What makes you think retirees are so risk averse?
The investment habits of older people tend toward loss aversion. This is pretty common knowledge, but is confirmed in studies like this one. Keep in mind that it was you who postulated that humans are semi-rational actors, and it is in keeping with that to shift your behaviors vis-a-vis risk as you age. In the absence of other factors, such as wanting to build a business to pass to your grandkids or some principle you have about some aspect of the world that you can change through your business, there simply isn’t much point to taking a shot at building a business that won’t come to fruition until 10 or 20 years later when you’re 80, whereas there is when you’re 20. You have to have motivations other than personal financial gains in greater amounts than is the case for younger people.
Old-age entrepreneurship is rising, as is labor-force participation, and many retirees continue to engage in speculative financial ventures until the day they die.
This is surely a function of increased lifespans and the infeasibility for large numbers of being able to retire at 65 anymore, whereas it used to be more common.
Yes, they face a diminished time-horizon for rewards, but they also face a diminished time-horizon for suffering.
Yet they are more loss averse than younger people. It is ironic. It may be that they feel the penalty for major financial loss is worse because they won’t be able to go out and get a job as easily as a 20 year old. If we lived in a non-agiest society, this might change.
Keep in mind that one of the costs of failed ventures is “I’ll be poor for a long time” or perhaps, “I’ll be bankrupt for a long time.”
Do entrepreneurs think this way? The shift from 1% to 1.2% in entrepreneurism suggests that perhaps the other 99% of people think this way, but that the 20% gain in entrepreneurism isn’t related to this, and is more likely a function of, “I can finally try to start this business I wanted to start because I can actually pay my rent this month and don’t have to work 40 hours a week for minimum wage just to survive.”
Retirees don’t always have the same view of this fear, hence why risky behaviors (smoking being classic examples unprotected sex) tend to rise dramatically with old age. Retirees are not a systematically risk-averse population in any absolute sense. Furthermore, many of the benefits of high-growth entrepreneurship, the kind that actually drives local economic success, are obtained quickly. Few startups that haven’t yielded their founders major benefits in the first 5–10 years will ever do so.
I don’t know. The data I’ve seen doesn’t agree with you. Maybe you base your conclusions on different data, and that’s fine. I think it is erroneous to assume that financial and entrepreneurial habits have anything to do with smoking and sex habits. A person who has already made it to 80 doesn’t have to worry about smoking killing him before he hits 60. Nor does he really have to worry about AIDs shortening his life.
As for protected sex… well, all your senses dull as you age, so there comes a point where it’s just not worth it for either party anymore if there are too many, um, barriers getting in the way.
It’s statistical deception to characterize a very small change from a low base by its percent increase.
It’s not a small change. That was the point I was making. It’s a 20% increase. 1% may sound like a small number of people, but in the United States alone, we have about 250 million people over 16 who could theoretically be working, at least part time. 1% of that is 2.5 million people. 20% of that is 500,000 people. That’s 500,000 new entrepreneurs for every US-sized adult population. Even if the majority of those new businesses don’t employ people, the mean number of employees for all of them doesn’t have to be very high before we’re talking about millions of jobs.
The reality is that changes in entrepreneurship rates due to existing examples of paid-non-working cause changes in entrepreneurship rates to go from lower-than-population-average for the groups being studied (often parents, academics, or people in pilot programs for asset-oriented programs) to still-lower-than-population-average. The only exception is when asset accumulation aids are paired with paternalistic programs to support, induce, or compel preferred activities. The reality is that most people won’t invest an allowance.
Yeah, there’s an obvious bias when your sample population has a higher proportion of, say, academics than the general population. Then of course you expect the rate of entrepreneurism to be lower because, by definition, people working as academics (employed by universities or related agencies) aren’t entrepreneurs; they’re employees.
That small business stat is also misleading, as it refers to any business with under 200 employees. There are under 30 million Americans working in 0-employee businesses, and most of them are either farmers, or else the “business” yields a fairly small side income. The number of people making a living as lone wolves is quite small, as it is an extremely difficult and risky financial prospect. Most who do so are older people past their prime working years who have become less risk averse, have accumulated assets as a cushion, and have extensive knowledge or experience of a given field.
I’m not entirely sure what the relevance of this is. As I mentioned before, it seems to me that you should be looking at the mean number of jobs created by small businesses, not the proportion that are for small side income, or lone-wolf, etc. The stimulus to a region will be based on the mean more than the ratio of lone-wolf to employer businesses.
Finally, your last comment reveals a key part of the disconnect. Whether UBI is $5,000 or $50,000, I do not view it as getting people out of poverty. I do not care about post-transfer income, per se. The goal is not to create a program that lets people live impoverished lives as comfortably as possible (that’s the alleviationism as I refer to it). The goal is to make it so that fewer people need support. The aim is not to make total income above the poverty line, but to make market income above the poverty line. If UBI boosts total income above the poverty line (as it certainly would), that’s of little benefit if market incomes show no improvement, or even, as is very likely, decline. For every entrepreneur who’s brought into the market there will be many low-wage workers who exit entirely, especially if UBI is given on an unrestricted family-unit basis.
As you said at the outset, it depends on your aim. Just to be clear, I define a basic income as one that is sufficient for someone to no longer be below the poverty line. $5,000/year wouldn’t cut it in America (generally speaking). Regarding the rest of your argument, aren’t market incomes inevitably going to increase if robots supplant people in a wider number of sectors, as long as a sufficient proportion of the resultant productivity gains are distributed by way of increased basic income payments over time?
