The Economic Value of Breaking Bad: Misbehavior, Schooling and the Labor Market

Prevailing research argues that childhood misbehavior in the classroom is bad for schooling and, presumably, bad overall. We examine lifecycle impacts of a widely studied socio-emotional skill, externalizing behavior, which captures childhood misbehavior in school and is linked to aggression, hyperactivity and lower educational attainment. Externalizing behavior has been the focus of hundreds of papers across several fields and its negative impact on educational attainment has justified multitudes of policies to address or discourage it. Aligned with prior work, we find that externalizing behavior lowers educational attainment for males. However, we also provide novel evidence that it increases earnings for males and females. The earnings premium holds across genders and occupations, is replicated in several data sets and is robust to alternative modeling assumptions. That a skill can be both helpful and harmful raises concerns about policies surrounding skill acquisition, especially if the skill has opposite effects across crucial or largely unavoidable phases of the lifecycle, such as schooling and work. For example, well-meaning policies to improve schooling can have negative repercussions over the lifecycle. More broadly, our results illustrate the need to measure skill prices across contexts and challenge the widespread, implicit and largely untested assumption that the same skills that are valuable in childhood are also valuable in adulthood.