What makes an entrepreneur?
A combination of privilege, smarts, and risk-taking–with the potential for seriously high earnings.
That is according to a new paper from the National Bureau of Economic Research. The scholars Ross Levine and Yona Rubinstein combed though a major longitudinal survey of Americans born between 1957 and 1964 with check-ins in 1979 and 2010–in so doing, they confirmed some of the popular conceptions of entrepreneurs.
They score highly on a military intelligence test.
Entrepreneurs were more likely to engage in what the authors dubbed “illicit activities” in the days of their wild youth, with teenage pastimes like shoplifting, playing hooky, assault, drug dealing, and smoking marijuana.
“The combination of ‘smarts’ and ‘aggressive/illicit/risk-taking’ tendencies as a youth accounts for both entry into entrepreneurship and the comparative earnings of entrepreneurs,” the authors note.
As the Washington Post reports, a $100,000 increase in household income corresponds with a more than 50% increase in the chance of starting a company, perhaps because of seed capital.
It’s 72% guys, 28% ladies in the entrepreneurial set.
Most were salaried workers before doing their own thing.
The people who left their salaried gigs to incorporate their own companies work more hours, the Wall Street Journal reports, but earn much more per hour–to the tune of a 48% increase.
Taken together, the picture painted isn’t quite one of entrepreneurship as the democratizing force that it’s often mythologized as–since it’s still mostly privileged white guys that fill out the entrepreneurial demographic. However, we should also note that this is for a specific generation–what’s the mix with the League of Extraordinary Women?
Hat tip: Washington Post