Smart, rule-abiding teenagers are less likely to become successful entrepreneurs than equally intelligent teens who engage in illicit activities, according to new research.

In a working paper published by the National Bureau of Economic Research, economists Ross Levine and Yona Rubinstein examine what it takes to become an entrepreneur and whether entrepreneurship pays off in terms of wages. Using data from the March Supplements of the U.S. Census Bureau‘s Current Population Survey and the National Longitudinal Survey of Youth, they look at the cognitive, noncognitive and family traits of self-employed individuals who have incorporated businesses and compare it to the characteristics of salaried workers and the self-employed who don’t have incorporated businesses.

Previous research on entrepreneurs has looked at the entire population of self-employed workers, which, Messrs. Levine and Rubinstein say, doesn’t distinguish between a hot dog vendor and Michael Bloomberg. The process of incorporating a business — making it a separate entity under the law — can be lengthy and expensive. The economists argue that self-employed workers who incorporate their businesses show the intent and agency to start a new, profitable venture and are therefore more representative of entrepreneurship than those who haven’t incorporated their businesses. Furthermore, not many self-employed workers switch from unincorporated to incorporated and vice versa, the economists say, providing more support for the idea that incorporation coincides with an entrepreneurial venture. “The nature of the business tells you about the nature of the person,” says Mr. Rubinstein.