By Zhao Hao

In 2010, an article in The Economist proclaimed that happiness over the course of life follows a “U-bend” curve, and people get happier as they get older beyond middle age. Anchored in many social surveys, this article pointed out that while people tend to be cheerful in their youth, their sense of happiness goes downhill until they reach a nadir commonly known as a mid-life crisis. Following this, however, as people move towards old age, their happiness may once again begin to increase. Even after removing variables such as income level, employment status, and number of offspring, this “U-shaped happiness curve” remains, implying that people’s happiest times may in fact begin at around age 46.

In a paper published in 2021 in the Journal of Business Venturing, I presented findings revealing a “U-bend” in entrepreneurial success similar to that which we see in measures of happiness over the course of life. My study uniquely focused on entrepreneurs, measuring their success through both financial metrics and their subjective sense of accomplishment. Contrary to popular narratives that often celebrate young founders like Microsoft’s Bill Gates and JD.com’s Liu Qiangdong, who launched their groundbreaking enterprises in their university days, the age spectrum of successful entrepreneurs is remarkably diverse. For instance, Jack Ma was 35 when he established Alibaba; Zong Qinghou founded China's leading beverage maker Wahaha at 44; Colonel Sanders was 65 when he founded KFC; and Chu Shijian began his venture Chu’s Oranges at the age of 75.

After compiling empirical data from hundreds of English academic reports, I found a discernible “U-bend”: young entrepreneurs tend to experience a decline and hit a nadir at an average age of 42, after which success rate gradually recovers. This finding intriguingly aligns with a report from the Wharton School pinpointing the average age of American entrepreneurs at precisely age 42. If we consider this age distribution to follow a typical bell-shaped curve, then a significant number of entrepreneurs are either approaching or amid their career nadir. Conversely, while older entrepreneurs may experience slower financial growth than their younger counterparts, they often exhibit higher levels of sense of achievement and satisfaction. In other words, even if the financial performance of their enterprises is comparable, older entrepreneurs are more likely to derive happiness from their endeavors.

While happiness and financial growth are not synonymous, they often reinforce each other. A mentally resilient and optimistic entrepreneur is generally more effective in steering their business toward growth and success. Consistent financial success in turn tends to bolster an entrepreneur’s sense of well-being and optimism, spurring them to invest more and seek further growth opportunities. However, this interrelation can sometimes spiral into a negative loop. An entrepreneur mired in dissatisfaction or blinded by frustration can inadvertently alienate others, making it challenging to regain positive momentum. In such scenarios, entrepreneurs must adjust their mindset first to positively influence their team and enhance business performance. Moreover, it’s important to recognise that most entrepreneurs don’t embark on this arduous journey solely for financial gain; the pursuit of happiness is often their ultimate goal. From this perspective, older entrepreneurs emerge as a group worthy of respect and admiration given their prioritising of happiness over money.

Constrained by data limitations, my research could not rigorously verify why entrepreneurs feel happier after middle age, but I’ve summarised various psychological, sociological, and business operation factors that I believe can explain the career nadirs described above and subsequent upswings.

Psychologically speaking, aging influences individuals in four distinct ways. Firstly, there’s the factor of loss. In transitioning from youth to middle age, individuals often face a decline in physical vitality, youthful appearance, spirit of adventure, and fluid intelligence, such as quick memorisation skills. This inevitably fosters anxiety and diminished success rates. The following three factors, however, can mitigate the adverse impacts of loss.

The second factor, growth, leads to maturity, which comes with an enhancement in crystallised intelligence – accrued experience and wisdom. This in turn bolsters problem-solving skills and appreciation for life’s subtler joys, both personally and professionally.

The third factor is reorganisation. As awareness of life’s finitude grows, priorities shift. Older individuals, and by extension older entrepreneurs, tend to focus more on the present, eschewing long-term, high-risk ventures in favour of stable profits. Their competitive edge softens, replaced by a preference for stability, mentorship, and community contribution, which in turn garners gratitude and respect.

The fourth factor is transformation in mindset and emotion. With life experience, middle-aged and elderly entrepreneurs tend to have stronger ability to regulate their emotions, which allows them to handle setbacks without being overwhelmed by anger or sadness. This attribute is vividly demonstrated in the case of New Oriental's Founder and Chairman Yu Minhong, who, amidst the upheaval faced by educational companies, not only responsibly wound down New Oriental’s primary and secondary school education business, donating all the desks and chairs, but also ventured into livestream e-commerce. His approach to adversity, marked by strategic decision-making and emotional resilience, exemplifies the wisdom and stability characteristic of older entrepreneurs.

Sociologically, an individual’s economic and physical consumption both increase as one starts a family. In this case, their sense of happiness will decrease, resulting in the downward trend on the left side of the U-bend curve. The burden tends to intensify in middle age, a period frequently characterised by the dual responsibility of caring for aging parents and raising young children. This stage is particularly difficult for entrepreneurs as their expectations and personal goals often escalate during this time. On one hand, they typically work more than 12 hours a day, without the benefits of paid leave or compensatory time off that employees of organisations might enjoy. On the other hand, they also grapple with the dual pressures of work and family responsibilities, stretching their resources in multiple directions.

Additionally, marital breakdown, if it occurs, can exacerbate anxiety and depression. Upon reaching their 40s, people often experience a pivotal shift; their children may leave home for university, significantly reducing family obligations. This change allows them to redirect their energies more effectively to deal with life, work, and marital issues. Even a partial resolution of these issues can lead to a noticeable increase in happiness compared to earlier life stages. Stress from family responsibilities can have an even more pronounced impact on female entrepreneurs because their male partners are less inclined to sacrifice their own careers for family care or to support the entrepreneurial endeavours of their spouses. This contrasts with male entrepreneurs, who often take their wives’ sacrifices for granted.

From a business operation perspective, young entrepreneurs typically begin business ventures with limited industry knowledge and organisational management experience. They often make decisions based on intuition, which entails higher risks and results in more dramatic fluctuations in business success. On the contrary, older entrepreneurs often have accumulated financial savings that can be utilized as startup capital, and may possess fixed assets that can be leveraged for securing loans, which alleviates the immediate pressure for fundraising and being subject to others in the early stage of entrepreneurship.

Furthermore, they tend to launch businesses in fields related to their previous professional experiences, such as industries upstream or downstream of their original sector. Hence, they can capitalise on their existing skills, established reputation, and interpersonal networks to acquire core technologies, win customer orders, and recruit talent. This significantly lowers the risks of their business ventures, leading to greater stability. Additionally, compared to younger people, older entrepreneurs have more realistic and achievable expectations for their lives and careers. Fulfilling these expectations might be easier, thereby enhancing their sense of happiness.

A significant hurdle for older entrepreneurs is the external bias they encounter. In many parts of the world, including Silicon Valley, older entrepreneurs can experience explicit or implicit discrimination, being considered ignorant of new technologies or not as motivated as their younger counterparts. However, visionary older entrepreneurs often find ways to bridge these gaps by hiring skilled employees and collaborating with younger partners. Investors and public resource decision makers that fail to see the unique strengths of older entrepreneurs may miss out on business opportunities and go against the principles of equitable resource distribution.

However, the investors’ preference for younger entrepreneurs may not always stem from age discrimination, but sometimes could also be attributed to so-called “reverse ageism.” Young entrepreneurs, who are in need of funding and eager to make their mark, might be more willing to sell shares at lower prices. This perceived malleability makes them more attractive to investors, as it can facilitate profitable equity deals. The subsequent downhill journey and grievances of these young entrepreneurs over the next couple of years, then, are hardly surprising.

While insightful, the U-bend theory is contingent on specific assumptions. Its applicability is limited when considering very elderly individuals, who often face health challenges associated with advanced aging. Additionally, the theory may not hold in third-world countries with insufficient social welfare systems. In these contexts, elderly individuals, particularly those without adequate savings, are often compelled to work beyond retirement to meet basic living needs. The prospect of starting a business is even less feasible as health and economic hardships can substantially diminish happiness and well-being.

The empirical research surrounding the U-bend phenomenon, including my study, predominantly relies on data from outside China. Does the same phenomenon exist in contemporary China? Known for their industrious nature, Chinese people have historically been among the tap ranked in the globe in terms of per capita savings rates. Despite being well-positioned financially in their later years, China’s unique culture of bringing up grandchildren after retirement may extend elders’ “working hours” and add to their physical burden. Furthermore, their financial burden will greatly increase if their adult children depend on their financial support to buy a house in an urban centre. Therefore, the happiness of Chinese older adults might not be much higher than in their middle age, potentially altering or even negating the expected upward trajectory on the right side of the U-bend.

Conversely, since happiness is a subjective psychological state, could the typical Chinese grandparenting role bring additional happiness? Or do they take pride in the self-sacrifice of supporting children, ending up tired yet happy enough to sustain the upward turn in the U-bend? China’s dense population gives rise to unique social phenomena like public square dancing and card rooms, where numerous elders stay active. Could engaging in these activities help unhappy entrepreneurs reduce feelings of loneliness and enhance their sense of happiness? These intriguing questions will have to be left for future research.

China is entering an aging society, which is often seen as an economic and social burden by many scholars. This perspective is mirrored in individual apprehension about entering the later years of life. However, as The Economist article states, “Mankind is wrong to dread ageing. Life is not a long slow decline from sunlit uplands towards the valley of death. It is, rather, a U-bend.” One is only halfway through their lives by the age of 40, as age-related constraints on entrepreneurs are increasingly less significant. With age, the likelihood of experiencing happiness grows. CEIBS students in their 40s and 50s should find encouragement by this prospect, because the most challenging moments of their lives may well be behind them, or at least may soon pass. Thus, my message for them, and indeed for anyone apprehensive about aging, is clear: do not give up!

Zhao Hao is a Professor of Management at CEIBS. For more on his teaching and research interests, please visit his faculty profile here.