Sources of variance in social outcomes

Abstract

Social inequality has been growing steadily within developed economies for the past fifty years. However, the causes of within-country variation in economic outcomes remain unclear. The present work assesses the relative contribution of cognitive and non-cognitive skills to economic outcomes, controlling for genetic predisposition and family background. In Study 1, we develop scales to measure saving disposition and financial distress in a sample of twin pairs. By examining sources of variance, we find that saving disposition is largely affected by the rearing environment, while both scales are moderately heritable. In Study 2, we add polygenic scores as instrumental variables, which allows us to draw causal inference. We find that education and cognitive ability raise income, but do not offer sufficient protection from financial distress. Conversely, saving disposition has no effect on income, but reduces the risk of financial distress. In Study 3, we assess the degree to which socioeconomic status is transmitted culturally versus genetically across generations. We detect weak heritability for socioeconomic status, with most of the variance being due to unspecified non-genetic factors. Overall, our results highlight the contribution of non-cognitive skills to social outcomes, as well as the importance of fortune.