Do attitudes toward risk taking affect entrepreneurship? Evidence from second-generation Americans

This paper empirically investigates the impact of willingness to take risks on entrepreneurship. We use a quarter century of data on second-generation Americans from Current Population Surveys in conjunction with a measure of willingness to take risks based on the Global Preference Survey. The level of risk taking in the country of origin is found to have a positive and significant impact on the likelihood of being an entrepreneur. A one-standard deviation increase in risk taking increases the probability of being an entrepreneur by 18%. We find that risk taking is also robust to other preference and cultural factors such as trust, patience, and individualism, as well as several deep-root determinants of development.

Automated summary

This study empirically found that willingness to take risks has a positive impact on entrepreneurship, which is related to the level of risk taking in the country of origin, and is robust to other preference and cultural factors.