From struggle to startup: How childhood socioeconomic status shapes entrepreneurial happiness

Abstract

This study examines the happiness levels of underdog entrepreneurs who started their entrepreneurial journeys as adults after experiencing low socioeconomic status (SES) in childhood. Drawing on data from the 2020 China Family Panel Studies, we find that underdog entrepreneurs who were socioeconomically disadvantaged as children have lower happiness levels than ‘conventional’ entrepreneurs who did not experience similar early life disadvantages. Interestingly, this disparity in happiness is not observed when comparing employees with conventional entrepreneurs. Specific demographic factors associated with lower happiness among underdog entrepreneurs include being female, possessing over nine years of formal education, falling between the ages of 31 and 65 and living in an urban area. We identify income, self-confidence, trust, memory capacity and mental health as mechanisms through which a lower childhood SES influences underdog entrepreneurs' happiness levels. The findings remain robust after applying a series of sensitivity checks.