The Happiness of Being Self-Employed:
A Function of Personality Traits or
Procedural Utility?
Thomas Lange
Bournemouth University Business School
Motivation
• The self-employed enjoy greater job satisfaction than
salaried employees. Why?
– Studies in the economics discourse pay particular attention to
greater freedom and autonomy. Economists generally consider it
less likely that personality traits may drive the utility difference
between self-employed and employed workers. Interestingly,
variables on personality traits are rarely explicitly taken into
account.
– Research in the management and psychology literature
suggests that entrepreneurial satisfaction may depend, at least
in part, on specific personal values and personality traits.
Previous findings
• Early work (Schumpeter 1934; Super 1953)
• Contemporary studies:
– Success and achievement motivation
– Low risk aversion
– Optimism, confidence, depression
– Creativity
 ‘personality traits’
– Independence
– Autonomy
– Ability to influence organisational events
 ‘procedural utility’
Data
• 2006 European Social Survey
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Cross-sectional
Covers responses from 25 European countries
Approx. 2,000 individuals per country
Information on job satisfaction (ordinal, categorical; scale 0 – 10)
and various socio-demographic characteristics
Also (!): information on respondents’ levels of optimism, selfconfidence, depression, and a range of personal values and beliefs
By excluding countries with missing information on the main
variables of interest, the analysis is restricted to 19 countries
Workers in full-time employment; focus on individuals aged 18 – 65
years of age
Effective sample: 11,157 observations – 6,282 for male and 4,875
for female workers
Results (1): some basic cross-tabulations
Employee
Self-employed
Mean job satisfaction
(sample mean; scale 0 – 10)
7.10***
7.89***
Allowed to decide how daily work is organised
(sample mean; scale 0 - 10)
6.51***
9.23***
Allowed to influence organisation’s policy
decision (sample mean; scale 0 - 10)
Important to think new ideas and be creative (%
indicating “like me” or “very much like me”)
3.86***
9.00***
52.84
68.14
Important to be successful and that people
recognise achievement (% indicating “like me” or
“very much like me”)
34.91
42.23
Important to seek adventures and have an exciting
life (% indicating “like me” or “very much like
me”)
18.60
24.15
Always optimistic about future (% indicating
“agree” or “strongly agree”)
71.17
79.49
Feel very positive about myself (% indicating
“agree” or “strongly agree”)
79.20
85.01
Felt depressed during past week (% indicating
most, almost all or all of the time)
4.99
3.96
Source: 2006 European Social Survey; author’s own calculations; *** = significant at the 1 percent level.
Results (2): ordered probit regressions
(1)
Self-Employed
Male
Age
Age2
Married
Education
Middle
Upper
Ongoing education/training past 12
months
Household income
Middle
Upper
0.416***
(0.036)
(2)
(3)
(4)
0.414***
(0.036)
-0.002
(0.020)
-0.023***
(0.006)
0.000***
(0.000)
0.061***
(0.022)
0.353***
(0.037)
-0.057***
(0.020)
-0.016**
(0.006)
0.000***
(0.000)
0.036*
(0.021)
0.062
(0.040)
-0.056***
(0.020)
-0.025***
(0.006)
0.000***
(0.000)
0.037*
(0.021)
-0.026
(0.028)
-0.044
(0.031)
0.208***
(0.022)
-0.053**
(0.026)
-0.097***
(0.029)
0.217***
(0.021)
-0.074***
(0.026)
-0.175***
(0.029)
0.152***
(0.022)
0.197***
(0.039)
0.271***
(0.043)
0.210***
(0.028)
0.277***
(0.031)
0.130***
(0.029)
0.148***
(0.031)
Results (3): ordered probit (contd.)
(1)
(2)
Value Statements: Important to …
think new ideas and be creative
be successful and people recognise
achievements
seek adventure and have an exciting life
Personality Traits
I am always optimistic about
the future
Generally, I feel very positive about
myself
I felt depressed (how often
past week)
(3)
0.058***
(0.009)
0.036***
(0.009)
-0.022***
(0.008)
0.044***
(0.009)
0.035***
(0.009)
-0.032***
(0.008)
0.197***
(0.013)
0.095***
(0.016)
-0.235***
(0.017)
0.187***
(0.013)
0.101***
(0.016)
-0.224***
(0.017)
AUTONOMY INDICATORS
Allowed to decide how daily work is
organised
Allowed to influence organisation’s policy
decision
Country dummies
Observations
Log Likelihood
(4)
0.049***
(0.004)
0.037***
(0.004)
Yes
11,157
2122.647
Yes
11,157
43421.446
Yes
11,157
43047.255
Yes
11,157
42613.323
Concluding remarks
• The empirical analysis shows the following:
– A number of demographic variables impact on workers’ well being
– It confirmed psychologists’ assertions that several personality traits
serve as strong predictors of workers’ job satisfaction
– However, controlling for these traits does not alter the statistical
significance of a strong and positive association between selfemployment and job satisfaction
– In contrast, adding variables on autonomy and procedural freedom
to the regressions results in strong mediating effects: the sign of the
self-employment coefficient remains positive, but is no longer
statistically significant at the conventional levels.
– The findings add further strength to economists’ argument: net
of demographics, values and personality traits, autonomy and
independence are the key mechanisms by which selfemployment leads to higher levels of job satisfaction.