If You Are So Smart, Why Aren't You an Entrepreneur? (Study)
ideas.repec.org
ideas.repec.org
That said, I'm not against entrepreneurship: it's a means to an end. If the best way to bring a particular product to the market is through going on my own (and I've felt that way at multiple points in my career), I'll do what it takes. However, I have no interest in entrepreneurship for money's, status' or its own sake.
See, I know what I want. And I really, really like my free time. Money doesn't matter nearly so much to me as it seems to for most people.
So the answer to that question is:
Because you don't know me.
The title is admittedly rather attention-grabby, but I did not make it up, I copied it from the study (and truncated it to fit in 80 characters).
That's funny because this is precisely the perfect reason to be an entrepreneur. If you don't mind not making any money for a year or two, and if you want to be in total control of your time, instead of selling 1/3 of it to some company, then being an entrepreneur may be the right opportunity.
(Not saying that this is what you should do of course, I don't know you, either. Just saying that the reason you gave is much more in favor of entrepreuneurship than not.)
For example, once robotic transportation becomes a reality, virtual assembly lines will be possible, giving entrepreneurs new tools and lower costs. Something people previously moving things from point A to B could take advantage of to create products and services at suddenly lower costs.
In the same way the Internet made it possible to distribute digital products world wide, low cost robotic transportation will make it cheap to combine physical things in interesting new ways.
All of this will make being an employee less rewarding and entrepreneurship even more appealing.
Instead of being a cog, more people will be buying cogs and building machines that satisfy even more human needs.
However, people with knowledge that computers can't yet automate; will be pretty valuable (Try online self-diagnosis..).
Which is to say, big doesn't alway win either.
I believe (and am probably alone in this belief :-)) that there is still an inherent tax advantage to having everything in one entity that probably outweighs the disadvantages of coordinating a large group.
A group of 100 members trades internally without paying taxes on these transactions, but everything between independents has some tax effects for at least one side.
If this advantage were removed by some kind of tax reform, I suspect corporations would be smaller on average.
Getting back to the entrepreneur, even if there are many standard-izable things in a process, there are costs to outsourcing those things. Automation of physical logistics may greatly reduce these costs, making it possible to focus on just the unique value one can add and be rewarded.
Or were you talking about some other kind of tax?
Not sure how big an effect this is or it has been studied at all.
I guess the costs of doing business with another entity should also be considered and maybe they are more significant. Just having to evaluate vendors, do POs, trying to collect, etc, are also costs avoided inhouse.
One should do critical thinking and always get relevant feedback because hey, what you're doing is for others. Not for yourself.
Can you build me the next facebook? I can't say what it is unless you sign this heavily-one-sided NDA.
Purely macro-economic reasons can dictate, that sometimes it is best to be an entrepreneur (say, in times of "under-investment"), sometimes a consultant and yet again, sometimes an employee (in times of "over-investment" in a sector)
Prestigious depends very heavily on who you ask. I don't think you can come up with one answer even 50% of a population would agree on today.
I suspect that if you limited your applicant pool - say, "10 people who could get into YC" or "10 people who scored perfects on the SATs", the returns for entrepreneurship vs. finance would be much more even. I'm not sure entrepreneurs would come out ahead, but you're far more likely to catch the Herokus and Reddits and less likely to catch the folks who start a restaurant or a RoR CRUDscreen with no plan for monetization.
I must admit being a bit out of my depth regarding U.S. finance hiring. In Canada, Ivy or equivalent is not required, though of course it's not going to hurt. As far as I can see, it's one of the better fields when it comes to recognizing and rewarding hard work and ability and motivation (provided a baseline social/IQ ability). The luck component is still pretty important, but nevertheless much less so than in entrepreneurship.
Unfortunately neither of us have data here. I can't go digging for mine right now, which is a bit of a shame as I would like to continue this discussion. Some other time?
"Many" smart people become just about everything in every time period. I doubt we have the data to justify the assertion the ratios have changed over the years.
Your second paragraph makes more sense: to use one of your examples one can be a Physics consultant, employee, OR an entrepreneur (while still being a Physicist).
"The same individual has a 30% higher return to general ability when active as an entrepreneur than when working as an employee. Nevertheless, the resulting earnings are higher as an entrepreneur than as an employee only for the upper echelon of the general ability distribution. This suggests that, if the choice for entrepreneurship hinges on expected earnings, only the smartest people become entrepreneurs. However, as indicated by the results in Table A2 of the Appendix, general ability is not a factor that affects people’s occupational choice. In fact, there is some negative effect of general ability but it is not significant."
"These results suggest that, again if occupational choices are based on expected earnings differentials, people with high levels of math, technical and social abilities become entrepreneurs, whereas people with relatively high levels of clerical and language abilities become wage employees."
One of the reasons I'm not an entrepeneur is that it involves dealing with people and money. I prefer dealing with code.