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Can Money Change Who We Are? Estimating the Effects of Unearned Income on Measures of Incentive-Enhancing Personality Traits

Author

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  • Powdthavee, Nattavudh

    () (University of Warwick)

  • Boyce, Christopher J.

    () (University of Manchester)

  • Wood, Alex M.

    () (University of Manchester)

Abstract

The importance of noncognitive childhood skills in predicting higher wages is well documented in economics. This paper studies the reverse. Using surveys of lottery winners, we analyze the effects of unearned income on the Big Five personality traits. After correcting for potential endogeneity problems from prize sizes, we find that unearned income improves traits that predict pro-social and cooperative behaviors, preferences for social contact, empathy, and gregariousness, and reduces individuals' tendency toward negative emotional states: known in economics literature as incentive-enhancing personality traits. Our results support the possibility of scope for later interventions to improve the personality traits of adults.

Suggested Citation

  • Powdthavee, Nattavudh & Boyce, Christopher J. & Wood, Alex M., 2011. "Can Money Change Who We Are? Estimating the Effects of Unearned Income on Measures of Incentive-Enhancing Personality Traits," IZA Discussion Papers 6131, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp6131
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    References listed on IDEAS

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    Cited by:

    1. Mosca, Irene & McCrory, Cathal, 2016. "Personality and wealth accumulation among older couples: Do dispositional characteristics pay dividends?," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 1-19.

    More about this item

    Keywords

    noncognitive skills; personality traits; lottery winners; instrumental variables; unearned income;

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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