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“Surfeiting, the appetite may sicken”: entrepreneurship and happiness

Abstract

Do the presence and nature of entrepreneurship impact on national happiness, and are nations with happy citizens better for entrepreneurs to start new businesses? To provide tentative answers we survey the literature on entrepreneurship and subjective well-being and use various data sources to uncover the first evidence of the relationship between entrepreneurship and happiness at the country level. We find that opportunity-motivated entrepreneurship may contribute to a nation’s happiness but only to a certain point, at which the effects of happiness begin to decline. Moreover, our results suggest that a nation’s happiness affects early-stage opportunity-driven entrepreneurial activity.

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Notes

  1. 1.

    This measure was termed as such after the Kingdom of Bhutan introduced the concept of gross national happiness as its overarching development goal (see http://www.grossnationalhappiness.com/).

  2. 2.

    This commission, which was appointed by President Nicholas Sarkozy of France, is available at http://www.stiglitz-sen-fitoussi.fr/en/index.htm.

  3. 3.

    In a survey of 38 studies on the relationship between entrepreneurship and economic production, Nyström (2008) concluded that there is generally a positive relationship between entrepreneurship and economic production, at least over the long term.

  4. 4.

    A rigorous finding in the economics of happiness literature is that increasing per capita incomes contribute positively to the happiness of individuals and countries, but after a certain level, which some believe is approximately US $ 15,000 (Frey and Stutzer 2005), additional income appears to contribute little to overall happiness (Easterlin 1995; Layard et al. 2008).

  5. 5.

    We are grateful to an anonymous referee for this insight.

  6. 6.

    These elements are common to most definitions of entrepreneurship that are used in economics and management (e.g. Shane and Venkataraman 2000; Casson 1982).

  7. 7.

    See Diener et al. (2010).

  8. 8.

    As Di Tella and MacCulloch (2008) note, the term ‘life satisfaction’ is used in these surveys rather than ‘happiness’, as the latter cannot always be translated precisely in all languages.

  9. 9.

    Job satisfaction is not synonymous with happiness per se, although there is a strong and positive correlation between people’s happiness and job satisfaction (Seligman 2002). Thus, why are entrepreneurs generally happier than employees on the job? Empirical evidence suggests that the former are happier because they value the independence and lifestyle flexibility of operating their own business (Benz and Frey 2004; Lange 2012; Moskovitz and Vissing-Jørgensen 2002; Taylor 2004). Furthermore, they experience “procedural utility”; that is, the process of being an entrepreneur provides enjoyment beyond the material success of actually being such a person (Block and Koellinger 2009; Gries and Naudé 2011). Entrepreneurs that are better endowed with human capital also tend to be happier than those with less (Carree and Verheul 2012).

  10. 10.

    Consistent with this assertion, Stutzer and Frey (2010) showed that high unemployment rates in a country also reduce the happiness of people.

  11. 11.

    For the other endogenous variables of the model (E a with a = 2 or a = 3 and the squared value of happiness), we use a set of equations in which these variables are a function of the exogenous covariates raised to power a and their cross products.

  12. 12.

    The rank conditions of the equation systems in each model were verified using the option checkreg3 in Stata (http://fmwww.bc.edu/repec/bocode/c/checkreg3.ado).

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Acknowledgments

We are grateful to Erkko Autio, Niels Bosma, Jonathan Levie and Sander Wennekers for helpful comments on the earlier drafts. José Ernesto Amoros and Oscar Cristi also acknowledges the support of The National Fund for Scientific and Technological Development, FONDECYT Chile, Project No 1130919 “Are entrepreneurs happier than others? The relationship between happiness, well-being and entrepreneurial activity at country and individual level”.

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Correspondence to Wim Naudé.

Appendix: List of the GEM countries used on the estimations

Appendix: List of the GEM countries used on the estimations

Argentina Italy
Australia Japan
Belgium Netherlands
Brazil Norway
Chile Peru
Colombia Poland
Denmark Portugal
Dominican Republic Romania
Finland Slovenia
France Spain
Germany Sweden
Greece Switzerland
Hungary Thailand
Iceland Turkey
India United Kingdom
Ireland United States
Israel Uruguay

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Naudé, W., Amorós, J.E. & Cristi, O. “Surfeiting, the appetite may sicken”: entrepreneurship and happiness. Small Bus Econ 42, 523–540 (2014). https://doi.org/10.1007/s11187-013-9492-x

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Keywords

  • Happiness
  • Life satisfaction
  • Entrepreneurship
  • Development
  • Global Entrepreneurship Monitor

JEL Classifications

  • I31
  • M13
  • O50
  • L26