The Big Five personality traits and earnings

Human capital is the education, training, experience, intelligence, motivation, and other human factors that workers use to be successful in their job. In effect, it is the capital that is bound up within the workers as a person, and inseparable from them. When economists measure human capital, we usually use education as a proxy. Sometimes we use job experience, or measures of intelligence or skill. Sometimes we use a combination of two or more of those measures.

It is less common for economists to use more intrinsic measures of human capital, such as personality. However, it seems likely that personality traits should affect earnings. So, I was interested to see what this 2023 meta-analysis article by Melchior Vella (University of Essex), published in the journal Bulletin of Economic Research (open access), would turn up. A meta-analysis is a way of quantitatively combining the results of many studies into a single overall estimate of the relationship. If done well, it can also account for publication bias (where studies that fail to show statistically significant effects are less likely to be published).

Vella looks at studies that estimate the relationship between earnings and the Big Five personality traits, which are:

...openness to experience (ability to be creative, curious, intellectually engaged, honest/humble, and inquisitive), conscientiousness (self-discipline, punctuality, and organized and general competence), extraversion (how talkative, friendly, energetic, and outgoing the person is), agreeableness (the tendency to be kind, charitable, warm, and generous), and neuroticism (fear, worry, paranoia, and stress)...

While the Big Five has copped a lot of criticism (for example, see here), the taxonomy is still widely used, which means that there are a lot of studies that Vella can draw upon in the meta-analysis. Altogether, after a thorough search and screening process, they include 52 studies, with 1307 estimates of the relationship between the Big Five personality traits and earnings (most studies have many estimates of the relationship, with various different combinations of control variables, different specifications, or robustness checks). Applying a random effects model (which is quite common in meta-analysis, since it assumes that the true effect sizes vary across studies, not just due to random sampling error, but also due to real differences between the studies), Vella finds that:

For openness to experience, the true effect size is 0.019, indicating that a one standard deviation increase in openness to experience corresponds to a 1.92% increase in earnings. Similarly, conscientiousness (θ = 0.016, 1.61%) and extraversion (θ = 0.003, 0.30%) are positively correlated with earnings, whereas agreeableness (θ=−0.017, −1.69%) and neuroticism (θ=−0.018, −1.78%) show negative correlations.

Vella checks for publication bias in the results, and finds that there is statistically significant publication bias in estimates for conscientiousness, agreeableness, and neuroticism. After adjusting for publication bias, the relationships become much smaller, and are only statistically significant for openness to experience (positively correlated with earnings) and agreeableness (negatively correlated with earnings). The other traits are not statistically significantly related to earnings, once publication bias is controlled for.

Vella then looks at heterogeneity across studies, identifying what factors are associated with the size of the reported estimates. This analysis identifies that studies that fail to account for demographic characteristics (age), family background (parental education and/or income), socioeconomic status, education, occupation, or cognitive ability, are likely to have biased estimates of the relationship between the Big Five personality traits and earnings. Since most studies won't control for all of those factors, that explains part of the reason why there is publication bias, since studies that have biased estimates may be more likely to show statistically significant effects, if the true effect is small or zero.

Overall, this meta-analysis finds evidence that people who have higher openness to experience (ability to be creative, curious, intellectually engaged, honest/humble, and inquisitive) earn more, and those who have higher agreeableness (the tendency to be kind, charitable, warm, and generous) earn less. Other personality traits don't appear to matter (or the effects are too small to be measured). Vella stops short of trying to explain why it is that openness to experience and agreeableness matter, which is just as well. These studies, and therefore the meta-analysis as well, only show the correlation between the personality traits and earnings. They do not show that the personality traits cause differences in earnings. Nevertheless, it probably wouldn't hurt for people to be a little more open to experience (although I'm less keen on people being more disagreeable!).