Personality, IQ, and Lifetime Earnings

Miriam Gensowski

Personality, IQ, and Lifetime Earnings

Department of Economics

Abstract

Talented individuals are seen as drivers of long-term growth, but how do they realize their full potential? In this paper, I show that lifetime earnings of high-IQ men and women are substantially influenced by their personality traits, in addition to intelligence and education. Personality traits, as identified in a factor model, significantly affect earnings, but not for young workers. The effects are furthermore heterogeneous by educational attainment. For women, personality traits do not affect family earnings in the same way as own earnings. Personality and IQ also influence earnings indirectly through education, which has sizeable positive rates of return for men in this sample. Women’s returns to education past a bachelor’s degree are lowered through worse marriage prospects, which offset gains to education in terms of own earnings. The causal effect of education is identified through matching on detailed background information. This paper complements the literature on investments in education and personality traits by showing that they also have potentially high returns at the high end of the ability distribution.

Original language	English
Publication status	Published - Jun 2014

Series	IZA Discussion Paper
Number	8235

Keywords

Faculty of Social Sciences
lifetime earnings
returns to education
cognitive skills
social skills
Big Five
factor analysis
human capital

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Cite this

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abstract = "Talented individuals are seen as drivers of long-term growth, but how do they realize their full potential? In this paper, I show that lifetime earnings of high-IQ men and women are substantially influenced by their personality traits, in addition to intelligence and education. Personality traits, as identified in a factor model, significantly affect earnings, but not for young workers. The effects are furthermore heterogeneous by educational attainment. For women, personality traits do not affect family earnings in the same way as own earnings. Personality and IQ also influence earnings indirectly through education, which has sizeable positive rates of return for men in this sample. Women{\textquoteright}s returns to education past a bachelor{\textquoteright}s degree are lowered through worse marriage prospects, which offset gains to education in terms of own earnings. The causal effect of education is identified through matching on detailed background information. This paper complements the literature on investments in education and personality traits by showing that they also have potentially high returns at the high end of the ability distribution.",

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KW - lifetime earnings

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KW - social skills

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BT - Personality, IQ, and Lifetime Earnings

ER -

Personality, IQ, and Lifetime Earnings

Abstract

Keywords

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