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. 2020 Apr;128(4):1474-1522.
doi: 10.1086/705415.

Genetic Endowments and Wealth Inequality

Daniel Barth  1 , Nicholas W Papageorge  2 , Kevin Thom  3
Affiliations

Genetic Endowments and Wealth Inequality

Daniel Barth et al. J Polit Econ. 2020 Apr.

Abstract

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 account for the gene-wealth gradient, including inheritances, mortality, risk preferences, portfolio decisions, beliefs about the probabilities of macroeconomic events, and planning horizons. We provide 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.

Keywords: Beliefs; D14; D31; Education and Genetics; G11; H55; I24; Inequality; J24; Portfolio Decisions; Wealth.

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Figures

Figure 1:
Figure 1:
Distribution of Household Average EA Score
Figure 2:
Figure 2:
Notes: Panel A plots average household EA score versus log household wealth using data for all household-year observations in the analytic sample. Panel B plots the same relationship for two subsamples of households, the first with a maximum education level of a high school degree or less and the second with at least one member having at least a college degree.
See this image and copyright information in PMC

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