Papers
“Genetic Variation in Financial Decision Making” (Job Market Paper) (with Johannesson M, Lichtenstein P, Sandewall, O and B. Wallace)
Individuals differ in how they compose their investment portfolios, yet empirical models of portfolio risk typically only account for a small portion of the cross-sectional variance. This paper asks if genetic variation can explain some of these individual differences. Following a major pension reform Swedish adults had to compose a portfolio from a large menu of funds. We match data on these investment decisions with the Swedish Twin Registry and
nd that approximately 25% of individual variation in portfolio risk is due to genetic variation. We also show that these results extend to several other aspects of
financial decision-making.
“The Effect of Family Environment on Productive Skills, Human Capital and Lifecycle Income” Under Review.
This paper uses two complementary Swedish datasets to examine the importance of family environment in explaining variation in income, educational attainment, as well as measures of cognitive and non-cognitive skills. Using seven different sibling types who differ in their degree of genetic relatedness and rearing status, I find moderate family effects on educational attainment and cognitive and non-cognitive skills. This contrasts with the effects of family on income, which are low. Additional analyses, based on a sample of idenitical (MZ) and fraternal (DZ) twins for which more comprehensive income data is available, reveal large and persistent separation of the MZ and DZ correlations over the entire lifecycle, except at very early ages. One interpretation of this finding is that there are strong family effects on the timing of labor market entry. I discuss the relevance of these results for current efforts to understand the causes of income inequality.
“The Co-Twin Methodology and Returns to Schooling - Testing a Critical Assumption” (with Sandewall, Ö and M Johannesson) Under Review.
Twins-based estimates of the return to schooling feature prominently in the labor economics literature. The validity of such estimates hinges critically on the assumption that within-pair variation in schooling is explained by factors which are unrelated to wage earning ability. This paper develops a framework for testing this assumption, and finds, using a unique dataset of monozygotic twins, strong evidence against it. Differences in adolescent IQ test scores predict within-pair variation in educational attainment, and including IQ in the wage equation causes within-pair point estimates for the returns to schooling to decline significantly. Our results thus cast doubt on the validity of estimates derived from the co-twin literature.
“A Genome Wide Association Study of Educational Attainment” (with Beauchamp J, Rosenquist N, Fowler JH and N Christakis)
Twin and adoption studies have consistently found that genetic variation is an important source of heterogeneity in economic outcomes such as educational attainment and income. The advent of inexpensive, genome-wide scans of variation is now making it increasingly feasible to directly examine specific genetic variants that predict individual differences. In this paper, we conduct a genome wide association study (GWAS) of educational achievement, using data on over 360,000 genetic markers throughout the genome collected from a family-based sample of nearly 8,500 individuals. We discuss and address several challenges that arise when doing inference using such a dataset and identify a number of markers with a "suggestive" association with educational attainment. The most promising variants are significant at the 5⋅10⁻⁷ level. We discuss the potential mechanisms for how the identified variants affect human capital investments.