Incentive-Enhancing Preferences: Personality, Behavior and Earnings
AbstractSuppose there is a principal-agent relationship between employer and employee in which effort is not contractible, but is elicited through employer incentive mechanisms. We term preferences that allow the employer to elicit effort at lower cost incentive enhancing. We analyze how such preferences affect earnings, and then provide evidence that one of the relevant behavioral traits, efficacy, as well as other psychological aspects of individuals, are signifiant influences on earnings. We conclude that measures of cognitive performance are not sufficient indicators of the effectiveness of schools in promoting student labor market success, incentive enhancing preferences are irreducibly heterogeneous, incentive enhancing preferences help explain the persistence of poverty over generations within families and, unlike cognitive skills, incentive-enhancing traits need not be welfare increasing for their bearers.
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Bibliographic InfoPaper provided by Santa Fe Institute in its series Working Papers with number 01-01-004.
Date of creation: Jan 2001
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Other versions of this item:
- Herbert Gintis & Samuel Bowles & Melissa Osborne, 2001. "Incentive-Enhancing Preferences: Personality, Behavior, and Earnings," American Economic Review, American Economic Association, vol. 91(2), pages 155-158, May.
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management
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- Heckman, James J., 2000.
"Policies to foster human capital,"
Research in Economics,
Elsevier, vol. 54(1), pages 3-56, March.
- James J. Heckman, 2000. "Policies to Foster Human Capital," JCPR Working Papers 154, Northwestern University/University of Chicago Joint Center for Poverty Research.
- James J. Heckman, 1999. "Policies to Foster Human Capital," NBER Working Papers 7288, National Bureau of Economic Research, Inc.
- James Heckman, 2000. "Policies to Foster Human Capital," Working Papers 0028, Harris School of Public Policy Studies, University of Chicago.
- Samuel Bowles & Herbert Gintis & Melissa Osborne, 2000. "The Determinants of Earnings: Skills, Preferences, and Schooling," UMASS Amherst Economics Working Papers 2000-07, University of Massachusetts Amherst, Department of Economics.
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- Capitalism. princesses and alienation
by chris dillow in Stumbling and Mumbling on 2011-05-09 14:09:35
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