The Economics and Econometrics of Gene–Environment Interplay

Abstract

Economists and social scientists have debated the relative importance of nature (one’s genes) and nurture (one’s environment) for decades, if not centuries. This debate can now be informed by the ready availability of genetic data in a growing number of social science datasets. This paper explores the potential uses of genetic data in economics, with a focus on estimating the interplay between nature (genes) and nurture (environment). We discuss how economists can benefit from incorporating genetic data into their analyses even when they do not have a direct interest in estimating genetic effects. We argue that gene–environment (G x E) studies can be instrumental for (i) testing economic theory, (ii) uncovering economic or behavioral mechanisms, and (iii) analyzing treatment effect heterogeneity, thereby improving the understanding of how (policy) interventions affect population subgroups. We introduce the reader to essential genetic terminology, develop a conceptual economic model to interpret gene–environment interplay, and provide practical guidance to empirical researchers.

Note:
Funding Information: Financial support from NORFACE DIAL (462-16-100). Research reported in this publication was also supported by the European Research Council (DONNI 851725 and GEPSI 946647), the National Institute on Aging of the National Institutes of Health (RF1055654 and R56AG058726), and the Dutch National Science Foundation (016.VIDI.185.044). The UK Medical Research Council and Wellcome (Grant ref: 217065/Z/19/Z) and the University of Bristol provide core support for ALSPA.

Conflict of Interests: The authors declare to have no competing interests in this research.

Ethical Approval: Ethical approval for the study was obtained from the ALSPAC Ethics and Law Committee and the Local Research Ethics Committees. Informed consent for the use of data collected via questionnaires and clinics was obtained from participants following the recommendations of the ALSPAC Ethics and Law Committee at the time.

JEL Classification: D1, D3, I1, I2, J1