Many people around the world work for themselves. This is true even where job opportunities abound.
Self-employment rates have been rising for decades. Some predict by 2020 more than 40% of the U.S. workforce will be self-employed–that’s more than 60 million people. Given that self-employment–much like entrepreneurship–closes the gap between supply and demand, increases in self-employment lead to higher economic prosperity over time.
Yet what is the best way to decide between traditional, full-time employment and being your own boss? A great deal of psychological research has been conducted to answer precisely this question.
Scientists have examined the genetic basis of self-employment. They have evaluated whether the biological make-up of self-employed individuals may be different from people in traditional employment. However, few salient differences have been found between both groups.
It appears differences are best understood at the psychological rather than biological level. Ample evidence shows success and satisfaction levels with self-employment are largely dependent on people’s personality. In other words, your typical character style and behavioral preferences determine both how effective and happy you will be if you enter self-employment.
A study from October 2013 showed openness to experience, a personality trait associated with creativity, aesthetic sensitivity, and liberal political attitudes, as well as greater risk tolerance and extraversion–a preference to focus on the world outside the self–all tend to propel people to self-employment. Meanwhile, higher agreeableness and risk-aversion drive people to avoid and even terminate self-employment. These broad personality differences may also explain why self-employment rates around the world are significantly lower for women than men, even after accounting for economic opportunities.
In all cultures, women are generally less open and impulsive, but more agreeable than men. The role of risk is particularly interesting because higher risk drives individuals to pursue self-employment, as well as entrepreneurial activities. Research from September 2014 shows a moderate rather than high level of risk is associated with higher success rates in self-employed people. In short, you have to be adventurous to work for yourself, but not too bold to be successful at it.
Self-employment is also a better alternative for individuals with an entrepreneurial personality, which concerns being more creative, opportunistic, proactive, and visionary. The main reason is these competencies help individuals remain self-motivated and engaged, even in the absence of a clear work structure and routine. Individuals with this profile tend to get bored in traditional jobs, and are generally reluctant to follow orders and processes.
Although the likelihood of big success for entrepreneurs is very low, many successful entrepreneurs–including Bill Gates, Steve Jobs, and Jeff Bezos–were in some ways unemployable by traditional standards, because of their unwillingness to fit in other people’s businesses or follow anything except their own vision. If you have some problems with authority–addressed or unaddressed–self-employment will help.
Unsurprisingly, education is also important. Multiple studies show formal courses on entrepreneurship help self-employed individuals become more successful. The growing number of online courses and open-source learning materials, which are slowly disrupting the education industry, attempt to cater to the millions of individuals around the world who are contemplating self-employment or investing in their own career portfolio.
Although many people enter self-employment to make work more enjoyable, freelancers are generally less satisfied with their work than people in full-time employment are. In fact, people who switch from full-time to self-employment tend to work more and earn less than they did in their full-time jobs.
Ironically, self-employment is more stable than traditional employment, perhaps because it is less susceptible to economic changes in the market. Self-employed individuals also don’t need to cope with abusive or incompetent bosses.
Personality also determines how long people remain self-employed. In a 50-year study, individuals with higher intellectual curiosity, resilience, and emotional intelligence (EQ) remained self-employed for longer. It is noteworthy that EQ and resilience also predict career stability in employed individuals. However, people’s willingness to quit their job will generally increase with their curiosity levels.
You should consider leaving your job to work for yourself if:
- You can tolerate job uncertainty
- You enjoy the absence of routine
- You have problems following rules
- You can self-motivate
- You are emotionally stable and resilient