Genetic Endowments and Wealth Inequality

63 Pages Posted: 30 May 2018 Last revised: 1 May 2023

See all articles by Daniel Barth

Daniel Barth

Board of Governors of the Federal Reserve System

Nicholas W. Papageorge

Johns Hopkins University Department of Economics

Kevin Thom

New York University, Dept of Economics

Date Written: May 2018

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 help to explain the gene-wealth gradient, including inheritances, mortality, savings, risk preferences, portfolio decisions, beliefs about the probabilities of macroeconomic events, and planning horizons. The associations we report provide preliminary 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. Our study illustrates how economic research seeking to understand sources of inequality can benefit from recent advances in behavioral genetics linking specific observed genetic endowments to economic outcomes.

Suggested Citation

Barth, Daniel and Papageorge, Nicholas W. and Thom, Kevin, Genetic Endowments and Wealth Inequality (May 2018). NBER Working Paper No. w24642, Available at SSRN: https://ssrn.com/abstract=3185896

Daniel Barth (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Nicholas W. Papageorge

Johns Hopkins University Department of Economics ( email )

3400 Charles Street
Baltimore, MD 21218-2685
United States

Kevin Thom

New York University, Dept of Economics ( email )

NYU Economics
19 W. 4th Street, 6th Floor
New York, NY 10012
United States

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