The Promises and Pitfalls of Genoeconomics*

Abstract

This article reviews existing research at the intersection of genetics and economics, presents some new findings that illustrate the state of genoeconomics research, and surveys the prospects of this emerging field. Twin studies suggest that economic outcomes and preferences, once corrected for measurement error, appear to be about as heritable as many medical conditions and personality traits. Consistent with this pattern, we present new evidence on the heritability of permanent income and wealth. Turning to genetic association studies, we survey the main ways that the direct measurement of genetic variation across individuals is likely to contribute to economics, and we outline the challenges that have slowed progress in making these contributions. The most urgent problem facing researchers in this field is that most existing efforts to find associations between genetic variation and economic behavior are based on samples that are too small to ensure adequate statistical power. This has led to many false positives in the literature. We suggest a number of possible strategies to improve and remedy this problem: (a) pooling data sets, (b) using statistical techniques that exploit the greater information content of many genes considered jointly, and (c) focusing on economically relevant traits that are most proximate to known biological mechanisms.

Keywords: GWAS; genetics; heritability.

Figure 1

Mean of the human capital index by genotype. (a) The human capital index is a composite variable comprising educational attainment and the number of languages learned. The mean years of educational attainment by genotype are shown in parentheses below the sample size. (b) The cognitive function index is a composite variable comprising digit symbol substitution (WAIS), digit span (forward and backward), spatial working memory, and long-term memory (CVLT recall and recognition). In the cognitive function sample, survey respondents who scored ≤23 on the Mini Mental State Examination are dropped. Both the human capital index and the cognitive function index are standardized to have zero mean and unit variance. The genotype is for SSADH rs2267539. Error bars show ±1 standard error. Data are from the AGES-RS.