Personality, IQ, and lifetime earnings - Gifted Issues Discussion Forum

How Your Personality Affects Your Paycheck
A study of earnings data suggests that extroverts are paid more, and "agreeable" men get less.
By Tyler Cowen
Bloomberg
August 9, 2018

Quote

What makes really smart people tick? Why do some end up earning so much more than others? And how much do these disparate outcomes have to do with their personalities? A new study by Miriam Gensowski, at the University of Copenhagen, sheds fascinating light on these and other questions.

Gensowski revisits a data set from all schools in California, grades 1-8, in 1921-1922, based on the students who scored in the top 0.5 percent of the IQ distribution. At the time that meant scores of 140 or higher. The data then cover how well these students, 856 men and 672 women, did through 1991. The students were rated on their personality traits and behaviors, along lines similar to the �Big Five� personality traits: openness to experience, conscientiousness, extraversion, agreeableness and neuroticism.

One striking result is how much the trait of conscientiousness matters. Men who measure as one standard deviation higher on conscientiousness earn on average an extra $567,000 over their lifetimes, or 16.7 percent of average lifetime earnings. Measuring as extroverted, again by one standard deviation higher than average, is worth almost as much, $490,100. These returns tend to rise the most for the most highly educated of the men.

For women, the magnitude of these effects is smaller (for one thing, women earned less because of restricted opportunities). Furthermore, extroversion is more strongly correlated with higher earnings than is conscientiousness, unlike for the men.

The study is

Personality, IQ, and lifetime earnings
by Miriam Gensowski
Abstract
This paper estimates the effects of personality traits and IQ on lifetime earnings of the men and women of the Terman study, a high-IQ U.S. sample. Age-by-age earnings profiles allow a study of when personality traits affect earnings most, and for whom the effects are strongest. I document a concave life-cycle pattern in the payoffs to personality traits, with the largest effects between the ages of 40 and 60. An interaction of traits with education reveals that personality matters most for highly educated men. The largest effects are found for Conscientiousness, Extraversion, and Agreeableness (negative), where Conscientiousness operates partly through education, which also has significant returns.

I wonder if conscientiousness or extraversion can be instilled and how disagreeable you want your children to be

Thanks for sharing, Bostonian.

A few more excerpts from this 47-page report, which I find interesting...

"social skills matter, at least for men, to orders of magnitude that are about half of the impact of education"

"The cohort studied here was born in the early years of the last century, when women had a fundamentally different role in the labor market and society than women do today... Women with postgraduate degrees, however, saw earnings gains that were similar to men�s in terms of signs and relative magnitudes... On the other hand, the most highly educated women were
much less likely to be married. This lower propensity to marry represents an additional cost to post-graduate education for women of this cohort."

"Men with low emotional stability (high scores of Neuroticism) are not punished when they are highly educated."

The "wage penalties to agreeableness" remind me of another article I read some time ago which stated that more compliant (agreeable) children were more likely to be bullied; if bullied the article suggested that a child be taught
- NOT to acquiesce, but to take a firm stand on issues,
- to maintain healthy and appropriate personal boundaries rather than letting others encroach (as one might allow with a close friend).
In this sense, being paid more for being less agreeable appears logical.

"In the generation immediately following the Terman women, Conscientiousness is generally associated with higher earnings"
and
"More extraverted women with at most a college education benefit greatly in terms of family earnings, coming from two positive effects: more extravert women are more likely to marry than introverts, and if they do they marry husbands with higher earnings"
...
are excerpts which seem, to me, to help explain what used to be called the generation gap. The economy, the local jobscape, and the ways in which these and other factors make demands which shape society, may change drastically from generation to generation driven by negative and positive forces such as war, scientific breakthrough, etc. Regarding this specific time in US history, the image of Rosie the Riveter comes to mind.

Keeping the age of the Terman longitudinal study in mind, I dislike the perspective presented by the Bloomberg article, as it seems to ignore timing/context and present the correlations as truisms... as though these correlations are causations and may be relied upon as rules of thumb in today's economy and jobscape... or possibly even be predictive for today's children in tomorrow's economy.