The Psychology of the Entrepreneur and the Gender Gap in Entrepreneurship

Self-employment is often used as synonymous with entrepreneurship. We define entrepreneurship as having the ambition to grow or innovate. As part of a large and representative survey in Sweden, business owners were asked to self-identify as either entrepreneurs or self-employed. The survey in addition contains detailed questions on economic preferences, attitudes and behaviors as well as psychometrically validated measures of personality traits. We document significant psychological differences between self-identified entrepreneurs and the self-identified self-employed. Entrepreneurs differ substantially from the population; they are less risk and ambiguity averse, more aware of opportunity costs, exhibit greater tolerance of greed and are less behaviorally inhibited. With the notable exception of risk aversion the self-employed do not differ appreciably from wage-earners on most psychological characteristics. An interesting application of the distinction made above is gender differences in entrepreneurship. Measured psychological characteristics can account for one third of the large gender gap in entrepreneurship, but only one tenth of the smaller gender gap in self-employment. Men are one and a half times more likely to be self-employed than females but five times more likely to be entrepreneurs.