Entrepreneurs Gene or Rich Kids with Money
Recent research from the National Bureau of Economic Research studied risk-taking in the stock market and found that environmental factors (not genetic) most influenced behavior.
The study appear to answer the question “Are Entrepreneurs Born or Made“, but it doesn’t really. Furthermore many interpreted the results as: Entrepreneurship is for rich kids (or upper middle class), which again is a wrong interpretation.
First, let’s examine the Abstract of the research, before jumping to conclusions, (full article linked above).
Risk-taking behavior is highly correlated between parents and their children; however, little is knownabout the extent to which these relationships are genetic or determined by environmental factors. Weuse data on stock market participation of Swedish adoptees and relate this to the investment behaviorof both their biological and adoptive parents. We find that stock market participation of parents increasesthat of children by about 34% and that both pre-birth and post-birth factors are important. However,once we condition on having positive financial wealth, we find that nurture has a much stronger influenceon risk-taking by children, and the evidence of a relationship between stock-holding of biological parentsand their adoptive children becomes very weak. We find similar results when we study the share offinancial wealth that is invested in stocks. This suggests that a substantial proportion of risk-attitudesand behavior is environmentally determined.
Meaning, there is a difference between someone putting his money on random companies with no emotional connections to, and someone putting his money on an idea that he has been day dreaming about for several months.