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Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy

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Abstract

One can be independent, or one can be subject to decisions made by others. This paper argues that this difference, embodied in the institutional distinction between the decision-making procedures ‘market’ and ‘hierarchy’, affects individual wellbeing beyond outcomes. Taking self-employment as an important case of independence, it is shown that the self-employed derive higher satisfaction from work than those employed in organizations, irrespective of income gained or hours worked. This is evidence for procedural utility: people value not only outcomes, but also the processes leading to outcomes.

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