The impact of personality on economic decisions /

Abstract

This dissertation contains three chapters focusing on the impact of several personality traits --- locus of control, self-esteem and self-monitoring - on economic outcomes including wages, educational attainment, and decisions in game-theoretical experiments. In the first chapter, entitled "The Effects of Personality Traits on Wages: A Matching Approach," I utilize the National Longitudinal Survey of Youth 1979 to estimate the effects of adolescent measurements of self-esteem and locus of control on adult wages using propensity score matching. An adolescent possessing high self-esteem will experience between 8.5 to 9.2 percent higher wages as an adult. When cognitive skill and family background characteristics are controlled for, locus of control as an adolescent is insignificant in explaining adult wages.

In the second chapter entitled "Self-esteem, Educational Attainment and Wages: A Question of Selection," fuse the National Longitudinal Survey of Youth 1979 again to explore the relationship between self-esteem and wages found in the first chapter more closely. I find that self-esteem partially estimates selection into higher levels of education. Conditional on this selection, the remaining direct effects of self-esteem on wages are negligible. This evidence suggests that self-esteem affects wages indirectly through educational attainment.

In the third chapter, co-authored with Mark Owens and Josh Hill, entitled "Self-monitoring and Risk Preferences: Responsibility in the Stag Hunt," we analyze how self- monitoring and risk preferences affect decision-making strategies in Rousseau's classic Stag Hunt game. Past research indicates that people tend to change their decision in this game when being faced with responsibility over another individual's outcomes. We further this literature by analyzing how these traits affect their decisions. We find that high self-monitors tend to generally switch their decisions when being faced with responsibility over another's outcomes and that risk averse individuals tend to make a cautious shift in decisions given the same circumstances. In addition, those with more risk-loving preferences tend to play Stag more often than their risk-averse counterparts regardless of the way the game is set up.