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

38 Pages Posted: 28 Nov 2011  

Nattavudh Powdthavee

University of Warwick

Christopher Boyce

University of Warwick

Alex M. Wood

affiliation not provided to SSRN

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.

Keywords: noncognitive skills, personality traits, lottery winners, instrumental variables, unearned income

JEL Classification: D3, J24

Suggested Citation

Powdthavee, Nattavudh and Boyce, Christopher and Wood, Alex M., Can Money Change Who We are? Estimating the Effects of Unearned Income on Measures of Incentive-Enhancing Personality Traits. IZA Discussion Paper No. 6131. Available at SSRN: https://ssrn.com/abstract=1965148

Nattavudh Powdthavee (Contact Author)

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom
+44 (0)2476 528240 (Phone)

Christopher Boyce

University of Warwick ( email )

Gibbet Hill Rd.
Coventry, West Midlands CV4 8UW
United Kingdom

Alex M. Wood

affiliation not provided to SSRN ( email )

No Address Available

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