Happiness and wealth: The peculiar case of men and women self-employed

Do different factors affect the job-satisfaction of men and women entrepreneurs?
27th August 2018
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5th May 2019

Happiness and wealth: The peculiar case of men and women self-employed

Do different factors affect the job-satisfaction of men and women who are running their own business? From the ancient times of Aristotle, Epicurus and Boethius to the contemporary works of Diener or Easterlin, happiness has been in the centre of human life experience. The Greek philosopher Aristotle (born 384 BCE) explained happiness through a lens of living a virtuous life and acting in noble ways. Aristotle argues that thinking of what is good, without acting upon it, is not the way to happiness. In his view, happiness [Gr: ευδαιμονία "eudaimonia"] is not enough to be a state of mind, but the result of noble and virtuous pursue. Hence, he concludes, happiness seems to need also some sort of prosperity in addition, "for it is impossible, or not easy, to do noble acts without the proper equipment".
"for one who has the activity, will of necessity be acting, and acting well. And as in the Olympic Games it is not the most beautiful and the strongest that are crowned but those who compete, so those who act win, and rightly win, the noble and good things in life.”


It is not an accident that the Aristotelian concept of eudaimonia has been linked with self-employment. Aristotelian eudaimonia is the idea of happiness that is found when people pursue their art or techne, in which they excel and are passionate about. For the self-employed are essentially people who seek an eudaimonic state in their life. Though there might be differences in the definitions of self-employed, Schumpeterian entrepreneur, Kiznerian entrepreneur etc. they all seek to achieve a higher state of life-satisfaction through the pursue of the activities in which they engage (maybe some in more virtuous ways than others). Life-satisfaction and job-satisfaction are two sides of the same dice. Considering that the dice of life can be a truly multisided dice, job-satisfaction alone has been found to explain from 5-16 percent of it (Johnson et al., 2004). A significant high number when considering that life-satisfaction can be affected from all sorts of things, ranging from the regional climate, to party politics, the neighbourhood one lives in, one’s peers or family situation, previous experiences, and the list goes on and on.

Anyone who has ever attempted to start and operate a business will tell you that money, as in capital and cash flows, is a very important factor for survival and success. And one would not be wrong to assume that a profitable business is better than an unprofitable one. But as Easterlin's work over the decades has shown, money alone does not guarantee happiness. Even in money driven societies, where people's worth is measured by the size of their house or the brand of their sport-car, more than anything else, a change to higher income bracket seems to have only a temporal positive effect on life-satisfaction, which later evaporates. If anything the literature seems to confirm the old adage that "money does not bring happiness", even though it can provide the research funds necessary for an investigation into why it does not.
"If economic growth is not the main route to greater happiness, what is? A simple, but unhelpful answer, is that more research is needed."

Richard A. Easterlin

One thing that we know for sure is that the majority of the wealthier people on the income scale of any country are not wage-employees, but men and women who run their own businesses. Of course, it is not any big secret that most of the wealthiest individuals of our time came from a wealthy background to start with, and most were already rich before starting their first business. For example, Wolff and Gittleman (2011) find that 45 percent of US households in the highest wealth bracket ($1,000,000 or more) received an average inheritance of $1,842,000, compared to only 9 percent of those in the lowest wealth bracket (less than $25,000), who received an average inheritance of $7,000. And it is likely true that people from a more affluent background would have a greater possibility to operate a successful venture than those who are less so, not only due to financial reasons alone, but also due to an extensive network of family and friends in positions of influence. Big examples would be people like Donald Trump, who built upon the inherited multibillion-dollar real-estate business of his father, Bill Marriott, who inherited the Marriot International hotel chain from his father, and the brothers Charles and David Koch who inherited the oil refining and chemicals conglomerate from their father (Faireconomy, 2012).

Nevertheless, Quadrini (2000) finds that those who enter self-employment from wage-employment move up in the social ladder more often than not, while the contrary is true for those who exit self-employment to become wage-employees. Big example of such social mobility cases include people like Larry Ellison of Oracle, who was born in a lower-middle class part of Chicago, Harold Hamm, an one-time gas-station attendant who built an oil and gas empire, and Oprah Winfrey, who was born to an unwed teenage mother living in poverty in rural Mississippi, and went on to become a television superstar (Faireconomy, 2012).

"The self-employed make up 62 percent of the households in the top 1 percent of the wealth distribution and the self-employed business owners are 54 percent. The overall message of this table is that most rich people are entrepreneurs."

Marco Cagetti and Mariacristina De Nardi

There is a plethora of literature in business, entrepreneurship, human resource management and labour economics that investigates entrepreneurial motivation, leadership characteristics and the employment choices of men and women. Moreover, what we think we know may not be all correct. That is because of a little thing statisticians call heterogeneity, and how the variation within male and female sub-samples has been largely under-investigated in the related research. Not so long ago, that is two-three decades ago, researchers would even dismiss the existence of significant differences between the two sexes, or excuse the lack of separating the two due to the scarcity of enough data for a meaningful statistical analysis. As much as the latter maybe true, that does not make the assumption of non-significant differences to be right. Typically, a statistical analysis is likely to have a control for say, being male or female. But the effect of the control will only show the effect of gender (or sex) on the independent variable, while it will hide any true gender dichotomy that may exist among the rest of variables in the model. For among many social scientists, philosophers, and average voters alike, it is common sense that men are from Mars, while women are from Venus.

A typical finding in satisfaction related research (i.e. job, life) is that being female is a factor with a significantly positive association. A large number of studies points out that women build businesses that are more in harmony with their local environment than men do, and seem to assign higher value overall to family and children, autonomy, self-esteem and et cetera (Parasuraman and Simmers, 2001; Paul and Smith-Hunter, 2011; Jennings, Jennings and Sharifian, 2016). The most current research from business, economics, psychology and sociology, show that there are significant gender effects on satisfaction with job and life, as well as with other aspects of life, such as income, health, family, access to finance, goal achievement, autonomy etc. In fact, one could say that men and women are only similar on the surface, but are rather different in most details. But as a recent paper in genetic research argues (Joel, 2012), the differences are not biologically gender based. Joel (2012) explains that when it comes to brain and gender, we all have an array of masculine and feminine traits, as well as, a mosaic of "male" and "female" brain characteristics. It follows then that any systematic dichotomy identified between the two sexes in business research is either some sticky coincidence, or (more likely) due to gender based nurturing (see e.g.The genetics of entrepreneurship: the effects of nurture and nature.).
"Having one brain/gender characteristic with the "male" form is not a reliable predictor for the form of other brain/gender characteristics."

Daphna Joel

The ancient Roman philosopher Boethius (born c. 477 AD) suggested that happiness does not lie in the accumulation of money, but in the spending of it. Now, far more recently, Carter (2011) argues that the subjective well-being of those who operate their own businesses is supported by a high subsidy on their consumption, which comes from their business to their household. What this means is that the self-employed, have the ability to manage their financial resources in a tax-efficient way, where in a good business period they cover their personal/family consumption of goods and services from their business earnings, while in a bad business period they can direct resources from their family to the business. This ability is non-existent among wage-employees, who, everything else being equal, in a good period they might simply consume and save a bit more, and in a bad period likely subsidise their consumption from their own savings (or consume less).

When wage-employees and self-employed talk about income, it is likely they do not talk about the same thing. For the first is an on-going consumption ability and personal savings, for the second is business growth and investment, plus consumption and savings. Then, when men and women in self-employment talk about wealth and success, they may also be talking about different things. For the first it may be with regards to competition and peer-success or turnover, while for the second it might be work and life balance, and financial independence. Happiness and wealth may be associated in a different way for men and women.

"Being one’s own boss has been shown to increase individuals’ satisfaction with their job, despite drawbacks such as initially often decreased incomes through self-employment."

Martin Binder and Alex Coad

When it comes to job or life satisfaction, income indeed ranks first as"the most important thing" for both men and women, but after that, the ranking is quite different between genders. Our understanding about what motivates men and women entrepreneurs is increasing everyday, and things are indeed changing, but not so fast, and in some cases not in the right direction (see e.g. Why aren’t there more female entrepreneurs?). Governments should rethink various business incentives and create policies that correct for market imbalances with regards to female entrepreneurship.


Binder, M. and Coad, A., 2013. Life satisfaction and self-employment: A matching approach. Small Business Economics, 40(4), pp.1009-1033.

Boethius, A.M.S. and James, H.R., 1897. The Consolation of Philosophy of Boethius. E. Stock.

Bywater, I. (ed.) (2010) Aristotelis Ethica Nicomachea. Cambridge: Cambridge University Press.

Cagetti, M. and De Nardi, M. (2006) ‘Entrepreneurship, Frictions, and Wealth’, Journal of Political Economy, 114(5), pp. 835–870.

Carter, S. (2011) ‘The Rewards of Entrepreneurship: Exploring the Incomes, Wealth, and Economic Well-Being of Entrepreneurial Households’, Entrepreneurship: Theory and Practice. Hunter Centre for Entrepreneurship, University of Strathclyde Business School, Nordland Research Institute, Bodo, Norway, 35(1), pp. 39–55.

Diener, E. and Suh, E. (1997) ‘Measuring quality of life: Economic, social, and subjective indicators’, Social indicators research, 40(1–2), pp. 189–216.

Easterlin, R. A. (1973) ‘Does Money Buy Happiness?’, The Public Interest. New York, 30, p. 3.

Easterlin, R. A. (2004) ‘The economics of happiness’, Daedalus. MIT Press, 133(2), pp. 26–33.

Easterlin, R.A., McVey, L.A., Switek, M., Sawangfa, O. and Zweig, J.S., 2010. The happiness–income paradox revisited. Proceedings of the National Academy of Sciences, 107(52), pp.22463-22468.

Johansson Sevä, I., Vinberg, S., Nordenmark, M. and Strandh, M. (2016) ‘Subjective well-being among the self-employed in Europe: macroeconomy, gender and immigrant status’, Small Business Economics. Umea U, 46(2), pp. 239–253.

Joel, D., 2012. Genetic-gonadal-genitals sex (3G-sex) and the misconception of brain and gender, or, why 3G-males and 3G-females have intersex brain and intersex gender. Biology of sex differences, 3(1), p.27.

Parasuraman, S. and Simmers, C. A. (2001) ‘Type of employment, work-family conflict and well-being: a comparative study’, Journal of Organizational Behavior, 22(5), pp. 551–568. doi: 10.1002/job.102.

Paul, M. and Smith-Hunter, A. (2011) ‘Using Decision Tree Analysis To Predict Women’s Entrepreneurial Choices’, Academy of Information & Management Sciences Journal, 14(1), pp. 137–162.

Jennings, J. E., Jennings, P. D. and Sharifian, M. (2016) ‘Living the Dream? Assessing the “Entrepreneurship as Emancipation” Perspective in a Developed Region’, Entrepreneurship: Theory & Practice. Wiley-Blackwell, 40(1), pp. 81–110.

Quadrini, V. (2000) ‘Entrepreneurship, Saving, and Social Mobility’, Review of Economic Dynamics, 3(1), pp. 1–40.

Wolff, E.N. and Gittleman, M., 2014. Inheritances and the distribution of wealth or whatever happened to the great inheritance boom?. The Journal of economic inequality, 12(4), pp.439-468.

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