Personality, IQ, and lifetime earnings
Section snippets
The Terman survey
The Terman survey was initiated by the prominent psychologist Lewis Terman to study the life outcomes of high IQ children. His team canvassed all schools in California, grades 1–8, in 1921–1922, to enrol children who scored in the top 0.5% of the IQ distribution. The sample consists of 856 boys and 672 girls, born around 1910, and who were followed until 1991, with surveys every 5–10 years.2
The overall association of personality traits and IQ with lifetime earnings
The first order of business must be to establish the overall association of personality traits with lifetime earnings in Terman, conditioning on baseline covariates. This overall association would be comprised of both direct effects of these traits on wages, as well as any intermediate outcomes of traits that also drive earnings. Examples of such intermediate outcomes are working hours, health, retirement age, and education. Education plays a particular role in the literature, therefore it will
Conditional effects of personality traits and IQ, men
So far, I have presented the overall association of traits with earnings, comprising numerous potential channels. As mentioned, one channel stands out in importance: education. There is pervasive evidence that more conscientious individuals have higher educational attainment (Noftle, Robins, 2007, O’Connor, Paunonen, 2007). Piatek and Pinger (2016) argue that for Locus of Control, another facet of personality, the largest wage effects are indeed due to its effect on educational attainment.
Conditional effects of personality traits and IQ, women
After studying when and for whom personality traits matter most in terms of lifetime earnings for men, this section briefly completes the analysis for women. The direct analogy is challenged by the historical nature of the Terman sample, which is more visible for women than for men of this cohort. The women belonged to a generation in which their role was still mainly that of a homemaker, mother, and wife. A woman’s freedom to choose a career or define her lifestyle was not what it is today.
Summary and conclusion
This paper estimates the effects of personality traits and IQ on lifetime earnings of the men and women of the Terman study. The traits of Conscientiousness and Extraversion have strong, positive associations with men's lifetime earnings, and Agreeableness a negative association. While the Terman sample is selective in terms of IQ, these results mirror prior findings that are based on representative samples. They show that even men with exceptional cognitive skills benefit from socio-emotional
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2023, Journal of Comparative EconomicsCitation Excerpt :There is a growing body of literature studying the importance of non-cognitive skills, also referred to as personality traits1, in predicting social outcomes (Heckman et al., 2006). As a vital component of human capital, non-cognitive skills are found to affect educational attainment (Humburg, 2017), unemployment (Cuesta and Budria, 2017), wages (Brunello and Schlotter, 2011; Gensowski, 2018), mobility (Ayhan et al., 2020), and health-related outcomes, including longevity (Savelyev, 2020; Savelyev and Tan, 2019). Alcohol consumption is another essential part of social behavior, which may have harmful effect on one's well-being in case of excessive drinking.
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2022, Journal of Economic Behavior and OrganizationCitation Excerpt :Its inverse is often referred to as Emotional Stability. Although not all five of them, the Big Five personality traits are important as they predict labor market outcomes (Chamorro-Premuzic and Furnham, 2003; Fletcher, 2013; Gensowski, 2018; Heineck and Anger, 2010; Mueller and Plug, 2006; Nyhus and Pons, 2005), occupational choice (Cobb-Clark and Tan, 2011), health and academic performance (Chamorro-Premuzic and Furnham, 2003; Furnham et al., 2003; Kappe and van der Flier, 2012; Noftle and Robins, 2007). In waves 5, 9, 13, and 17, HILDA collected an inventory of the Big-Five personality traits based on Saucier (1994) that can be used to construct measures for Extraversion, Agreeableness, Conscientiousness, Emotional Stability (the reverse of Neuroticism), and Openness to Experience.
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The activities of CEBI are financed by a grant from the Danish National Research Foundation. This paper and other versions of it have benefited immensely from discussions with numerous seminar participants. I am very grateful to everyone who provided helpful feedback, especially James J. Heckman, Steven N. Durlauf, and Gary S. Becker, Rémi Piatek, Mathilde Almlund, Katarína Borovičková, Deborah Cobb-Clark, Pia Pinger, Stefanie Schurer, Jeffrey Smith, Lucas Threinen and Philipp Eisenhauer. I am also indebted to Peter Savelyev, who generously shared his knowledge of the Terman data, and to Min Ju Lee and Molly Schnell who provided outstanding research assistance in the project's earlier stages.