Can having internal locus of control insure against negative shocks? Psychological evidence from panel data

Abstract

We investigate whether the intensity of emotional pain following a negative shock is different across the distribution of a person's locus of control - the extent to which individuals believe that their actions can influence future outcomes. Using panel data from Australia, we show that individuals with strong internal locus of control are psychologically insured against own and others' serious illness or injury, close family member detained in jail, becoming a victim of property crime and death of a close friend, but not against the majority of other life events. The buffering effects vary across gender. Our findings thus add to the existing literature on the benefits of internal locus of control.

Keywords: HILDA; Happiness; Locus of control; Resilience; Well-being.

Fig. 1

A Kernel plot of the standardized locus of control distributions (fixed versus raw).

Fig. 2

(A and B) The estimated effects of different life events on life satisfaction and mental health for working-age respondents, regression-corrected. A: Life satisfaction, B: Mental health. Note: 4-standard-error bands (95% C.I.) are reported: 2 above 2 below. DCF = death of close friends, DCFM = death of close family members, including spouse and children, MWF = major worsening in finances, FMR = fired or made redundant, SFM = serious injury/illness to family members, SPI = serious personal injury/illness, CFIJ = close family member detained in jail, VPC = victim of a property crime, SFS = separated from spouse, VPV = victim of physical violence.

Fig. 3

(A–J) Leads and lags in life satisfaction to negative life events by locus of control type. A: Death of close friends, B: Death of close family members, including spouse/child, C: Major worsening in finances, D: Fired or made redundant, E: Serious injury/illness to family members, F: Serious personal injury/illness, G: Close family detained in jail, H: Victim of property crime, I: Separated from spouse, J: Victim of physical violence. Note: 4-standard errors (two above, two below) or 95% confidence intervals are reported. External locus of control (bottom 25% of the external–internal locus of control scale) and internal locus of control (top 25% of the external–internal locus of control) are presented here. Each time (t) represents 0–12 months. The event in question took place at time t = 0. Each value represents the lead and lag coefficients of the negative life event in question.

Fig. 3

(A–J) Leads and lags in life satisfaction to negative life events by locus of control type. A: Death of close friends, B: Death of close family members, including spouse/child, C: Major worsening in finances, D: Fired or made redundant, E: Serious injury/illness to family members, F: Serious personal injury/illness, G: Close family detained in jail, H: Victim of property crime, I: Separated from spouse, J: Victim of physical violence. Note: 4-standard errors (two above, two below) or 95% confidence intervals are reported. External locus of control (bottom 25% of the external–internal locus of control scale) and internal locus of control (top 25% of the external–internal locus of control) are presented here. Each time (t) represents 0–12 months. The event in question took place at time t = 0. Each value represents the lead and lag coefficients of the negative life event in question.

Fig. 4

(A–J) Leads and lags in mental health to negative life events by locus of control type. A: Death of close friends, B: Death of close family members, including spouse/child, C: Major worsening in finances, D: Fired or made redundant, E: Serious injury/illness to family members, F: Serious personal injury/illness, G: Close family detained in jail, H: Victim of property crime, I: Separated from spouse, J: Victim of physical violence. Note: 4-standard errors (two above, two below) or 95% confidence intervals are reported. External locus of control (bottom 25% of the external–internal locus of control scale) and internal locus of control (top 25% of the external–internal locus of control) are presented here. Each time (t) represents 0–12 months. The event in question took place at time t = 0. Each value represents the lead and lag coefficients of the negative life event in question.

Fig. 4

(A–J) Leads and lags in mental health to negative life events by locus of control type. A: Death of close friends, B: Death of close family members, including spouse/child, C: Major worsening in finances, D: Fired or made redundant, E: Serious injury/illness to family members, F: Serious personal injury/illness, G: Close family detained in jail, H: Victim of property crime, I: Separated from spouse, J: Victim of physical violence. Note: 4-standard errors (two above, two below) or 95% confidence intervals are reported. External locus of control (bottom 25% of the external–internal locus of control scale) and internal locus of control (top 25% of the external–internal locus of control) are presented here. Each time (t) represents 0–12 months. The event in question took place at time t = 0. Each value represents the lead and lag coefficients of the negative life event in question.