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Genetic Endowments and Wealth Inequality

Author

Listed:
  • Daniel Barth

    (University of Southern California)

  • Nicholas W. Papageorge

    (John Hopkins University)

  • Kevin Thom

    (New York University)

Abstract

We show that genetic endowments linked to educational attainment strongly and robustly predict wealth at retirement. The estimated relationship is not fully explained by flexibly controlling for education and labor income. We therefore investigate a host of additional mechanisms that could help to explain the gene-wealth gradient, including inheritances, mortality, savings, risk preferences, portfolio decisions, beliefs about the probabilities of macroeconomic events, and planning horizons. The associations we report provide preliminary evidence that genetic endowments related to human capital accumulation are associated with wealth not only through educational attainment and labor income, but also through a facility with complex financial decision-making. Our study illustrates how economic research seeking to understand sources of inequality can benefit from recent advances in behavioral genetics linking specific observed genetic endowments to economic outcomes.

Suggested Citation

  • Daniel Barth & Nicholas W. Papageorge & Kevin Thom, 2018. "Genetic Endowments and Wealth Inequality," Working Papers 2018-077, Human Capital and Economic Opportunity Working Group.
    • Handle: RePEc:hka:wpaper:2018-077
    Note: HI,MIP
    as

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    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Barth_Papageorge_Thom_2018_genetic-endowments-wealth-ineq.pdf
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    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Barth_Papageorge_Thom_2018_ONLINE_APP.pdf
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    References listed on IDEAS

    as
    1. Yogo, Motohiro, 2016. "Portfolio choice in retirement: Health risk and the demand for annuities, housing, and risky assets," Journal of Monetary Economics, Elsevier, vol. 80(C), pages 17-34.
    2. Hastie, Nicholas D. & van der Loos, Matthijs J. H. M. & Vitart, Veronique & Völzke, Henry & Wellmann, Jürgen & Yu, Lei & Zhao, Wei & Allik, Jüri & Attia, John R. & Bandinelli, Stefania & Bastardot,, 2013. "GWAS of 126,559 Individuals Identifies Genetic Variants Associated with Educational Attainment," Scholarly Articles 13383543, Harvard University Department of Economics.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    wealth; Inequality; portfolio decisions; beliefs; education; genetics;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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