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

  • Powdthavee, Nattavudh

    ()

    (London School of Economics)

  • Boyce, Christopher J.

    ()

    (University of Manchester)

  • Wood, Alex M.

    ()

    (University of Manchester)

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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6131.

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Length: 38 pages
Date of creation: Nov 2011
Date of revision:
Handle: RePEc:iza:izadps:dp6131
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