Friday, July 31, 2009

Aging and Entrepreneurship (And The Coming Entrepreneurship Boom)

Below is an article I wrote that was published in the Encyclopedia of Financial Gerontology, (Lois A. Vitt and Jurg K. Siegenthaler, Editors-in-Chief, Greenwood Press, 1996). It is now called Encyclopedia of Retirement and Finance. I examined the psychology of entrepeneurship for older people through the lense of mythology and Erik Erikson's eight ages of man. My article is relevent because the Kaufman Foundation recently released a report called The Coming Entrepreneurship Boom. The report says that the aging population in the USA will actually help this boom. My article discussed how important entrepreneurship can be for people as they age, and not just for economic reasons.

Here it is:

ENTREPRENEURSHIP, the initiation and assumption of the financial risks of a business and its management. The decision to start a business is often complex. Many factors, including the need for achievement, the need for control over one's destiny, the willingness to take risks, the loss of one's job, and other forms of displacement may prompt a person to start his or her own business. While some writers see no link between age and the decision to start a new business, others have found close links. When age is a significant factor, it is often for psychological reasons.

Entrepreneurial opportunities are most likely to be pursued by people with a college education who are in their late thirties and have established careers. Age is relevant to entrepreneurship, and entrepreneurship is important for the aged. Of those who are employed at age 65 or older, 27% are self-employed (Maddox 1985). It is useful to examine the relationship between entrepreneurship and aging through the internal or psychological aspects of a person's decision to become an entrepreneur.

The Entrepreneur and Hero Compared

Joseph Campbell believed that the entrepreneur was the real hero in our society. Although he never systematically compared the entrepreneur and the hero, it is interesting to do so. Heroes and entrepreneurs are called to take part in an adventure that is a simultaneous journey of self-discovery, spiritual growth, and the personal creativity they make possible. An entrepreneur's journey closely resembles the journey of the hero in mythology as outlined in Campbell's book, The Hero 'With a Thousand Faces (1968). There is a strong similarity between the journey that

entrepreneurs take and the adventure of heroes. Entrepreneurs and heroes also have similar personality traits. Myths describe the universal human desires and conflicts we see played out in the lives of entrepreneurs. Ian MacMillan and Rita Gunther McGrath (Wall Street Journal 1992) of the Wharton School's entrepreneurial center found that entrepreneurs, no matter what country they call home, think alike. Campbell found that the basic pattern in the hero's journey is the same in every culture.

Heroes bring change. Campbell (1968) refers to the constant change in the universe as "The Cosmogonic Cycle" that "unrolls the great vision of the creation and destruction of the world which is vouchsafed as revelation to the successful hero." This recalls Joseph Schumpeter's theory of entrepreneurship as creative destruction. A successful entrepreneur simultaneously

destroys and creates a new world, a new way of life. Henry Ford destroyed the horse and buggy age while creating the world of the automobile. Campbell's hero finds that the world "suffers from a symbolical deficiency" and "appears on the scene in various forms according to the changing needs of the race." Changing needs and deficiencies correspond to the changing market conditions or the changing desires for products. The entrepreneur is the first person to perceive changing needs. Campbell believed that people become creative when they engage in an activity, pursue a career or entrepreneurial venture, because it is what one loves to do and because it bestows on one a sense of personal importance and fulfillment. It is not the social system that dictates that it be done; rather, the drive comes from within. It is this courageous action that opens up doors and creative possibilities that did not previously exist.

Relationship of the Hero's Journey to Aging

The hero's goal is now to find a purpose in life. Campbell's and Erik Erikson's (1963) heroes are similar, because the hero's journey is a quest for personal identity that can be found in service to others or to society, or in finding and delivering a boon. During the generativity versus stagnation stage, which comes in the second half of life, in Erikson's eight ages of man, people become willing to take risks in order to be creative or make their mark upon society. Generativity involves establishing and guiding the next generation, but it also includes productivity and creativity, which, along with the willingness to take risks, are essential to entrepreneurship. For Campbell, the act of creating involves the willingness to take a risk and cross a boundary into a new domain of ideas. To be unwilling or afraid to do so is to be controlled by what he calls "the elder psychology," or the unwillingness to strike out on one's own and take risks.

The paradox, then, is that although entrepreneurship may be an important path for people to discover themselves and "do something meaningful for society" as they become older, they must resist this "elder psychology," which Campbell believes blocks risk taking, creativity, and entrepreneurship. When a person is able to champion things becoming, he or she can achieve generativity by making a significant and unique contribution to society. If one is able only to maintain the status quo, he or she will stagnate and will remain self-centered and unable to contribute to society. Almost by definition, entrepreneurs are champions of things becoming.

In counseling and advising the elderly in the area of entrepreneurial activity, it is useful to keep these insights from mythology and psychology in mind. They deal with the deepest of needs and forces in the human psyche. For an older person contemplating a new business venture, it will be helpful to recognize that it is not just the potential financial gains or losses involved that are important. The entrepreneurial act may be a life-defining and self-defining act, one with deep personal and perhaps even spiritual implications for the individual and his or her relationship with society. Entrepreneurs are often seen as having different attitudes toward risk: what a nonentrepreneur might view as a great financial risk, the entrepreneur may see as a cost of learning and adventuring. The venture is an end in itself, more than the profit. People who start new businesses in the second half of life may view risk in this way, because they feel such a strong need to define themselves and contribute to society.


Campbell, Joseph. 1968. The Hero With a Thousand Faces. Princeton. NJ: Princeton University Press.

Erikson, Erik H. 1963. Childhood and Society. New York: W. W. Norton.

Jung, Carl G. 1956. Symbols of Transformation. New York: Harper Torchbooks Bollingen Library.

Maddox, George L., et al. 1985. The Encyclopedia of Aging. New York: Springer.

Wall Street Journal. 1992. 6 February; A1.

Monday, July 27, 2009

Yes, You Can Have Too Many Friends

Even Bill Gates says so. Read about that at Bill Gates quits Facebook over 'too many friends'. Here are the key exerpts:

"Microsoft co-founder Bill Gates said he was forced to give up on the social networking phenomenon Facebook after too many people wanted to be his friend.

Gates, the billionaire computer geek-turned-philanthropist who was honoured Saturday by India for his charity work, told an audience in New Delhi he had tried out Facebook but ended up with "10,000 people wanting to be my friends".

Gates, who remains Microsoft chairman, said he had trouble figuring out whether he "knew this person, did I not know this person"."


""I read a lot and some of that reading is not on a computer," he said.

Gates, who sought to drive a vision of a computer on every desk and in every home, said the information technology revolution had been "hugely beneficial" but added: "All these tools of tech waste our time if we're not careful.""

So you can use technology too much as well. Notice how he brings in costs and benefits (waste implies cost and he mentions technology as being beneficial). But the more you use something, the less beneficial it is and it can also become more costly. That is, the marginal benefit (MB) falls and the marginal cost (MC) rises. The best result is to keep adding more of something up to the point where MB = MC. I explain all of this at the following site: Allocative Efficiency. This is taken directly from notes I use in one of my lectures. Just think about friends when you read it and look at the graph. At some point, one more friend has less MB than the MC. So it means you can have too many friends because you can have too much of anything.

Thursday, July 09, 2009

World's Most Expensive Fast Food (and some game theory)

You can read about it at World's Most Expensive Fast Food. Here is the opening paragraph:

"Dublin is home to Trinity College, the Guinness Storehouse and St. Stephens Green. Here, you'll also find the world's most expensive fast food. In U.S. dollars, a hamburger meal at a medium-priced establishment, as defined by consulting firm Mercer, costs a whopping $9.16."

Here are the top 5:

1. Dublin $9.16
2. Amsterdam $7.88
4. Paris $7.43
4. Brussels $7.43
5. Rome $7.30

In New York it's $5.99. One can only hope that if you are going to Dublin that the cost is worth it, that they have some attractions to see and some fun things to do. I can't see why anyone would go there at those prices:)

Update July 10
: World's Most Expensive Cities To Live

This was in the "Peanuts" comic strip once. Charlie Brown is on the mound talking to himself.

Frame 1: "This guy will never be expecting a fastball..."

Frame 2: "With the bases loaded he'll be expecting a curve. But he also knows I know what he's expecting..."

Frame 3: "So if he's expecting me to pitch what I know he knows I know he knows he's expecting..."

Frame 4: "Where was I?"

Tuesday, July 07, 2009

Slave Redemption in Sudan (Another Dangerous Economist Classic)

In my ECON 2302 class this week we read chapter 8 of the book The Economics of Public Issues. It seeems like a good idea to buy a slave and set him or her free. But the "redeemers" have often wanted to buy large groups of slaves to redeem. This has encouraged people to capture slaves in the first place. Then it puts more money in the hands of the slave traders who buy more weapons. Some people runs scams, selling people that were not really slaves. Below are links to the three articles listed in the book's bibliography.

The False Promise of Slave Redemption

Ripping Off Slave ‘Redeemers’

Fake slaves con aid agencies in Sudanese liberation scam

The following link has links to lots of info on this issue and different views

Policy Debate: Do slave redemption programs reduce the problem of slavery?

Finally, there was a movie made in 1971 that you can read about at the Internet Movie Database called Skin Game. It was about a fake slave being sold over and over again as a scam. Here is the synopsis:

"Quincy Drew and his black friend Jason O'Rourke have pulled off every dodge known for conning a well-heeled sucker, but it wasn't until they hit on the old skin game that they started to clean up. The game is simple. Jason, though born a free man in New Jersey, poses as Quincy's slave as the pair ride through Missouri and Kansas in 1857. Quincy picks a likely mark in each town, sells Jason to him for top money and rides out of town. Then Quincy and Jason get back together on the road to another town, because if Jason can't just run off after dark, Quincy finds a way to spring him loose."

Sunday, July 05, 2009

Does It Pay to Host the Olympics?

This was an article in Parade magazine today. You can read it at Does It Pay to Host the Olympics?. It can cost a city $50 million just to go through the bidding process. It is not clear that the benefits always outweighs the costs. Here is an exerpt:

"The 2004 Athens Olympics cost more than $11 billion and brought the city only about $2.8 billion in revenue. China has not released earnings from the 2008 Games in Beijing, but the $43 billion price tag shattered all Olympic records."

Montreal took 30 years to payoff the cost of the 1976 olympics. Chicago could spend up to $5 billion if they are the host of the 2012 summer olympics. Atlanta seems to have put its olympic buildings to good use.

Thursday, July 02, 2009

Can Your Student Loan Get a Bailout?

To read about this go to Can Your Student Loan Get a Bailout?. The article says "About two-thirds of the 3 million or so college seniors who donned a cap and gown this year took on an average debt of $22,500 for the privilege of that diploma." The government policies on this limit payments if you're income is low and/or you work in some kind of public service.