The Economics and Psychology of Inequality and Human Development

Recent research on the economics of human development deepens understanding of the origins of inequality and excellence. It draws on and contributes to personality psychology and the psychology of human development. Inequalities in family environments and investments in children are substantial. They causally affect the development of capabilities. Both cognitive and noncognitive capabilities determine success in life but to varying degrees for different outcomes. An empirically determined technology of capability formation reveals that capabilities are self-productive and cross-fertilizing and can be enhanced by investment. Investments in capabilities are relatively more productive at some stages of a child's life cycle than others. Optimal child investment strategies differ depending on target outcomes of interest and on the nature of adversity in a child's early years. For some configurations of early disadvantage and for some desired outcomes, it is efficient to invest relatively more in the later years of childhood than in the early years.

[1]  Rodica Ianole.  Exotic Preferences: Behavioral Economics and Human Motivation , 2011 .

[2]  K. Christensen,et al.  Being Born Under Adverse Economic Conditions Leads to a Higher Cardiovascular Mortality Rate Later in Life: Evidence Based on Individuals Born at Different Stages of the Business Cycle , 2008, Demography.

[3]  R. Pollak,et al.  Family structure and children’s educational outcomes: Blended families, stylized facts, and descriptive regressions , 2004, Demography.

[4]  J. Heckman,et al.  Investing in Our Young People , 2010 .

[5]  J. Heckman,et al.  Investing in Our Young People. NBER Working Paper No. 16201. , 2010 .

[6]  J. Heckman,et al.  A New Cost-Benefit and Rate of Return Analysis for the Perry Preschool Program: A Summary , 2010 .

[7]  J. Heckman,et al.  The Rate of Return to the High/Scope Perry Preschool Program , 2009, Journal of public economics.

[8]  Susanne M. Schennach,et al.  Web Appendix for \Estimating the Technology of Cognitive and Noncognitive Skill Formation" , 2010 .

[9]  A. Mood,et al.  Equality of Educational Opportunity. , 1967 .

[10]  E. Tucker-Drob,et al.  Differentiation of Cognitive Abilities across the Lifespan , 2010 .

[11]  R. Kaestner.  Adolescent Cognitive and Non-Cognitive Correlates of Adult Health , 2009 .

[12]  J. Bradford DeLong,et al.  The U.S. Equity Return Premium: Past, Present, and Future , 2008, Journal of Economic Perspectives.

[13]  A. Falk,et al.  Are Risk Aversion and Impatience Related to Cognitive Ability? , 2007, SSRN Electronic Journal.

[14]  E. Phelps.  The study of emotion in neuroeconomics. , 2009 .

[15]  Hein Putter,et al.  Persistent epigenetic differences associated with prenatal exposure to famine in humans , 2008, Proceedings of the National Academy of Sciences.

[16]  James J. Heckman,et al.  Estimating the Technology of Cognitive and Noncognitive Skill Formation , 2010, Econometrica : journal of the Econometric Society.

[17]  P. Nilsson,et al.  Does a pint a day affect your child's pay? The effect of prenatal alcohol exposure on adult outcomes , 2008 .

[18]  Hammad Sheikh,et al.  Achievement-related attitudes and the fate of 'at-risk' groups in society , 2008 .

[19]  J. Heckman.  Schools, Skills, and Synapses , 2008, Economic inquiry.

[20]  J. Currie.  Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development , 2008 .

[21]  A. Caspi,et al.  Elevated inflammation levels in depressed adults with a history of childhood maltreatment. , 2008, Archives of general psychiatry.

[22]  Angela L. Duckworth,et al.  The Economics and Psychology of Personality Traits , 2008, The Journal of Human Resources.

[23]  H. Friedman,et al.  Personality and health: A lifespan perspective. , 2008 .

[24]  Emmanuel J. Lopez.  What Money Can't Buy: Family Income and Children's Life Chances , 2008 .

[25]  Colin Camerer,et al.  Neuroeconomics: decision making and the brain , 2008 .

[26]  James J. Heckman,et al.  Estimating the Technology of Cognitive and Noncognitive Skill Formation. NBER Working Paper No. 15664. , 2010 .

[27]  B. Roberts,et al.  Contextualizing personality psychology. , 2007, Journal of personality.

[28]  D. Wood.  Using the PRISM to compare the explanatory value of general and role-contextualized trait ratings. , 2007, Journal of personality.

[29]  Petra E. Todd,et al.  The Production of Cognitive Achievement in Children: Home, School, and Racial Test Score Gaps , 2007, Journal of Human Capital.

[30]  M. Szyf,et al.  The dynamic epigenome and its implications in toxicology. , 2007, Toxicological sciences : an official journal of the Society of Toxicology.

[31]  Flavio Cunha,et al.  The Evolution of Inequality, Heterogeneity and Uncertainty in Labor Earnings in the U.S. Economy , 2007 .

[32]  L. Lochner,et al.  The Changing Role of Family Income and Ability in Determining Educational Achievement , 2007, Journal of Human Capital.

[33]  G. Loewenstein.  Exotic Preferences: Behavioral Economics and Human Motivation , 2007 .

[34]  Friedhelm Pfeiffer,et al.  Age-Dependent Skill Formation and Returns to Education: Simulation Based Evidence , 2007 .

[35]  Dimitriy V. Masterov,et al.  The Productivity Argument for Investing in Young Children , 2007 .

[36]  James F. Leckman,et al.  Genes and behavior: nature–nurture interplay explained. , 2007 .

[37]  M. Georgieff.  Nutrition and the developing brain: nutrient priorities and measurement. , 2007, The American journal of clinical nutrition.

[38]  R. Martorell,et al.  Child development in developing countries 3 Strategies to avoid the loss of developmental potential in more than 200 million children in the developing world , 2007 .

[39]  Julie Meeks Gardner,et al.  Child development: risk factors for adverse outcomes in developing countries , 2007, The Lancet.

[40]  P. Glewwe,et al.  Developmental potential in the first 5 years for children in developing countries , 2007, The Lancet.

[41]  J. Heckman,et al.  Econometric Evaluation of Social Programs, Part III: Distributional Treatment Effects, Dynamic Treatment Effects, Dynamic Discrete Choice, and General Equilibrium Policy Evaluation , 2007 .

[42]  James J. Heckman,et al.  Econometric Evaluation of Social Programs, Part I: Causal Models, Structural Models and Econometric Policy Evaluation , 2007 .

[43]  Thomas M Vogt,et al.  Mechanisms by which childhood personality traits influence adult health status: educational attainment and healthy behaviors. , 2007, Health psychology : official journal of the Division of Health Psychology, American Psychological Association.

[44]  E. Cadenas,et al.  Physiology and Neurobiology of Stress and Adaptation: Central Role of the Brain , 2007 .

[45]  Lex Borghans,et al.  The Role of Noncognitive Skills in Explaining Cognitive Test Scores , 2006, SSRN Electronic Journal.

[46]  C. Segal.  Motivation, Test Scores, and Economic Success ⁄ , 2006 .

[47]  E. Whitelaw,et al.  How lifetimes shape epigenotype within and across generations. , 2006, Human molecular genetics.

[48]  L. Wößmann,et al.  Efficiency and equity of European education and training policies , 2006 .

[49]  B. Roberts,et al.  Cross-sectional and longitudinal tests of the Personality and Role Identity Structural Model (PRISM). , 2006, Journal of personality.

[50]  J. Heckman,et al.  The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior , 2006, Journal of Labor Economics.

[51]  Clive Belfield,et al.  The High/Scope Perry Preschool Program. , 2006 .

[52]  A. Reynolds,et al.  Economic returns of investments in preschool education , 2006 .

[53]  C. Anderson‐Cook,et al.  Group-Based Modeling of Development , 2006 .

[54]  E. Phelps.  Emotion and cognition: insights from studies of the human amygdala. , 2006, Annual review of psychology.

[55]  S. Frederick.  Journal of Economic Perspectives—Volume 19, Number 4—Fall 2005—Pages 25–42 Cognitive Reflection and Decision Making , 2022 .

[56]  M. Grossman,et al.  Schooling, cognitive ability and health. , 2005, Health economics.

[57]  M. Meaney,et al.  Maternal care as a model for experience-dependent chromatin plasticity? , 2005, Trends in Neurosciences.

[58]  T. Spector,et al.  Epigenetic differences arise during the lifetime of monozygotic twins. , 2005, Proceedings of the National Academy of Sciences of the United States of America.

[59]  Richard V. Adkisson.  Inequality in America: What Role for Human Capital Policies? , 2005 .

[60]  Dimitriy V. Masterov,et al.  Interpreting the Evidence on Life Cycle Skill Formation , 2005, SSRN Electronic Journal.

[61]  James J. Heckman,et al.  Labor Market Discrimination and Racial Differences in Premarket Factors* , 2003, The Journal of Law and Economics.

[62]  Dimitriy V. Masterov,et al.  Labor Market Discrimination and Racial Differences in Premarket Factors , 2005, SSRN Electronic Journal.

[63]  Peter Gluckman,et al.  The Fetal Matrix: Evolution, Development and Disease , 2004 .

[64]  E. Knudsen.  Sensitive Periods in the Development of the Brain and Behavior , 2004, Journal of Cognitive Neuroscience.

[65]  Michael J Meaney,et al.  Epigenetic programming by maternal behavior , 2004, Nature Neuroscience.

[66]  D. Charney.  Psychobiological Mechanisms of Resilience and Vulnerability , 2004 .

[67]  A. Masten.  Regulatory Processes, Risk, and Resilience in Adolescent Development , 2004, Annals of the New York Academy of Sciences.

[68]  D. Charney,et al.  Psychobiological mechanisms of resilience and vulnerability: implications for successful adaptation to extreme stress. , 2004, The American journal of psychiatry.

[69]  J. Heckman,et al.  Inequality in America: What Role for Human Capital Policies? , 2004 .

[70]  D. Olds.  Prenatal and Infancy Home Visiting by Nurses: From Randomized Trials to Community Replication , 2002, Prevention Science.

[71]  Siem Jan Koopman,et al.  State Space and Unobserved Component Models: Theory and Applications , 2004 .

[72]  I. Gottesman,et al.  PSYCHOLOGICAL SCIENCE Research Article SOCIOECONOMIC STATUS MODIFIES HERITABILITY OF IQ , 2022 .

[73]  Uri Gneezy,et al.  The W effect of incentives , 2003 .

[74]  Adrian Angold,et al.  Relationships between poverty and psychopathology: a natural experiment. , 2003, JAMA.

[75]  Robert J. Sampson,et al.  LIFE‐COURSE DESISTERS? TRAJECTORIES OF CRIME AMONG DELINQUENT BOYS FOLLOWED TO AGE 70* , 2003 .

[76]  J. Heckman,et al.  Human Capital Policy , 2003, SSRN Electronic Journal.

[77]  J. Heckman,et al.  Learning-by-Doing vs. On-the-Job Training: Using Variation Induced by the EITC to Distinguish between Models of Skill Formation , 2002 .

[78]  A. Caspi,et al.  Role of Genotype in the Cycle of Violence in Maltreated Children , 2002, Science.

[79]  Marc Demeuse,et al.  Efficiency and Equity , 2002 .

[80]  J. Mcardle,et al.  Comparative longitudinal structural analyses of the growth and decline of multiple intellectual abilities over the life span. , 2002, Developmental psychology.

[81]  H. Gintis,et al.  The Determinants of Earnings: A Behavioral Approach , 2001 .

[82]  James J. Heckman,et al.  The Dynamics of Educational Attainment for Black, Hispanic, and White Males , 2001, Journal of Political Economy.

[83]  C. Meghir,et al.  The Effect of a Social Experiment in Education , 2001 .

[84]  J. Heckman,et al.  The Importance of Noncognitive Skills: Lessons from the GED Testing Program , 2001 .

[85]  E. Deci,et al.  Extrinsic Rewards and Intrinsic Motivation in Education: Reconsidered Once Again , 2001 .

[86]  S. Hoffman.  A Treatise on the Family , 2000 .

[87]  Marian Perkins,et al.  The Nurture Assumption: Why Children Turn Out the Way They Do , 2000, BMJ : British Medical Journal.

[88]  M. Bornstein,et al.  Contemporary research on parenting. The case for nature and nurture. , 2000, The American psychologist.

[89]  S. Suomi.  A Biobehavioral Perspective on Developmental Psychopathology Excessive Aggression and Serotonergic Dysfunction in Monkeys , 2000 .

[90]  S. Suomi.  A Biobehavioral Perspective on Developmental Psychopathology , 2000 .

[91]  B. Roberts,et al.  The rank-order consistency of personality traits from childhood to old age: a quantitative review of longitudinal studies. , 2000, Psychological bulletin.

[92]  A. Kohn.  Punished by Rewards: The Trouble with Gold Stars, Incentive Plans, A'S, Praise, and Other Bribes , 1999 .

[93]  D. Nagin,et al.  Trajectories of boys' physical aggression, opposition, and hyperactivity on the path to physically violent and nonviolent juvenile delinquency. , 1999, Child development.

[94]  E. Deci,et al.  A meta-analytic review of experiments examining the effects of extrinsic rewards on intrinsic motivation. , 1999, Psychological bulletin.

[95]  S. Paradiso.  The Emotional Brain: The Mysterious Underpinnings of Emotional Life , 1998 .

[96]  Ann S. Masten,et al.  The development of competence in favorable and unfavorable environments: Lessons from successful children: Major themes , 1998 .

[97]  A. Masten,et al.  The development of competence in favorable and unfavorable environments. Lessons from research on successful children. , 1998, The American psychologist.

[98]  William R. Johnson,et al.  The Role of Premarket Factors in Black-White Wage Differences , 1996, Journal of Political Economy.

[99]  W. Mischel.  Personality and Assessment , 1996 .

[100]  F. Nielsen,et al.  The Bell Curve: Intelligence and Class Structure in American Life. , 1995 .

[101]  R. Pollak,et al.  From Parent to Child: Intrahousehold Allocations and Intergenerational Relations in the United States , 1995 .

[102]  Sean A. Spence,et al.  Descartes' Error: Emotion, Reason and the Human Brain , 1995 .

[103]  R. Murnane,et al.  The Growing Importance of Cognitive Skills in Wage Determination , 1995 .

[104]  F. Fukuyama,et al.  Race and Culture: A World View , 1995 .

[105]  R. Pollak,et al.  From Parent to Child , 1995 .

[106]  Gertrude Himmelfarb,et al.  The De-moralization Of Society: From Victorian Virtues to Modern Values , 1995 .

[107]  J. Arnett,et al.  The Limits of Family Influence: Genes, Experience, and Behavior , 1995 .

[108]  W. Mischel,et al.  A cognitive-affective system theory of personality: reconceptualizing situations, dispositions, dynamics, and invariance in personality structure. , 1995, Psychological review.

[109]  Casey B. Mulligan,et al.  The Endogenous Determination of Time Preference , 1997 .

[110]  G. Becker,et al.  A Treatise on the Family: Enlarged Edition , 1993 .

[111]  T. Bergstrom.  A survey of theories of the family , 1993 .

[112]  R. Fildes.  Forecasting structural time series models and the kalman filter: Andrew Harvey, 1989, (Cambridge University Press), 554 pp., ISBN 0-521-32196-4 , 1992 .

[113]  J. Laitner.  Random earnings differences, lifetime liquidity constraints, and altruistic intergenerational transfers , 1992 .

[114]  D. Funder,et al.  Predicting personality and behavior: a boundary on the acquaintanceship effect. , 1991, Journal of personality and social psychology.

[115]  R. Hogan,et al.  Explorations in behavioral consistency: properties of persons, situations, and behaviors. , 1991, Journal of personality and social psychology.

[116]  Walter Mischel,et al.  Predicting adolescent cognitive and self-regulatory competencies from preschool delay of gratification: Identifying diagnostic conditions. , 1990 .

[117]  A. Tellegen,et al.  An alternative "description of personality": the big-five factor structure. , 1990, Journal of personality and social psychology.

[118]  J. Schuerger,et al.  The temporal stability of individually tested intelligence , 1989 .

[119]  R. Pollak.  Tied Transfers and Paternalistic Preferences , 1988 .

[120]  Y. Weiss,et al.  Children as Collective Goods and Divorce Settlements , 1985, Journal of Labor Economics.

[121]  Edward L. Deci,et al.  Intrinsic Motivation and Self-Determination in Human Behavior , 1975, Perspectives in Social Psychology.

[122]  Cheng Hsiao,et al.  Latent variable models in econometrics , 1984 .

[123]  D. Funder,et al.  Behavior as a function of the situation. , 1983 .

[124]  C. Jencks,et al.  Who Gets Ahead? The Determinants of Economic Success in America. , 1981 .

[125]  M. Rutter.  The Long‐term Effects of Early Experience , 1980, Developmental medicine and child neurology.

[126]  J. Whitaker.  Some Neglected Aspects of Alfred Marshall's Economic and Social Thought , 1977 .

[127]  Mark Blaug,et al.  Schooling in Capitalist America: Educational Reform and the Contradictions of Economic Life , 1976 .

[128]  R. Edwards,et al.  INDIVIDUAL TRAITS AND ORGANIZATIONAL INCENTIVES: WHAT MAKES A "GOOD" WORKER? , 1976 .

[129]  H. Gintis,et al.  Schooling in Capitalist America: Educational Reform and the Contradictions of , 1976 .

[130]  A. Goldberger,et al.  Estimation of a Model with Multiple Indicators and Multiple Causes of a Single Latent Variable , 1975 .

[131]  Arleen Leibowitz,et al.  Home Investments in Children , 1974, Journal of Political Economy.

[132]  E. Werner,et al.  The Children of Kauai: A Longitudinal Study from the Prenatal Period to Age Ten , 1971 .

[133]  C. Barbeau.  Future of the Family , 1971 .

[134]  Y. Ben-Porath.  The Production of Human Capital and the Life Cycle of Earnings , 1967, Journal of Political Economy.

[135]  W. G. Cutts.  Teaching young children to read : proceedings of a conference, November 14-16, 1962, U. S. Dept. of Health, Education, and Welfare, Office of Education , 1964 .

[136]  Andre L. Simon's.  Champagne , 1907, The Hospital.

[137]  F. E..  Principles of Economics , 1890, Nature.