IDEAS home Printed from https://ideas.repec.org/a/eee/labeco/v51y2018icp170-183.html
   My bibliography  Save this article

Personality, IQ, and lifetime earnings

Author

Listed:
  • Gensowski, Miriam

Abstract

This paper estimates the effects of personality traits and IQ on lifetime earnings of the men and women of the Terman study, a high-IQ U.S. sample. Age-by-age earnings profiles allow a study of when personality traits affect earnings most, and for whom the effects are strongest. I document a concave life-cycle pattern in the payoffs to personality traits, with the largest effects between the ages of 40 and 60. An interaction of traits with education reveals that personality matters most for highly educated men. The largest effects are found for Conscientiousness, Extraversion, and Agreeableness (negative), where Conscientiousness operates partly through education, which also has significant returns.

Suggested Citation

  • Gensowski, Miriam, 2018. "Personality, IQ, and lifetime earnings," Labour Economics, Elsevier, vol. 51(C), pages 170-183.
    • Handle: RePEc:eee:labeco:v:51:y:2018:i:c:p:170-183
    DOI: 10.1016/j.labeco.2017.12.004
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927537117303287
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.labeco.2017.12.004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thiel, Hendrik & Thomsen, Stephan L., 2013. "Noncognitive skills in economics: Models, measurement, and empirical evidence," Research in Economics, Elsevier, vol. 67(2), pages 189-214.
    2. Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), 2011. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 4, number 4, June.
    3. Joseph G. Altonji & Charles R. Pierret, 2001. "Employer Learning and Statistical Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 313-350.
    4. Peter A. Savelyev & Kegon T. K. Tan, 2019. "Socioemotional Skills, Education, and Health-Related Outcomes of High-Ability Individuals," American Journal of Health Economics, MIT Press, vol. 5(2), pages 250-280, Spring.
    5. Garett Jones, 2011. "IQ and national productivity," The New Palgrave Dictionary of Economics,, Palgrave Macmillan.
    6. By Tyas Prevoo & Bas ter Weel, 2015. "The importance of early conscientiousness for socio-economic outcomes: evidence from the British Cohort Study," Oxford Economic Papers, Oxford University Press, vol. 67(4), pages 918-948.
    7. James Heckman & Flavio Cunha, 2007. "The Technology of Skill Formation," American Economic Review, American Economic Association, vol. 97(2), pages 31-47, May.
    8. Marco Caliendo & Deborah A. Cobb-Clark & Arne Uhlendorff, 2015. "Locus of Control and Job Search Strategies," The Review of Economics and Statistics, MIT Press, vol. 97(1), pages 88-103, March.
    9. Guido Heineck, 2011. "Does it Pay to Be Nice? Personality and Earnings in the United Kingdom," ILR Review, Cornell University, ILR School, vol. 64(5), pages 1020-1038, October.
    10. Goldin, Claudia, 1992. "Understanding the Gender Gap: An Economic History of American Women," OUP Catalogue, Oxford University Press, number 9780195072709.
    11. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    12. 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).
    13. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    14. Angela Lee Duckworth & David R. Weir, 2010. "Personality, Lifetime Earnings, and Retirement Wealth," Working Papers wp235, University of Michigan, Michigan Retirement Research Center.
    15. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1991. "The Allocation of Talent: Implications for Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 503-530.
    16. Rémi Piatek & Pia Pinger, 2016. "Maintaining (Locus of) Control? Data Combination for the Identification and Inference of Factor Structure Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 31(4), pages 734-755, June.
    17. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," Working Papers 696, Princeton University, Department of Economics, Industrial Relations Section..
    18. 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.
    19. Nyhus, Ellen K. & Pons, Empar, 2005. "The effects of personality on earnings," Journal of Economic Psychology, Elsevier, vol. 26(3), pages 363-384, June.
    20. Heckman, James J. & Moon, Seong Hyeok & Pinto, Rodrigo & Savelyev, Peter A. & Yavitz, Adam, 2010. "The rate of return to the HighScope Perry Preschool Program," Journal of Public Economics, Elsevier, vol. 94(1-2), pages 114-128, February.
    21. Robert T. Michael, 1976. "Factors Affecting Divorce: A Study of the Terman Sample," NBER Working Papers 0147, National Bureau of Economic Research, Inc.
    22. Susan M. Dynarski, 2003. "Does Aid Matter? Measuring the Effect of Student Aid on College Attendance and Completion," American Economic Review, American Economic Association, vol. 93(1), pages 279-288, March.
    23. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    24. Sarah Dahmann & Silke Anger, 2014. "The Impact of Education on Personality: Evidence from a German High School Reform," SOEPpapers on Multidisciplinary Panel Data Research 658, DIW Berlin, The German Socio-Economic Panel (SOEP).
    25. Hause, John C, 1972. "Earnings Profile: Ability and Schooling," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 108-138, Part II, .
    26. Becker, Gary S & Landes, Elisabeth M & Michael, Robert T, 1977. "An Economic Analysis of Marital Instability," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1141-1187, December.
    27. Henry S. Farber & Robert Gibbons, 1996. "Learning and Wage Dynamics," The Quarterly Journal of Economics, Oxford University Press, vol. 111(4), pages 1007-1047.
    28. Arleen Leibowitz, 1974. "Home Investments in Children," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 432-456, National Bureau of Economic Research, Inc.
    29. Miller, Robert A, 1984. "Job Matching and Occupational Choice," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 1086-1120, December.
    30. Flavio Cunha & James J. Heckman & Susanne M. Schennach, 2010. "Estimating the Technology of Cognitive and Noncognitive Skill Formation," Econometrica, Econometric Society, vol. 78(3), pages 883-931, May.
    31. Heckman, James J. & Lochner, Lance J. & Todd, Petra E., 2006. "Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond," Handbook of the Economics of Education, in: Erik Hanushek & F. Welch (ed.), Handbook of the Economics of Education, edition 1, volume 1, chapter 7, pages 307-458, Elsevier.
    32. Kuhn, Peter J. & Weinberger, Catherine, 2002. "Leadership Skills and Wages," IZA Discussion Papers 482, Institute of Labor Economics (IZA).
    33. Heckman, James J., 2011. "Integrating Personality Psychology into Economics," IZA Discussion Papers 5950, Institute of Labor Economics (IZA).
    34. Maria Cubel & Ana Nuevo‐Chiquero & Santiago Sanchez‐Pages & Marian Vidal‐Fernandez, 2016. "Do Personality Traits Affect Productivity? Evidence from the Laboratory," Economic Journal, Royal Economic Society, vol. 0(592), pages 654-681, May.
    35. Erik Hanushek & F. Welch (ed.), 2006. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 1, number 1, June.
    36. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
    37. repec:fth:prinin:317 is not listed on IDEAS
    38. Murnane, Richard J. & Willett, John B. & Braatz, M. Jay & Duhaldeborde, Yves, 2001. "Do different dimensions of male high school students' skills predict labor market success a decade later? Evidence from the NLSY," Economics of Education Review, Elsevier, vol. 20(4), pages 311-320, August.
    39. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, June.
    40. Fletcher, Jason M., 2013. "The effects of personality traits on adult labor market outcomes: Evidence from siblings," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 122-135.
    41. Deborah A. Cobb‐Clark & Stefanie Schurer, 2013. "Two Economists' Musings on the Stability of Locus of Control," Economic Journal, Royal Economic Society, vol. 0, pages 358-400, August.
    42. Thomas J. Kane & Cecilia E. Rouse, 1993. "Labor Market Returns to Two- And Four-Year College: Is a Credit a Credit And Do Degrees Matter?," Working Papers 690, Princeton University, Department of Economics, Industrial Relations Section..
    43. Adriana Lleras-Muney, 2005. "The Relationship Between Education and Adult Mortality in the United States," Review of Economic Studies, Oxford University Press, vol. 72(1), pages 189-221.
    44. James Heckman & Rodrigo Pinto & Peter Savelyev, 2013. "Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult Outcomes," American Economic Review, American Economic Association, vol. 103(6), pages 2052-2086, October.
    45. Hamermesh, Daniel S, 1984. "Life-Cycle Effects on Consumption and Retirement," Journal of Labor Economics, University of Chicago Press, vol. 2(3), pages 353-370, July.
    46. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863, Elsevier.
    47. Stefanie Schurer, 2017. "Does education strengthen the life skills of adolescents?," IZA World of Labor, Institute of Labor Economics (IZA), pages 366-366, June.
    48. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," Working Papers 696, Princeton University, Department of Economics, Industrial Relations Section..
    49. Almlund, Mathilde & Duckworth, Angela Lee & Heckman, James & Kautz, Tim, 2011. "Personality Psychology and Economics," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 1-181, Elsevier.
    50. Blackburn, McKinley L & Neumark, David, 1995. "Are OLS Estimates of the Return to Schooling Biased Downward? Another Look," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 217-230, May.
    51. Uysal, Selver Derya & Pohlmeier, Winfried, 2011. "Unemployment duration and personality," Journal of Economic Psychology, Elsevier, vol. 32(6), pages 980-992.
    52. Thomas J. Kane & Cecilia Rouse, 1993. "Labor Market Returns to Two- And Four-Year College: Is A Credit a Credit And Do Degrees Matter?," Working Papers 690, Princeton University, Department of Economics, Industrial Relations Section..
    53. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-990, October.
    54. repec:fth:prinin:311 is not listed on IDEAS
    55. Heineck, Guido & Anger, Silke, 2010. "The returns to cognitive abilities and personality traits in Germany," Labour Economics, Elsevier, vol. 17(3), pages 535-546, June.
    56. Thomas J. Kane & Cecilia E. Rouse, 1993. "Labor Market Returns to Two- and Four-Year Colleges: Is a Credit a Credit and Do Degrees Matter?," NBER Working Papers 4268, National Bureau of Economic Research, Inc.
    57. Philip Oreopoulos & Till von Wachter & Andrew Heisz, 2012. "The Short- and Long-Term Career Effects of Graduating in a Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 1-29, January.
    58. Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), 2011. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 3, number 3, June.
    59. Joshua D. Angrist & Alan B. Keueger, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, Oxford University Press, vol. 106(4), pages 979-1014.
    60. Goldsmith, Arthur H & Veum, Jonathan R & Darity, William, Jr, 1997. "The Impact of Psychological and Human Capital on Wages," Economic Inquiry, Western Economic Association International, vol. 35(4), pages 815-829, October.
    61. Tomes, Nigel, 1981. "A Model of Fertility and Children's Schooling," Economic Inquiry, Western Economic Association International, vol. 19(2), pages 209-234, April.
    62. Jule Specht & Boris Egloff & Stefan C. Schmukle, 2011. "Stability and Change of Personality across the Life Course: The Impact of Age and Major Life Events on Mean-Level and Rank-Order Stability of the Big Five," SOEPpapers on Multidisciplinary Panel Data Research 377, DIW Berlin, The German Socio-Economic Panel (SOEP).
    63. Erik Hanushek & F. Welch (ed.), 2006. "Handbook of the Economics of Education," Handbook of the Economics of Education, Elsevier, edition 1, volume 2, number 2, June.
    64. Jule Specht & Maike Luhmann & Christian Geiser, 2014. "On the Consistency of Personality Types Across Adulthood: Latent Profile Analysis in Two Large-Scale Panel Studies," SOEPpapers on Multidisciplinary Panel Data Research 687, DIW Berlin, The German Socio-Economic Panel (SOEP).
    65. Jacob A. Mincer, 1974. "Schooling and Earnings," NBER Chapters, in: Schooling, Experience, and Earnings, pages 41-63, National Bureau of Economic Research, Inc.
    66. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
    67. Arleen Leibowitz, 1974. "Home Investments in Children," NBER Chapters, in: Marriage, Family, Human Capital, and Fertility, pages 111-135, National Bureau of Economic Research, Inc.
    68. Bolck, Annabel & Croon, Marcel & Hagenaars, Jacques, 2004. "Estimating Latent Structure Models with Categorical Variables: One-Step Versus Three-Step Estimators," Political Analysis, Cambridge University Press, vol. 12(1), pages 3-27, January.
    69. Leibowitz, Arleen, 1974. "Home Investments in Children," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 111-131, Part II, .
    70. Richard Williams, 2006. "Generalized ordered logit/partial proportional odds models for ordinal dependent variables," Stata Journal, StataCorp LP, vol. 6(1), pages 58-82, March.
    71. Gerrit Mueller & Erik Plug, 2006. "Estimating the Effect of Personality on Male and Female Earnings," ILR Review, Cornell University, ILR School, vol. 60(1), pages 3-22, October.
    72. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
    73. Martin, Leslie R. & Friedman, Howard S. & Clark, Kathleen M. & Tucker, Joan S., 2005. "Longevity following the experience of parental divorce," Social Science & Medicine, Elsevier, vol. 61(10), pages 2177-2189, November.
    74. Pencavel, John, 1998. "Assortative Mating by Schooling and the Work Behavior of Wives and Husbands," American Economic Review, American Economic Association, vol. 88(2), pages 326-329, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nikolov, Plamen & Jimi, Nusrat & Chang, Jerray, 2020. "The Importance of Cognitive Domains and the Returns to Schooling in South Africa: Evidence from Two Labor Surveys," Labour Economics, Elsevier, vol. 65(C).
    2. Esteban García-Miralles & Miriam Gensowski, 2020. "Are Children's Socio-Emotional Skills Shaped by Parental Health Shocks?," CEBI working paper series 20-21, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    3. Thiel, Hendrik & Thomsen, Stephan L., 2013. "Noncognitive skills in economics: Models, measurement, and empirical evidence," Research in Economics, Elsevier, vol. 67(2), pages 189-214.
    4. Hanushek, Eric A. & Schwerdt, Guido & Wiederhold, Simon & Woessmann, Ludger, 2015. "Returns to skills around the world: Evidence from PIAAC," European Economic Review, Elsevier, vol. 73(C), pages 103-130.
    5. Hilger, Anne & Nordman, Christophe Jalil & Sarr, Leopold, 2018. "Cognitive and Non-Cognitive Skills, Hiring Channels, and Wages in Bangladesh," IZA Discussion Papers 11578, Institute of Labor Economics (IZA).
    6. Bühler, Dorothee & Sharma, Rasadhika & Stein, Wiebke, 2020. "Occupational Attainment and Earnings in Southeast Asia: The Role of Non-cognitive Skills," Labour Economics, Elsevier, vol. 67(C).
    7. Engelhardt, Carina, 2017. "Unemployment and personality: Are conscientiousness and agreeableness related to employability?," Hannover Economic Papers (HEP) dp-621, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    8. Elke Lüdemann, 2011. "Schooling and the Formation of Cognitive and Non-cognitive Outcomes," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 39, March.
    9. Bonin, Holger, 2017. "The Potential Economic Benefits of Education of Migrants in the EU," IZA Research Reports 75, Institute of Labor Economics (IZA).
    10. Gensowski, Miriam & Gørtz, Mette & Schurer, Stefanie, 2021. "Inequality in personality over the life cycle," Journal of Economic Behavior & Organization, Elsevier, vol. 184(C), pages 46-77.
    11. Leonora Risse & Lisa Farrell & Tim R L Fry, 2018. "Personality and pay: do gender gaps in confidence explain gender gaps in wages?," Oxford Economic Papers, Oxford University Press, vol. 70(4), pages 919-949.
    12. Maria Cubel & Ana Nuevo‐Chiquero & Santiago Sanchez‐Pages & Marian Vidal‐Fernandez, 2016. "Do Personality Traits Affect Productivity? Evidence from the Laboratory," Economic Journal, Royal Economic Society, vol. 0(592), pages 654-681, May.
    13. Peter, Frauke, 2016. "The effect of involuntary maternal job loss on children's behaviour and non-cognitive skills," Labour Economics, Elsevier, vol. 42(C), pages 43-63.
    14. Fletcher, Jason M., 2013. "The effects of personality traits on adult labor market outcomes: Evidence from siblings," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 122-135.
    15. Fossen, Frank M. & Büttner, Tobias J.M., 2013. "The returns to education for opportunity entrepreneurs, necessity entrepreneurs, and paid employees," Economics of Education Review, Elsevier, vol. 37(C), pages 66-84.
    16. Emilia Bedyk & Jacek Liwiński, 2016. "The wage premium from parents’ investments in the education of their children in Poland," Working Papers 2016-14, Faculty of Economic Sciences, University of Warsaw.
    17. Kautz, Tim & Heckman, James J. & Diris, Ron & ter Weel, Bas & Borghans, Lex, 2014. "Fostering and Measuring Skills: Improving Cognitive and Non-Cognitive Skills to Promote Lifetime Success," IZA Discussion Papers 8696, Institute of Labor Economics (IZA).
    18. Cubel, Maria & Nuevo-Chiquero, Ana & Sanchez-Pages, Santiago & Vidal-Fernandez, Marian, 2014. "Do Personality Traits Affect Productivity? Evidence from the Lab," IZA Discussion Papers 8308, Institute of Labor Economics (IZA).
    19. Glewwe, Paul & Huang, Qiuqiong & Park, Albert, 2017. "Cognitive skills, noncognitive skills, and school-to-work transitions in rural China," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 141-164.
    20. Schnitzlein, Daniel D. & Stephani, Jens, 2016. "Locus of Control and low-wage mobility," Journal of Economic Psychology, Elsevier, vol. 53(C), pages 164-177.

    More about this item

    Keywords

    Personality traits; Socio-emotional skills; Cognitive skills; Returns to education; Lifetime earnings; Big Five; Human capital; Factor analysis;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:51:y:2018:i:c:p:170-183. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.elsevier.com/locate/labeco .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/labeco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.