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The Relationship between Economic Preferences and Psychological Personality Measures

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  • Anke Becker
  • Thomas Deckers
  • Thomas Dohmen
  • Armin Falk
  • Fabian Kosse

Abstract

Although both economists and psychologists seek to identify determinants of heterogeneity in behavior, they use different concepts to capture them. In this review we first analyze the extent to which economic preferences and psychological concepts of personality - such as the Big Five and locus of control - are related. We analyze data from incentivized laboratory experiments and representative samples and find only low degrees of association between economic preferences and personality. We then regress life outcomes - such as labor market success, health status and life satisfaction - simultaneously on preference and personality measures. The analysis reveals that the two concepts are rather complementary when it comes to explaining heterogeneity in important life outcomes and behavior.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3785.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3785

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Keywords: risk preference; time preference; social preferences; Locus of Control; Big Five;

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References

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  1. Dohmen, Thomas J & Falk, Armin & Huffman, David & Sunde, Uwe, 2008. "Are Risk Aversion and Impatience Related to Cognitive Ability?," CEPR Discussion Papers 6852, C.E.P.R. Discussion Papers.
  2. Falk, Armin & Fehr, Ernst & Fischbacher, Urs, 2005. "Driving Forces Behind Informal Sanctions," IZA Discussion Papers 1635, Institute for the Study of Labor (IZA).
  3. Borghans, Lex & Golsteyn, Bart H.H. & Heckman, James J. & Meijers, Huub, 2009. "Gender Differences in Risk Aversion and Ambiguity Aversion," IZA Discussion Papers 3985, Institute for the Study of Labor (IZA).
  4. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  5. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2009. "Homo Reciprocans: Survey Evidence on Behavioural Outcomes," Economic Journal, Royal Economic Society, vol. 119(536), pages 592-612, 03.
  6. Falk, Armin & Fischbacher, Urs, 2001. "A Theory of Reciprocity," CEPR Discussion Papers 3014, C.E.P.R. Discussion Papers.
  7. Michael Daly & Liam Delaney & Colm P. Harmon, 2009. "Psychological and Biological Foundations of Time Preference," Journal of the European Economic Association, MIT Press, vol. 7(2-3), pages 659-669, 04-05.
  8. Mathilde Almlund & Angela Lee Duckworth & James J. Heckman & Tim D. Kautz, 2011. "Personality Psychology and Economics," NBER Working Papers 16822, National Bureau of Economic Research, Inc.
  9. Dohmen Thomas & Falk Armin & Huffman David & Sunde Uwe & Schupp Jürgen & Wagner Gert, 2009. "Individual Risk Attitudes: Measurement, Determinants and Behavioral Consequences," ROA Research Memorandum 007, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  10. Eckel, Catherine C. & Grossman, Philip J., 1996. "Altruism in Anonymous Dictator Games," Games and Economic Behavior, Elsevier, vol. 16(2), pages 181-191, October.
  11. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
  12. Manski, Charles F., 2002. "Identification of decision rules in experiments on simple games of proposal and response," European Economic Review, Elsevier, vol. 46(4-5), pages 880-891, May.
  13. Lex Borghans & Angela Lee Duckworth & James J. Heckman & Bas ter Weel, 2008. "The Economics and Psychology of Personality Traits," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
  14. Dohmen, Thomas J. & Falk, Armin & Huffman, David & Sunde, Uwe, 2008. "Representative trust and reciprocity: Prevalence and determenants," Munich Reprints in Economics 20058, University of Munich, Department of Economics.
  15. Ernst Fehr, 2009. "On the economics and biology of trust," IEW - Working Papers 399, Institute for Empirical Research in Economics - University of Zurich.
  16. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  17. Jürgen Schupp & Gert G. Wagner, 2002. "Maintenance of and Innovation in Long-Term Panel Studies: The Case of the German Socio-Economic Panel (GSOEP)," Discussion Papers of DIW Berlin 276, DIW Berlin, German Institute for Economic Research.
  18. Catherine C. Eckel & Philip J. Grossman, 2002. "Sex Differences and Statistical Stereotyping in Attitudes Toward Financial Risk," Development Research Unit Working Paper Series archive-03, Monash University, Department of Economics.
  19. Shane Frederick & George Loewenstein & Ted O'Donoghue, 2002. "Time Discounting and Time Preference: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 351-401, June.
  20. Heckman, James J., 2011. "Integrating Personality Psychology into Economics," IZA Discussion Papers 5950, Institute for the Study of Labor (IZA).
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Papers on Personality and Economics
    by Liam Delaney in Economics and Psychology Research on 2012-04-18 10:30:00
  2. Journal session on personality and economics
    by Liam Delaney in Economics and Psychology Research on 2012-05-04 12:58:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Shelly Lundberg, 2013. "Educational Inequality and the Returns to Skills," Working Papers 2013-017, Human Capital and Economic Opportunity Working Group.
  2. Almås, Ingvild & Cappelen, Alexander W. & Salvanes, Kjell G. & Sørensen, Erik Ø. & Tungodden, Bertil, 2014. "Willingness to Compete: Family Matters," Discussion Paper Series in Economics 3/2014, Department of Economics, Norwegian School of Economics.
  3. Lundberg, Shelly, 2010. "Personality and Marital Surplus," IZA Discussion Papers 4945, Institute for the Study of Labor (IZA).
  4. Deckers, Thomas & Falk, Armin & Schildberg-Hörisch, Hannah, 2013. "Nominal or Real? The Impact of Regional Price Levels on Satisfaction with Life," IZA Discussion Papers 7345, Institute for the Study of Labor (IZA).
  5. Krause, Annabelle, 2013. "Don’t worry, be happy? Happiness and reemployment," Journal of Economic Behavior & Organization, Elsevier, vol. 96(C), pages 1-20.
  6. Dohmen, Thomas, 2014. "Behavioural Labour Economics: Advances and Future Directions," IZA Discussion Papers 8263, Institute for the Study of Labor (IZA).
  7. Daniel D. Schnitzlein & Jens Stephani, 2013. "Locus of Control and Low-Wage Mobility," SOEPpapers on Multidisciplinary Panel Data Research 589, DIW Berlin, The German Socio-Economic Panel (SOEP).
  8. LEE SunYoun & OHTAKE Fumio, 2014. "The Effects of Personality Traits and Behavioral Characteristics on Schooling, Earnings, and Career Promotion," Discussion papers 14023, Research Institute of Economy, Trade and Industry (RIETI).
  9. Friehe, Tim & Schildberg-Hörisch, Hannah, 2014. "The Individual and Joint Performance of Economic Preferences, Personality, and Self-Control in Predicting Criminal Behavior," IZA Discussion Papers 7894, Institute for the Study of Labor (IZA).
  10. Benjamin Volland, 2013. "Conscientious consumers? Preferences, personality and expenditure in the UK," Papers on Economics and Evolution 2013-05, Philipps University Marburg, Department of Geography.
  11. Heckman, James J. & Kautz, Tim, 2013. "Fostering and Measuring Skills: Interventions That Improve Character and Cognition," IZA Discussion Papers 7750, Institute for the Study of Labor (IZA).
  12. Thiel, Hendrik & Thomsen, Stephan L., 2011. "Noncognitive skills in economics: Models, measurement, and empirical evidence," ZEW Discussion Papers 09-076 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  13. Krause, Annabelle, 2012. "Don't Worry, Be Happy? Happiness and Reemployment," IZA Discussion Papers 7107, Institute for the Study of Labor (IZA).

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