Why entrepreneurs are happier than the average employee

A surprising volume of research shows that, despite massive stress and unpredictability, entrepreneurs are generally happier than wage-earning employees. Here, we recap some of the key studies that find entrepreneurs are indeed happier and researchers’ explanations as to why.

We begin with a fitting quote from one of the world’s most admired entrepreneurs, Berkshire Hathaway CEO Warren Buffet: “In the world of business, the people who are most successful are those who are doing what they love.”

Researchers home in on what makes entrepreneurs happier

In several studies, entrepreneurs’ innate vitality has been shown to be a driver behind their high levels of motivation, performance, creativity and action. Below we review five studies that focus on the extent to which entrepreneurs felt they possessed positive energy and a state of physical and mental aliveness.

1. King’s College professor of entrepreneurship Ute Stephan, who conducted a comprehensive review of more than 100 academic studies on entrepreneurship and well-being, found that “entrepreneurs are happier in terms of all indications of life satisfaction and work satisfaction.” She ascribes their higher levels of happiness to these two traits:

• Entrepreneurs tend to be deeply invested in their businesses, which gives them a strong sense of purpose and autonomy. 
• The sense of doing something important and being their own boss is so gratifying that it outweighs the negatives and leaves entrepreneurs happier overall.

2. In a November 2020 study , professor Stephan applied regression analysis to survey data from over 22,000 people in 16 European countries and found that:

• Entrepreneurs experienced higher levels of happiness, meaning and autonomy than wage-earning employees.  
• The concept of meaning was the decisive factor in entrepreneurial happiness.

“What we found is that much more important than decision-making freedom is the sense of doing something profoundly meaningful,” said Stephan. “That really energizes you, and as an entrepreneur you really need that energy to be creative and to do the work that’s important to you.” 

3. University of Basel professor of political economy Alois Stutzer analyzed survey data from over 1,000 German entrepreneurs compiled from 1991 to 2013 and found that:

• Newly self-employed people tend to be too optimistic about future life satisfaction.
• Entrepreneurs’ job satisfaction increased over time, although their leisure satisfaction declined due to an increased workload.

4. Texas Christian University professor of entrepreneurship Keith Hmieleski surveyed 303 founding CEOs of small businesses across the U.S. and found that:

• Female entrepreneurs achieve greater subjective well-being and new venture performance when their roles are high in creativity.
• Male entrepreneurs achieve greater subjective well-being and new venture performance when their roles are high in teamwork.

5. A study published in the Journal of Business Venturing analyzed interviews conducted with more than 1,700 entrepreneurs across 29 countries and found that:

• Self-employed people experience their work as more meaningful and report higher work autonomy and well-being than wage employees.
• Entrepreneurs’ superior wellbeing is “almost entirely” attributable to these three psychological outcomes: purposeful engagement with life; greater use of their talents, since the business usually suits their strengths; and high resilience, developed in adaptation to the at times extreme stress of entrepreneurship.