Entrepreneurship: The Illegal Move Economics Can’t Explain

Get something straight before we waste time arguing over whether Elon Musk is an economist or Richard Branson is a glorified small business owner. Entrepreneurship, as I define it (and as anyone serious about economics should), isn’t just owning a business. It’s not opening a vape shop on Main Street, corporate innovation, or running an Etsy store for ironic crocheted coasters. Entrepreneurship is the practice of people who fundamentally create new value by bending markets, behavior, and belief to their will. It is invention in motion. It is irrational confidence weaponized by pragmatism. And it’s rare. The economics of entrepreneurship plays a crucial role in understanding this process.

Real entrepreneurs – the Bransons, Musks, Jobs, or those building category-defining startups in garages or labs right now – are not operators. They’re originators. They are people who do what others say shouldn’t be done, not because they’re rebellious, but because they see it differently and can’t not try. That distinction matters. A business owner optimizes. An entrepreneur destabilizes.

Universities and economic development offices increasingly position their work and curriculum as fostering or serving entrepreneurs, and yet what they tend to sell is a promise that they can make you an entrepreneur, more than doing the work that enables entrepreneurs.

Understanding the economics of entrepreneurship can provide insights into how entrepreneurs navigate challenges and seize opportunities in a constantly evolving market.

“By the time I began to ‘teach’ entrepreneurship, I had come to realize that it is a spectrum: at one end are people who would never voluntarily want to start their own business, at the other end are Richard Branson and Elon Musk…and in the middle is everyone else. The goal of entrepreneurship programs, therefore, is to help move people one or two spots along the spectrum.” – David S. Rose; Founder & Executive Chairman of Gust

So, here’s the question: Is this kind of disruptive human behavior a subset of economics?
(bear with me, I was asked, giving grounds to this article)

A lot has been misplaced, heck, social media counts as a news source, so let’s explore the question.

Economics Is a System. Entrepreneurship Is the Glitch.

Economics, in the academic and policy sense, is the study of how scarce resources are allocated. Supply, demand, labor markets, incentives, utility curves, macro and micro equilibrium; all neat frameworks for understanding how people behave in the face of constraints.

Entrepreneurship, by contrast, is not about navigating those constraints. It’s about rendering them obsolete. Musk doesn’t ask how to maximize utility given a carbon-constrained world, he builds electric cars and rockets. Gen Z on TikTok is going about creating new ways of monetizing attention faster than the Bureau of Labor Statistics can update job codes.

Entrepreneurs aren’t solving within the system; they’re rewriting the system. They do it through the economy.

So, we have an edge case: Entrepreneurship expresses itself through economic mechanisms, but it is not governed by economic rules. It plays by the rules only until it can afford to change them. It is a behavior pattern, an economic mutation that survives only when the environment (the economy) allows it to thrive.

While we can call entrepreneurship a subset of economics for convenience, the truth is that it is more of an emergent behavior, a black swan in the behavioral flowchart of resource allocation, Gen X overlooked among generations that do both play by the rules and break them; it says “what rules?” or even “screw the roles.” Useful to economists, essential to GDP growth, but not reducible to rational incentives or systemic equilibrium.

It’s a bug in the matrix. And thank God for the bugs.

Speaking of: The Gen X Variable – A Generation of Reluctant Economists

You want to understand why the consumer internet exploded in the late ’90s and early 2000s? Why Craigslist, PayPal, Amazon, and Google weren’t government-funded research projects or Fortune 500 subsidiaries?

Look to Gen X. The whatever generation overlooked in memes.

This was the generation raised by Reaganomics, MTV, and divorce. They didn’t trust institutions because those institutions had already failed them. They weren’t trying to burn the system down like Boomers with protest signs nor storm the gates like Millennials with hashtags. Gen Xers just opted out. Quietly. Cunningly.

They didn’t cry about monopolies; they built eBay.
They didn’t whine about the music industry; they downloaded Napster.
They didn’t complain about being ignored by politics nor worry about the bias of mainstream media; they started blogs and forums and forums about blogs.

Gen X was the perfect vector for entrepreneurial thinking, not because they loved business, but because they distrusted bureaucracy. They weren’t playing the game. They were finding the backdoors and cheat codes. And they were the first generation with just enough tech and cynicism to pull it off at scale.

That’s why it’s useful to view entrepreneurship as a behavior nested within economic systems. Because the economic context (stagnant wages, regulatory bottlenecks, collapsing trust in institutions) is what allowed (or rather, forced) Gen X to invent their own economics. One that didn’t rely on jobs, pensions, or gatekeepers.

Personality Types and the Economic Misfit

Let’s not ignore the psychological angle, either. The Big Five personality traits correlate strongly with entrepreneurial success: high openness to experience, moderate conscientiousness, low agreeableness. In layman’s terms? Entrepreneurs are curious, independent, and slightly abrasive. They’re the people who would rather ask forgiveness than permission—except they never intended to ask either.

Sari Pekkala Kerr with Wellesley College, William R. Kerr of Harvard Business School & National Bureau of Economic Research, and Tina Xu with Wellesley College, have a great paper here, “students who display certain Big-5 traits (i.e., more open to new experiences, more conscientious, more extraverted, and less neurotic) and higher levels of ESE, internal LOC, and need for achievement are the group most likely to enter entrepreneurship after graduating from university.”

Combine that with generations increasingly raised with access to the tools of production (iPhones, code, Canva, and AI) and you have a recipe for rebellion through productivity. It’s no wonder Gen Z has a startup culture that seems less interested in IPOs and more interested in DAOs, collectives, and “building in public.”

Are these traits shaped by economics? Or are they a reaction to it? To a great extent they’re shaped culturally as well as by economics; and that’s where, I posit, the argument for entrepreneurship being a “subset” of economics falls apart. Economic environments can nurture or punish entrepreneurship, but they don’t cause it. Much like art flourishes under some regimes and withers under others, entrepreneurship is culture-driven and identity-bound. You don’t teach it in a class. You uncover it in a crisis.

So… Is Entrepreneurship a Subset of Economics?

Technically? Sure. If you’re the type who thinks the IRS should define what counts as innovation, go ahead and categorize entrepreneurship under the economic umbrella.

But practically? It’s like saying comedy is a subset of communication (which is ironic to point out since I’ve proposed comedy is a leading indicator of startups). You can put comedy under communication but you’re missing the point. Comedy is a form of rebellion. It breaks tension. It shifts power dynamics. So does entrepreneurship.

If we treat entrepreneurship as merely a component of economics, we undersell what it actually is: a human impulse to reimagine systems. And in that light, it becomes far more than a niche field of study or a career path. It becomes essential to progress.

The question, then, isn’t whether entrepreneurship is a subset of economics. It’s whether economics without entrepreneurship is even worth studying as what we’re all seeking is progress within whatever system we define.

If you’re shaping education policy, writing startup law, or allocating venture capital—are you treating entrepreneurs like economic actors, or like the social, cultural, and psychological anomalies they are?

Because if you’re using traditional economic tools to understand innovation, you’re showing up to a gunfight with a calculator. Instead ask what are you doing that helps break the rules?

Bonus points if you can name the painting

And share why it fits