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Genetic Endowments and Wealth Inequality

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.

The appendix for this paper may be found here.

Authors: 
Daniel Barth, University of Southern California
Nicholas W. Papageorge, John Hopkins University
Kevin Thom, New York University
Publication Date: 
October, 2018
Publication Status: 
Document Number: 
2018-077
File Description: 
First version, October 2018