How Wealth and Age Interact to Affect Entrepreneurship

Philippe d’Astous, Vyacheslav Mikhed, Sahil Raina and Barry Scholnick
Working paper #17
Retirement and Savings Institute – February 2025

In this working paper, the authors analyze how a sudden increase in wealth influences entrepreneurship depending on an individual’s age. Using data from lottery winnings and Canadian tax records, they find that the effects vary significantly by age.
Younger individuals (under 55) tend to use this financial windfall to start a business or improve the performance of their existing business. In contrast, older individuals (55 and over) are more likely to reduce their entrepreneurial activity or even close their business after a significant lottery win. This difference is primarily driven by life choices: while younger individuals see wealth as an investment opportunity, older individuals prefer to use it to reduce their workload or retire.
Additionally, the study shows that both younger and older individuals decrease their wage labor after receiving a financial windfall. However, younger individuals compensate for this reduction by increasing their entrepreneurial activities. This distinction highlights the importance of considering age when analyzing the impact of wealth on entrepreneurship.