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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. Armin Falk & Ernst Fehr & Urs Fischbacher, 2005. "Driving Forces Behind Informal Sanctions," Econometrica, Econometric Society, Econometric Society, vol. 73(6), pages 2017-2030, November.
  2. Borghans Lex & Lee Duckworth Angela & Heckman James J. & Weel Bas ter, 2008. "The Economics and Psychology of Personality Traits," ROA Research Memorandum, Maastricht University, Research Centre for Education and the Labour Market (ROA) 001, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  3. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, Springer, vol. 10(2), pages 171-178, June.
  4. 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, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
  5. Dohmen, Thomas J. & Falk, Armin & Huffman, David & Sunde, Uwe & Schupp, Jürgen & Wagner, Gert G., 2011. "Individual risk attitudes: Measurement, determinants, and behavioral consequences," Munich Reprints in Economics, University of Munich, Department of Economics 20048, University of Munich, Department of Economics.
  6. Dohmen, Thomas & Falk, Armin & Huffman, David B. & Sunde, Uwe, 2007. "Are Risk Aversion and Impatience Related to Cognitive Ability?," IZA Discussion Papers 2735, Institute for the Study of Labor (IZA).
  7. Borghans Lex & Golsteyn Bart & Heckman James & Meijers Huub, 2009. "Gender Differences in Risk Aversion and Ambiguity Aversion," ROA Research Memorandum, Maastricht University, Research Centre for Education and the Labour Market (ROA) 005, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  8. Thomas Dohmen & Armin Falk & David Huffman & Uwe Sunde, 2009. "Homo Reciprocans: Survey Evidence on Behavioural Outcomes," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 119(536), pages 592-612, 03.
  9. Heckman, James J., 2011. "Integrating Personality Psychology into Economics," IZA Discussion Papers 5950, Institute for the Study of Labor (IZA).
  10. Catherine C. Eckel & Philip J. Grossman, 2002. "Sex Differences and Statistical Stereotyping in Attitudes Toward Financial Risk," Development Research Unit Working Paper Series, Monash University, Department of Economics archive-03, Monash University, Department of Economics.
  11. Ernst Fehr, 2008. "On the Economics and Biology of Trust," SOEPpapers on Multidisciplinary Panel Data Research 154, DIW Berlin, The German Socio-Economic Panel (SOEP).
  12. 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.
  13. Manski, Charles F., 2002. "Identification of decision rules in experiments on simple games of proposal and response," European Economic Review, Elsevier, Elsevier, vol. 46(4-5), pages 880-891, May.
  14. Falk, Armin & Fischbacher, Urs, 2006. "A theory of reciprocity," Games and Economic Behavior, Elsevier, Elsevier, vol. 54(2), pages 293-315, February.
  15. Michael Daly & Liam Delaney & Colm P. Harmon, 2009. "Psychological and Biological Foundations of Time Preference," Journal of the European Economic Association, MIT Press, MIT Press, vol. 7(2-3), pages 659-669, 04-05.
  16. 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.
  17. Eckel, Catherine C. & Grossman, Philip J., 1996. "Altruism in Anonymous Dictator Games," Games and Economic Behavior, Elsevier, Elsevier, vol. 16(2), pages 181-191, October.
  18. Dohmen, Thomas J. & Falk, Armin & Huffman, David & Sunde, Uwe, 2008. "Representative trust and reciprocity: Prevalence and determenants," Munich Reprints in Economics, University of Munich, Department of Economics 20058, University of Munich, 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. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
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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. Almås, Ingvild & Cappelen, Alexander W. & Salvanes, Kjell G. & Sørensen, Erik Ø. & Tungodden, Bertil, 2014. "Willingness to Compete: Family Matters," Discussion Paper Series in Economics, Department of Economics, Norwegian School of Economics 3/2014, Department of Economics, Norwegian School of Economics.
  2. James J. Heckman & Tim Kautz, 2013. "Fostering and Measuring Skills: Interventions That Improve Character and Cognition," NBER Working Papers 19656, National Bureau of Economic Research, Inc.
  3. Krause, Annabelle, 2013. "Don’t worry, be happy? Happiness and reemployment," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 96(C), pages 1-20.
  4. Tim Friehe & Hannah Schildberg-Hörisch, 2014. "The Individual and Joint Performance of Economic Preferences, Personality, and Self-Control in Predicting Criminal Behavior," CESifo Working Paper Series 4622, CESifo Group Munich.
  5. Lundberg, Shelly, 2010. "Personality and Marital Surplus," IZA Discussion Papers 4945, Institute for the Study of Labor (IZA).
  6. 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.
  7. Dohmen, Thomas, 2014. "Behavioural Labour Economics: Advances and Future Directions," IZA Discussion Papers 8263, Institute for the Study of Labor (IZA).
  8. Lundberg, Shelly, 2013. "Educational Inequality and the Returns to Skills," IZA Discussion Papers 7595, Institute for the Study of Labor (IZA).
  9. Lundberg, Shelly, 2014. "Skill Disparities and Unequal Family Outcomes," IZA Discussion Papers 8346, Institute for the Study of Labor (IZA).
  10. Thiel, Hendrik & Thomsen, Stephan L., 2011. "Noncognitive skills in economics: Models, measurement, and empirical evidence," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 09-076 [rev.], ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  11. Krause, Annabelle, 2012. "Don't Worry, Be Happy? Happiness and Reemployment," IZA Discussion Papers 7107, Institute for the Study of Labor (IZA).
  12. Thomas Deckers & Armin Falk & Hannah Schildberg-Hörisch, 2013. "Nominal or Real?: The Impact of Regional Price Levels on Satisfaction with Life," SOEPpapers on Multidisciplinary Panel Data Research 560, DIW Berlin, The German Socio-Economic Panel (SOEP).
  13. 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).
  14. LEE SunYoun & OHTAKE Fumio, 2014. "The Effects of Personality Traits and Behavioral Characteristics on Schooling, Earnings, and Career Promotion," Discussion papers, Research Institute of Economy, Trade and Industry (RIETI) 14023, Research Institute of Economy, Trade and Industry (RIETI).

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