New Economics Papers
on Neuroeconomics
Issue of 2012‒03‒21
two papers chosen by

  1. Do risk and time preferences have biological roots? By Drichoutis, Andreas; Nayga, Rodolfo
  2. The Effects of Personality Traits on Adult Labor Market Outcomes: Evidence from Siblings By Fletcher, Jason M

  1. By: Drichoutis, Andreas; Nayga, Rodolfo
    Abstract: We revisit the claims about the biological underpinnings of economic behavior by specifically exploring if observed gender differences in risk/time preferences can be explained by natural fluctuations in progesterone/estradiol levels during the menstrual cycle and by prenatal exposure to testosterone levels. Results suggest that natural fluctuations in progesterone levels have a direct effect on discount rates and that estradiol/progesterone levels can indirectly affect time preferences by changing the curvature of the utility function. Using measured D2:D4 digit ratio, results imply that subjects with low digit ratio exhibit higher discount rates and risk loving preferences.
    Keywords: discount rates; risk aversion; lab experiment; menstrual cycle; D2:D4 ratio; hormones; estradiol; progesterone; testosterone
    JEL: D81 C91
    Date: 2012–03–12
  2. By: Fletcher, Jason M (Yale University)
    Abstract: While large literatures have shown that cognitive ability and schooling increases employment and wages, an emerging literature examines the importance of so-called "non-cognitive skills" in producing labor market outcomes. However, this smaller literature has not typically used causal methods in estimating the results. One source of heterogeneity that may play an important role in producing both personality and other non-cognitive skills and labor market outcomes is family background, including genetic endowments. This paper is the first to use sibling differences to estimate the effects of personality on employment and wages and is also able to control for many other sources of heterogeneity, including attractiveness, cognitive ability, schooling, occupation, and other factors. Overall, the findings suggest that personality measures are important determinants of labor market outcomes in adulthood and that the results vary considerably by demographic group. The findings also highlight the potential role of extraversion in leading to favorable labor market outcomes, which has not been documented in many other studies.
    Keywords: personality, wages, sibling fixed effects
    JEL: J24 J31
    Date: 2012–02

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