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Cognitive and non-cognitive traits and the intergenerational transmission of socioeconomic inequality

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  • Rohde, Nicholas
  • Trivedi, Pravin
  • Tang, K.K.
  • Rao, Prasada

Abstract

This paper studies the roles of cognitive and non-cognitive characteristics in a standard Roemerian Inequality of Opportunity (IOP) model. Using Australian microdata, we model the effects of individuals’ backgrounds and their psychological traits on two adult income variables. We find that measurable psychological traits (intelligence, locus of control, big five personality traits) are slightly more important than background characteristics (such as race, gender, social class at birth) in explaining income disparities. However, the fraction of IOP confounded by psychological factors is small (11%–12%), which suggests that background inequalities do not meaningfully reflect differences in cognitive or non-cognitive ability.

Suggested Citation

  • Rohde, Nicholas & Trivedi, Pravin & Tang, K.K. & Rao, Prasada, 2023. "Cognitive and non-cognitive traits and the intergenerational transmission of socioeconomic inequality," Journal of Economic Psychology, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:joepsy:v:97:y:2023:i:c:s0167487023000363
    DOI: 10.1016/j.joep.2023.102635
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    More about this item

    Keywords

    Income inequality; Inequality of opportunity; Intergenerational mobility; Personality;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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