Summary of Wealth, Tastes, and Entrepreneurial Choice

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Wealth, Tastes, and Entrepreneurial Choice summary


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Small-business owners tend to earn less than they would as full-time employees, but most of them prefer entrepreneurship for its nonmonetary rewards and thus don’t mind taking a pay cut to engage in such ventures. This original research by macroeconomists Erik G. Hurst and Benjamin W. Pugsley explores this mind-set and its implications for policy makers looking to stimulate employment and innovation through small-business subsidies. While informative, the report is a heavily technical read intended for a professional audience. Nonetheless, getAbstract recommends it to government policy makers and economists, as well as to entrepreneurs.

In this summary, you will learn

  • What motivates the small-business owner,
  • How government policies aimed at this niche may not be optimal and
  • What impact the small-business owner’s mind-set has on the overall economy.

About the Authors

Erik G. Hurst is an economics professor at the University of Chicago, and Benjamin W. Pugsley is an economist at the Federal Reserve Bank of New York.



Small businesses are a staple of the US economy. Small-business ownership holds a romantic appeal for many American entrepreneurs, for whom the desire to be free and to control their own destinies ranks higher than the wish to make more money. In a 2011 study of US small-business owners, as many as ...

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