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Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy

  • Bruno S. Frey
  • Matthias Benz

One can be independent, or subject to decisions made by others. This paper empirically tests whether individuals attach an intrinsic value to the institutional difference between independence and hierarchy. Taking self-employment as an important case of independence, it is shown that the self-employed derive more utility from their work than people employed by an organization, irrespective of income gained or hours worked. This is evidence for procedural utility: people do not only value outcomes, but also the conditions and processes leading to these outcomes. Individuals value independence and dislike hierarchy as such, over and above the associated outcomes.

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Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 135.

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Handle: RePEc:zur:iewwpx:135
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  11. Bruno S. Frey & Alois Stutzer, . "Beyond Outcomes: Measuring Procedural Utility," IEW - Working Papers 076, Institute for Empirical Research in Economics - University of Zurich.
  12. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier.
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  18. Kahneman, Daniel & Wakker, Peter P & Sarin, Rakesh, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 375-405, May.
  19. Sen, Amartya, 1995. "Rationality and Social Choice," American Economic Review, American Economic Association, vol. 85(1), pages 1-24, March.
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  24. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
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  26. Rafael Lalive, 2007. "Do Wages Compensate for Workplace Disamenities?," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 53(3), pages 273-298.
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