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The Relationship Between Economic Preferences and Psychological Personality Measures

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  • Becker, Anke

    ()
    (University of Bonn)

  • Deckers, Thomas

    ()
    (University of Bonn)

  • Dohmen, Thomas

    ()
    (University of Bonn)

  • Falk, Armin

    ()
    (University of Bonn)

  • Kosse, Fabian

    ()
    (University of Bonn)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6470.

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Length: 44 pages
Date of creation: Apr 2012
Date of revision:
Publication status: published online in: Annual Review of Economics, 2012, [Review in Advance]
Handle: RePEc:iza:izadps:dp6470

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Keywords: risk preference; time preference; social preferences; Big Five; locus of control;

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References

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  1. 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.
  2. 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.
  3. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  4. Borghans, Lex & Duckworth, Angela Lee & Heckman, James J. & Weel, Bas ter, 2008. "The Economics and Psychology of Personality Traits," MERIT Working Papers 010, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  5. Armin Falk & Urs Fischbacher, . "A Theory of Reciprocity," IEW - Working Papers 006, Institute for Empirical Research in Economics - University of Zurich.
  6. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP): Scope, Evolution and Enhancements," SOEPpapers on Multidisciplinary Panel Data Research 1, DIW Berlin, The German Socio-Economic Panel (SOEP).
  7. Fehr, Ernst, 2008. "On the Economics and Biology of Trust," IZA Discussion Papers 3895, Institute for the Study of Labor (IZA).
  8. Dohmen Thomas & Falk Armin & Huffman David & Sunde Uwe, 2009. "Are Risk Aversion and Impatience Related to Cognitive Ability?," ROA Research Memorandum 007, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  9. Lex Borghans & Bart H.H. Golsteyn & James J. Heckman & Huub Meijers, 2009. "Gender Differences in Risk Aversion and Ambiguity Aversion," NBER Working Papers 14713, National Bureau of Economic Research, Inc.
  10. Dohmen Thomas & Falk Armin & Huffman David & Sunde Uwe, 2008. "Homo Reciprocans: Survey Evidence on Behavioural Outcomes," ROA Research Memorandum 007, Maastricht University, Research Centre for Education and the Labour Market (ROA).
  11. Almlund, Mathilde & Duckworth, Angela Lee & Heckman, James J. & Kautz, Tim, 2011. "Personality Psychology and Economics," IZA Discussion Papers 5500, Institute for the Study of Labor (IZA).
  12. James J. Heckman, 2011. "Integrating Personality Psychology into Economics," NBER Working Papers 17378, National Bureau of Economic Research, Inc.
  13. Catherine C. Eckel & Philip J. Grossman, 2002. "Sex Differences and Statistical Stereotyping in Attitudes Toward Financial Risk," Monash Economics Working Papers archive-03, Monash University, Department of Economics.
  14. 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.
  15. Falk, Armin & Fehr, Ernst & Fischbacher, Urs, 2005. "Driving Forces Behind Informal Sanctions," IZA Discussion Papers 1635, Institute for the Study of Labor (IZA).
  16. 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).
  17. Eckel, Catherine C. & Grossman, Philip J., 1996. "Altruism in Anonymous Dictator Games," Games and Economic Behavior, Elsevier, vol. 16(2), pages 181-191, October.
  18. 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.
  19. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  20. 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.
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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
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