“…To inform our empirical analysis, we appeal to a theoretical model of self-employment and entrepreneurship similar to Kihlstrom and Laffont (1979), where the choice to start a firm is a function of an individual’s degree of risk aversion. As ex-incarcerees/convicts presumably made choices—the commission of a crime—that increased the relative risk of losing of their valuable freedom (Abrams & Rohlfs, 2011), and/or life (May, Hemenway, Oen, & Pitts, 2000), it suggests that they are less risk averse and more willing to engage gambles and lotteries relative to individuals who have never been incarcerated/convicted for a crime. Viewing the decision to be a self-employed entrepreneur as a gamble or lottery with stochastic payoffs, the optimal choice of an individual to be self-employed can be sensitive to the degree of individual risk aversion (Cramer et al, 2002) as evidenced by Fairlie and Holleran (2012) and Hvide and Panos (2014) for individuals in general, and for illicit drug dealers in particular (Fairlie, 2002) suggests that criminals are relatively less risk averse, and perhaps relatively well-suited for entrepreneurship (Levine & Rubinstein, 2017).…”