Entrepreneurs among world's happiest people … but not in Jamaica

Girjanauth Boodraj, Guest Columnist

That's the finding of the Global Entrepreneurship Monitor (GEM) 2013 Global Report for which 197,000 individuals have been surveyed across 70 participating countries in all corners of the globe.

GEM is the leading research consortium worldwide committed to understanding the relationship between entrepreneurship and economic development. Jamaica/University of Technology (UTech) participates in GEM.

The results on the greater happiness of entrepreneurs were arrived at through an Adult Population Survey (APS) of at least 2,000 randomly selected persons between the ages of 18-64 years in each participating country.

For each variable of interest, a single composite numerical indicator was constructed for well-being, ranging between -1.7 (least subjective well-being) and +1.7 (highest subjective well-being). Well-being indicators were computed for total early-stage entrepreneurial activity (TEA) defined to be businesses which are under 3¹/² years' old, as well as established businesses that are defined as being above 3¹/² years old. Indicators were also computed for the overall adult populations in each country.

Incidentally, the famous island often referred to by the distinctive phrase, 'Jamaica, no problem', recorded the lowest level of subjective well-being (-0.53) in Latin America and the Caribbean. Only Greece (-0.50) and Russia (-0.81), and four countries in Sub-Saharan Africa - Botswana (-1.06), Ghana (-0.55), Malawi (-0.70), and Zambia (-1.26) - recorded lower rates than Jamaica. Excluding Russia and a few sub-Saharan African countries, the well-being for early-stage Jamaican entrepreneurs (-0.42) was the lowest among all 70 countries. Similar results were obtained for Jamaican established business owners (-0.44).

Indicators

Moreover, Jamaica recorded the lowest in Latin America and the Caribbean in the following four indicators of well-being:

(i) Opportunity early-stage entrepreneurship rate (-0.44)

(ii) Necessity early-stage entrepreneurship (-0.37), male total-early stage entrepreneurial activity (-0.23) and female total-early stage entrepreneurial activity TEA (-0.63). For all 70 countries, only women entrepreneurs in Russia, Botswana, Malawi, and Zambia, reported lower rates of subjective well-being than Jamaican female entrepreneurs.

Economic development, traditionally, has been measured by financial indicators such as per-capita gross domestic product. Recently, though, the term 'subjective well-being', or 'happiness', has increasingly been introduced to measure economic development.

Subjective well-being relates to the ways in which people experience the quality of their lives. It is a combination of satisfaction with life, balance between work and life, and job satisfaction. Subjective well-being was measured in the GEM Report using the Satisfaction with Life Scale (SWLS), a five-item instrument that measures cognitive judgements of satisfaction with one's life. This scale, first published in 1985 in the Journal of Personality Assessment, is freely available and credit is given to its architects Ed Diener, Robert Emmons, Randy Larsen and Sharon Griffin.

To construct the scale, the following five items are posed using a five-point scale from 1, 'Strongly Agree', to 5, 'Strongly Disagree': (i) In most ways, my life is close to my ideal; (ii) The conditions of my life are excellent; (iii) I am satisfied with my life; (iv) So far, I have obtained the important things I want in life; and, (v) If I could live my life again, I would not change anything.

Although the results of the GEM Survey are exploratory, they show initial evidence that involvement in entrepreneurship is related to one's own evaluation of subjective well-being. In all 70 countries, persons involved entrepreneurially demonstrated higher rates of well-being compared to individuals who were not. Additionally, entrepreneurs in established businesses exhibited higher rates of well-being than their counterparts in early-stage entrepreneurial activities globally. This is perhaps so because of the great pressures, uncertainties, and varied challenges that young businesses have to endure to stay afloat and sustain themselves in the early months (or years) of their operations.

Necessity-driven entrepreneurs and opportunity-based entrepreneurs were also examined in terms of well-being. A necessity-driven entrepreneur is involved in entrepreneurship because no other option for work exists. On the other hand, an opportunity-based entrepreneur is one who (i) claims to be driven by opportunity, as opposed to finding no other option for work; and (ii) indicates that the main driver for being involved entrepreneurially is to become independent or to increase income.

The overall GEM results confirmed that opportunity-based business persons exhibited higher rates of subjective well-being than necessity-driven entrepreneurs. In factor-driven countries (that is, the poorest group of countries), necessity-based entrepreneurs displayed the lowest rates of well-being. Interestingly, there is only a small difference in scores between opportunity-based entrepreneurs in innovation-driven and efficiency-driven economies (as defined below).

Efficiency-driven economy

The World Economic Forum's Global Competitiveness Reports categorise all countries under three headings: factor-driven, efficiency-driven and innovation-driven. A country is grouped as factor-driven if it has a GDP per capita of less than US$2,000 and its mineral exports as a proportion of its overall exports exceed 70 per cent on average over the last five years. An efficiency-driven economy is one that has a GDP per capita of between US$3,000 and US$8,999, and mineral exports as a fraction of total exports generally register less than 70 per cent. Lastly, a country is classified as being innovation-driven if its GDP per capita is greater than US$17,000. According to the above specifications, Jamaica was classified as an efficiency-driven state in 2013.

The GEM Global Report also examined well-being according to gender. Female entrepreneurs in innovation-driven economies reported higher levels of subjective well-being (0.25) than those in efficiency-driven countries (0.15), while those in factor-driven countries recorded a negative rate (-0.38). Moreover, the poorest countries in the world, such as those in sub-Saharan Africa, have the lowest rates of subjective well-being supporting the results of the 2012 and 2013 World Happiness Index edited by John Helliwell, Richard Layard and Jeffrey Sachs.

The first World Happiness Report published in April 2012 had specified that "Most people agree that societies should foster the happiness of their citizens ... . Yet most people probably believe that happiness is ... something to be pursued individually rather than as a matter of national policy ... . That, indeed, has been the traditional view. Yet, the evidence is changing this view rapidly." The report added: "Asking people whether they are happy or satisfied with their lives offers important information about the society. It can signal underlying crises or hidden strengths. It can suggest the need for change."

The GEM 2013 Global Report is recommended reading for policymakers, public-sector workers, academics, students, and business persons. The report may be accessed at www.gemconsortium.org.

Additionally, the Global Entrepreneurship Monitor 2013 Jamaica Report will be launched on June 25 at the Jamaica Conference Centre. Information on the launch may be accessed at http://www.utech.edu.jm/gem_conf/. Earlier GEM Jamaica reports are freely available at www.gemcaribbean.org.

Dr Girjanauth Boodraj is a GEM researcher and associate professor of the Economics Division, University of Technology, Jamaica. Email feedback to columns@gleanerjm.com and gboodraj@gmail.com.