Incentive-Enhancing Preferences: Personality, Behavior and Earnings

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Incentive-Enhancing Preferences: Personality, Behavior and Earnings

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Samuel Bowles
Herbert Gintis
Melissa Osborne

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Abstract

Suppose 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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Paper provided by Santa Fe Institute in its series Working Papers with number 01-01-004.

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Date of creation: Jan 2001
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Handle: RePEc:wop:safiwp:01-01-004

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Article
- Samuel Bowles & Herbert Gintis & Melissa Osborne, 2001. "Incentive-Enhancing Preferences: Personality, Behavior, and Earnings," American Economic Review, American Economic Association, vol. 91(2), pages 155-158, May. [Downloadable!] (restricted)

This paper has been announced in the following NEP Reports:

NEP-LAB-2001-07-17 (Labour Economics)
NEP-PKE-2001-07-17 (Post Keynesian Economics)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Heckman, James J., 2000. "Policies to foster human capital," Research in Economics, Elsevier, vol. 54(1), pages 3-56, March. [Downloadable!] (restricted)
Other versions:
- James Heckman, 2000. "Policies to Foster Human Capital," Working Papers 0028, Harris School of Public Policy Studies, University of Chicago. [Downloadable!]
- James J. Heckman, 1999. "Policies to Foster Human Capital," NBER Working Papers 7288, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
- James J. Heckman, 2000. "Policies to Foster Human Capital," JCPR Working Papers 154, Northwestern University/University of Chicago Joint Center for Poverty Research.
Samuel Bowles & Herbert Gintis & Melissa Osborne, 2000. "The Determinants of Earnings: Skills, Preferences, and Schooling," Working Papers 2000-07, University of Massachusetts Amherst, Department of Economics. [Downloadable!]

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Ham, Roger & Junankar, Pramod N. (Raja) & Wells, Robert, 2009. "Antagonistic Managers, Careless Workers and Extraverted Salespeople: An Examination of Personality in Occupational Choice," IZA Discussion Papers 4193, Institute for the Study of Labor (IZA). [Downloadable!]
Jon Reiersen, 2004. "Status and Incentives," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 30, pages 121-128. [Downloadable!]
Amelie Constant & Klaus F. Zimmermann, 2007. "Measuring Ethnic Identity and Its Impact on Economic Behavior," SOEPpapers 47, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
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- Amelie Constant & Klaus F. Zimmermann, 2007. "Measuring Ethnic Identity and Its Impact on Economic Behavior," IZA Discussion Papers 3063, Institute for the Study of Labor (IZA). [Downloadable!]
- Amelie Constant & Klaus F. Zimmermann, 2007. "Measuring Ethnic Identity and Its Impact on Economic Behavior," Discussion Papers of DIW Berlin 721, DIW Berlin, German Institute for Economic Research. [Downloadable!]
- Amelie F. Constant & Klaus F. Zimmermann, 2008. "Measuring Ethnic Identity and its Impact on Economic Behavior," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 424-433, 04-05. [Downloadable!] (restricted)
Eric Bettinger & Robert Slonim, 2005. "Using Experimental Economics to Measure the Effects of a Natural Educational Experiment on Altruism," NBER Working Papers 11725, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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Abigail Barr & Pieter Serneels, 2004. "Wages and Reciprocity in the Workplace," Development and Comp Systems 0409064, EconWPA. [Downloadable!]
Fernando Galindo-Rueda & Anna Vignoles, 2003. "Class Ridden or Meritocratic? An Economic Analysis of Recent Changes in Britain," CEE Discussion Papers 0032, Centre for the Economics of Education, LSE. [Downloadable!]
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- Galindo-Rueda, Fernando & Vignoles, Anna, 2002. "Class Ridden or Meritocratic? An Economic Analysis of Recent Changes in Britain," IZA Discussion Papers 677, Institute for the Study of Labor (IZA). [Downloadable!]
Kaye K. W. Lee, 2006. "Personality and Earnings," Economics Working Paper Archive wp_443, Levy Economics Institute, The. [Downloadable!]
repec:ese:iserwp: is not listed on IDEAS
Zetterberg, Johnny, 2005. "Swedish evidence on the impact of cognitive and non-cognitive ability on earnings – an extended pre-market factor approach," Working Paper Series 2005:16, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
Schlicht, Ekkehart, 2002. "Social Evolution, Corporate Culture, and Exploitation," IZA Discussion Papers 651, Institute for the Study of Labor (IZA). [Downloadable!]
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- Ekkehart Schlicht, 2004. "Social Evolution, Corporate Culture, and Exploitation," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 160(2), pages 232-, June.
Rebeca Echávarri, 2009. "Education and the dynamics of family decisions," DFAEII Working Papers 200901, University of the Basque Country - Department of Foundations of Economic Analysis II. [Downloadable!]
Jordan, Jeffrey L. & Anil, Bulent & Herbert, Velma & Chatterjee, Swan, 2009. "Human Capital Investments in Education and Home Stability: Exploring Education, Homeownership and Poverty," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49320, Agricultural and Applied Economics Association. [Downloadable!]
Constant, Amelie F. & Zimmermann, Klaus F., 2009. "Work and Money: Payoffs by Ethnic Identity and Gender," IZA Discussion Papers 4275, Institute for the Study of Labor (IZA). [Downloadable!]
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- Amelie Constant & Klaus F. Zimmermann, 2009. "Work and Money: Payoffs by Ethnic Identity and Gender," Discussion Papers of DIW Berlin 908, DIW Berlin, German Institute for Economic Research. [Downloadable!]
Ham, Roger & Junankar, Pramod N. (Raja) & Wells, Robert, 2009. "Occupational Choice: Personality Matters," IZA Discussion Papers 4105, Institute for the Study of Labor (IZA). [Downloadable!]
Markus Kitzmueller, 2008. "Economics and Corporate Social Responsibility," Economics Working Papers ECO2008/37, European University Institute. [Downloadable!]

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