The economic value of Breaking Bad: How misbehavior in school pays off for some kids

By Nicholas W. Papageorge (Johns Hopkins University and IZA)

Nicholas W. Papageorge

There is growing interest in how schools can shape children’s non-cognitive skills (sometimes known as behavioral traits, soft skills, or personality). One reason for this interest is that non-cognitive skills predict a wide range of economic outcomes, such as employment and lifetime earnings, but are also relatively malleable—at least until adulthood. This opens up a role for policy interventions aimed at school children. For example, schools could focus resources on cultivating positive non-cognitive skills (or eliminating negative ones) similar to the way that they develop math and reading skills. My research shows that policies aimed at reducing so-called “negative” non-cognitive or behavioral traits, however, could harm children in the long run.

Together with two co-authors, I have studied how classroom misbehavior relates to both educational attainment and labor market performance. Surprisingly, we find evidence that some non-cognitive skills that manifest as childhood misbehavior in the classroom (and are predictive of lower schooling attainment) are also predictive of higher earnings later in life. This finding challenges prevailing research, which has generally argued that misbehavior in the classroom reflects underlying skills that are bad for schooling and bad overall.

Our analysis uses data from a study following individuals born in 1958 in Great Britain.  When these individuals were 11-year-olds, the study asked their teachers to fill out a series of inventories describing each child’s behavior in the classroom. The study followed these children into adulthood, collecting information on their educational attainment and employment.  The length of the survey enables us to relate each individual’s economic success to his or her childhood misbehavior in the classroom.

Distinguishing different types of misbehavior is the key

It has been long established in the psychology literature that the survey information collected from teachers on classroom behavior is statistically well summarized by two underlying factors, each reflecting a different non-cognitive skill.  One of the factors captures anxious, aggressive, or restless outwardly expressed (thus: externalizing) behaviors.  The second embodies withdrawn, inhibited (thus: internalizing) behaviors. Recognizing the distinction between these two underlying traits is the key.  If we simply summarize all misbehavior, as some previous research has done, we find that misbehavior lowers schooling attainment and also lowers earnings. This is the basis for the widespread view that childhood misbehavior has a detrimental impact on all economically relevant outcomes.

However, when we recognize that misbehavior in the classroom can be reflective of two very different non-cognitive skills—externalizing and internalizing behaviors—a much more nuanced story emerges.  Both of these characteristics are associated with lower schooling attainment.  However, whereas internalizing behaviors, like being unforthcoming, depressive or withdrawn, predict lower earnings, externalizing behaviors, such as aggression, predict higher earnings.  In other words, the externalizing factor lowers schooling attainment, but appears to have value in the labor market.  This finding calls into question the role of schooling in identifying and cultivating skills that are productive.

Externalizing behaviors can be quite lucrative

We find that externalizing behaviors raise earnings even after we account for its negative impact on schooling.  We show similar patterns for men and women, however we find large differences in how externalizing affects individuals depending on their socioeconomic status as children. Children from low-income families who exhibit externalizing behaviors see no benefit in the job market.  This finding confirms previous results in the literature showing that policies that reduce externalizing behaviors among children from disadvantaged families can boost their lifetime earning potential. However, our work also shows that for children who do not grow up in poverty, externalizing behaviors can be quite lucrative.

Our ongoing research asks whether patterns similar to what we found in Great Britain hold in the U.S.  Preliminary evidence shows that for the same levels of externalizing behaviors, African American children face higher earnings penalties than white children.  We suspect that part of this is due to higher rates of interaction with the criminal justice system for high-externalizing African Americans.

This research suggests several avenues for future caution in how we design policies targeting non-cognitive skills.  This stands in contrast with health or cognition, which are generally perceived as “goods” that improve people’s lives.  What we show is that non-cognitive skills, personality or behavioral traits can have very mixed effects.  In our case, we show that a factor that predicts lower educational attainment also predicts higher earnings.  Finally, our results on externalizing suggest that schools do not always foster the sorts of skills that are valuable in the labor market.

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Editor’s note: This is a slightly edited version of the article that originally appeared on the Brookings Institution’s Brown Center Chalkboard. Reposted with kind permission.

Download the full paper (IZA DP No. 10822):

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Who feels the pain of science research budget cuts?

Bruce A. WeinbergBy Bruce A. Weinberg (Ohio State University and IZA)

Science funding is intended to support the production of new knowledge and ideas that develop new technologies, improve medical treatments and strengthen the economy. The idea goes back to influential engineer Vannevar Bush, who headed the U.S. Office of Scientific Research and Development during World War II. And the evidence is that science funding does have these effects.

But, at a practical level, science funding from all sources supports research projects, the people who work on them and the businesses that provide the equipment, materials and services used to carry them out. Given current proposed cuts to federal science funding – the Trump administration has, for instance, proposed a 20 percent reduction for the National Institutes of Health – it’s important to know what types of people and businesses are touched by sponsored research projects. This information provides a window into the likely effects of funding cuts.

Most existing research into the effects of science funding tries to quantify research artifacts, such as publications and patents, rather than tracking people. I’ve helped to start an emerging project called the UMETRICS initiative which takes a novel approach to thinking about innovation and science. At its core, UMETRICS views people as key to understanding science and innovation – people conduct research, people are the vectors by which ideas move around and, ultimately, people are one of the primary “products” of the research enterprise.

UMETRICS identifies people employed on scientific projects at universities and the purchases made to carry out those projects. It then tracks people to the businesses and universities that hire them, and purchases to the vendors from which they come. Since UMETRICS relies entirely on administrative data provided by member universities (now around 50), the U.S. Census Bureau and other naturally occurring data, there are no reporting errors, sample coverage concerns or burden for people. It covers essentially all federal research funding as well as some funding from private foundations.

Who does research funding support?

Our administrative data allow us to identify everyone employed on research projects, not just those who appear as authors on research articles. This is valuable because we’re able to identify students and staff, who may be less likely to author papers than faculty and postdocs but who turn out to be an important part of the workforce on funded research projects. It’s like taking into account everyone who works in a particular store, not just the manager and owner.

We compared the distribution of people supported on research projects at some of the largest National Science Foundation (NSF) Divisions and National Institutes of Health (NIH) Institutes and Centers. Together, the NSF and NIH support close to 70 percent of federally funded academic R&D.

The striking thing is that the majority of people employed on research projects are somewhere in the training pipeline, whether undergraduates; graduate students, who are particularly prevalent at NSF; or postdocs, who are more prevalent at NIH. Staff frequently constitute 40 percent of the NIH-supported workforce, but faculty are a relatively small portion of the workforce at all NIH Institutes and NSF Divisions.

Based on these results, it seems likely that changes in federal research funding will have substantial effects on trainees, which would naturally have implications for the future STEM workforce.

What happens to STEM doctoral recipients?

Given the importance of trainees in the research workforce, we have focused much of our research on graduate students.

We mapped the universities in our sample and the share of the graduate students in each state one year after graduation. Our data show that many grad students contribute to local economies – 12.7 percent are within 50 miles of the universities where they trained. For six of our eight universities, more people stayed in state than went to any other single state. At the same time, graduate students fan out nationally, with both coasts, Illinois and Texas all being common destinations.

The doctoral recipients in our sample are also more likely to take jobs at establishments that are engines of the knowledge economy. They are heavily overrepresented in industries such as electronics, semiconductors, computers and pharmaceuticals, and underrepresented in industries such as restaurants, grocery stores and hotels. Doctoral degree recipients are almost four times as likely as the average U.S. worker to be employed by an R&D-performing firm (44 percent versus 12.6 percent). And, the establishments where the doctoral degree recipients work have a median payroll of over US$90,000 per worker compared to $33,000 for all U.S. establishments and $61,000 for establishments owned by R&D performing firms.

We also studied initial earnings by field and find that earnings of doctoral degree recipients are highest in engineering; math and computer science; and physics. Among the STEM fields, the lowest earnings are in biology and health, but our data also suggest that many of the people in these fields take postdoc positions that have low earnings, which may improve long-run earnings prospects. Interestingly, we find that women have substantially lower earnings than men, but these differences are entirely accounted for by field of study, marital status and presence of children.

Taken as a whole, our research indicates that the workers trained on research projects play a critical role in the industries and at companies critical for our new, knowledge economy.

What purchases do research projects drive?

Another way in which sponsored research projects affect the economy in the short run is through purchases of equipment, supplies and services. Economist Paula Stephan writes eloquently of these transactions, which range from purchasing computers and software, to reagents, medical imaging equipment or telescopes, even to lab mice and rats.

Still unpublished work studying the vendors who sell to sponsored research projects at universities shows that many of the firms selling to sponsored research projects are frequently high-tech and often local. Moreover, firms that are vendors to university research projects are more likely to open new establishments near their campus customers. Thus, there is some evidence that research projects directly stimulate local economies.

So while the goal of sponsored research projects is to develop new knowledge, they also support the training of highly skilled STEM workers and support activity at businesses. The UMETRICS initiative allows us to see just which people and businesses are touched by sponsored research projects, providing a window into the short-run effects of research funding as well as hinting at its long-run value.

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This article was originally published on The Conversation.
Read the original article.The Conversation

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How social norms affect smoking behavior

Today on World No Tobacco Day, the WHO highlights the various negative effects of smoking, calling attention to the fact that tobacco use worldwide causes more than 7 million deaths every year. Since the effects on health, income and productivity also have important labor market consequences, over 30 IZA Discussion Papers have analyzed various aspects of smoking.

Despite smoking bans and increased awareness of the health dangers, many teenagers still choose to start smoking. Two selected papers look at possible reasons why, including peer pressure, role models and social norms.

When all the cool kids smoke

The IZA Discussion Paper by Juan D. Robalino (Cornell University & IZA) analyzes adolescent peer effects on cigarette consumption, specifically considering the impact of the popularity of peers. Using AddHealth data on American high-school students, Robalino finds that most of the aggregate peer effects regarding cigarette smoking come from the smoking propensity of the 20% most popular kids.

Thus, teens seem to imitate the smoking behavior of popular peers and avoid the behavior of unpopular peers. These patterns even persist seven and thirteen years after peers’ behavior was measured. As a result, Robalino finds that the higher the popularity of peer smokers is, the higher the probability is of an individual picking up smoking and vice versa.

The dark side of gender inequality

The IZA Discussion Paper by Núria Rodríguez-Planas (Queens College & IZA) and Anna Sanz-de-Galdeano (University of Alicante & IZA) focuses on the connection between gender equality and smoking. Although smoking is more prevalent among men, women in many countries are catching up, raising concerns of a future epidemic of tobacco use among women.

The objective of the paper is to understand the role of informal institutional constraints (culture or social norms) in explaining gender differences in smoking among adolescents. The authors analyze the smoking behavior of over 6,000 second-generation immigrant girls and boys aged 15 to 18 coming from 45 different countries of ancestry and living in Spain.

They find that descending from more gender-equal societies makes girls relatively more prone than boys to smoke and engage in other risky behaviors such as drinking or smoking marijuana. Girls whose parents come from more gender-equal societies are also relatively more likely to engage in risky behaviors than their male counterparts. As these risky behaviors are traditionally associated with males, the study suggests that gender equality moves females’ behaviors closer to those of males.

Read the complete papers:

See also more IZA Discussion Papers on smoking bans and smoking behavior.

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Rise in earnings inequality is the biggest difficulty in today’s US labor market

new IZA World of Labor report looking at the US labor market (2000-2016) finds a remarkable drop in the labor force participation rate; the nearly full recovery of unemployment from the depths of the Great Recession; and the continuing growth in post-inflation average earnings while earnings inequality continues to rise.

The report by IZA Network Coordinator Dan Hamermesh (Royal Holloway, University of London) looks at the development of the American labor market since before the 2001 recession. In the aggregate the US labor market is doing quite well today. Unemployment is currently below 5%, and real weekly earnings of full-time workers increased from the 2000 cyclical peak to the current period of near full employment.

IZAWOL.361.gaThe difficulties lie behind the aggregates. Teen unemployment at 15% is far higher than desirable, especially since it is coupled with the higher long-term unemployment among teenagers. It suggests that there is an increasingly large group who are beginning their work lives with long-term disappointment and with dim career prospects.

Even though labor force participation rates of people aged 55 and over have continued to rise, those of adult men aged 20−54 have dropped, continuing a trend. Since 2000 the overall participation rate has fallen by over four percentage points. Surprisingly so too has that of women aged 20−54, sharply reversing the previous trend. This decline means that employment is about six million people lower than it would have been had the participation rate not fallen. Hamermesh argues that seeing a decline in labor market participation may suggest that Americans are developing a more reasonable work−life balance.

Though post-inflation average earnings continue to rise, so does earnings inequality, with the growth in earnings most prevalent among workers in the upper half of the earnings distribution. The earnings of African-American and Hispanic workers relative to whites have not changed greatly and remain far below those of white workers.

Hamermesh sees the continuing rise in earnings inequality as one of the biggest challenges in today’s US labor market. He suggests that the solution to this problem is simple and would put the US economy more in line with those of other wealthy nations. Since the labor market continues to generate increasing earnings inequality, its effects could be offset by tax policy affecting income inequality: The government should raise tax rates on households in the upper third of the distribution of household incomes while at the same time lowering rates on households in the bottom two-thirds.

Read the complete article:

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This is the first of a series of 27 articles written by labor and macro economists from different countries who summarize the current state of the central issues in their country’s labor market: Unemployment and labor force participation, overall and by demographic group; changes in real wages and wage inequality; and other country-specific labor-market topics. Find out more on IZA World of Labor!

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Magne Mogstad receives 2017 IZA Young Labor Economist Award

mogstad

Magne Mogstad

Magne Mogstad, the Gary S. Becker Professor in Economics at the University of Chicago, has been selected as the recipient of the 2017 IZA Young Labor Economist Award. IZA bestows this honor once every two years to an aspiring labor market researcher below age 45 to support and stimulate top research. The selection was made by a committee consisting of the IZA Network Coordinator and five distinguished economists: Francine Blau, Richard Blundell, George Borjas, David Card and Shelly Lundberg.

According to Daniel S. Hamermesh, Professor at Royal Holloway University of London and Editor-in-Chief of IZA World of Labor, the award is a “modest recognition of the remarkable amount that Mogstad has already achieved.” He has contributed major studies in such diverse areas as the economics of the family, human capital, econometrics of labor issues, and others. The breadth of the topics analyzed is matched by the depth of the contribution in each area.

Mogstad’s research is characterized by a strong empirical focus on large-scale administrative population data to answer a variety of public policy questions. In his most recent papers, for example, he addressed the effect of assortative mating on overall income inequality, the welfare implications of disability insurance, and the causal mechanisms behind the intergenerational transmission of wealth.

The Award, which carries a stipend of 6,000 euros, will be conferred formally during the IZA reception at the ASSA annual meeting in Philadelphia, PA, on January 6, 2018.

See also the complete list of IZA Young Labor Economist Award winners.

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How personality is affected by birth order and birth spacing

The family environment is among the most important factors in the development of a child’s personality. It is evident that parental strategies and the amount of time and resources that parents are able to put towards their children would have a strong impact. Nonetheless, there are several popular anecdotes and stereotypes about the vastly different characteristics of siblings based on which order they were born and the age gap between them.

But does it really matter if a child is the first born, a middle child, or the last? Is it also relevant for the development of the child how many years parents wait to have another baby? According to two recent IZA Discussion Papers, both factors – birth order and spacing – play a role in shaping adult personality traits.

Psychologists have long hypothesized that birth order could be related to differences in personality. First-borns are believed to be more responsible and focused on pleasing the parents, thus acting as a role-model for their younger siblings, while later-born children are thought to be more easy-going and sociable.

Personality traits related to success seem to decline with birth order

An IZA Discussion Paper by Sandra E. Black (University of Texas at Austin and IZA), Erik Grönqvist (IFAU), and Björn Öckert (IFAU) studies this relationship between birth order and personality traits among Swedish men whose personality was assessed when enlisting in the military. The researchers find evidence that the types of personality traits which are positively related to success in life decline with birth order. First-born children show higher emotional stability, greater persistence, more social outgoingness, and higher willingness to assume responsibility and take initiative.

Given the importance of such personality traits in the labor market, the authors analyze whether occupational choices display a similar pattern as well. Indeed, first-born children are almost 30 percent more likely than third-borns to be top managers, an occupation which tends to require higher non-cognitive abilities.

But what can explain such a consistent pattern of stark differences between siblings? The authors scrutinize a number of mechanisms that might be driving these results. While they eliminate biological factors as a potential culprit, the authors point to parents’ behavior as the primary influence. They find that parents invest less in children that are born later, especially in terms of how strictly they enforce rules and how much time they put into discussing and helping with school work. The researchers also note that sibling rivalry and parents’ adaptation to it play a role in shaping children’s personality.

Larger age gaps associated with negative personality traits

Similar to birth order, birth spacing, i.e., the difference in age between siblings, also affects personality traits. The IZA Discussion Paper by Bart H. H. Golsteyn (Maastricht University and IZA) and Cécile A. J. Magnée (Maastricht University) follows a large British cohort from birth until age 42, studying the effect of age gaps between siblings on personality traits of the youngest child in a two-child household.

Larger birth gaps indeed appear to be related to more disorganized behavior, more neuroticism, and more introversion. While the authors do not investigate the underlying elements responsible for these outcomes in detail, the results suggest that small birth gaps make it easier for parents to devote adequate time and resources to both children simultaneously. In addition to more attention provided by parents, siblings closer to each other may be more able to play and learn from one another.

Adverse childhood circumstances matter too

While these studies show that the order and timing of births clearly matter for personality development, the effect of events later in childhood should not be neglected. The IZA Discussion Paper by Jason M. Fletcher (University of Wisconsin-Madison and IZA) and Stefanie Schurer (University of Sydney and IZA) reveals that adverse childhood experiences are significantly and robustly associated with neuroticism, conscientiousness, and openness to experience, but not with agreeableness and extraversion.

Each of these papers reinforces the importance of the conditions and context of early childhood development in shaping an individual’s personality, which in turn affects long-term success in life.

Read the complete papers:

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Do longer working hours decrease performance?

fatigueWorking hours vary substantially, both between and within countries, due to differences in the regulation of the standard workweek and in the prevalence of part-time work.

Relatively little, however, is known about how the length of the working day affects workers’ performance. From a theoretical point of view, two contrasting effects are possible. On the one hand, if part of the working time has to be used to prepare for work before one can actually become productive (e.g. exposing goods one wants to sell, or getting back to where one left in a complex cognitive task), then short working hours are not worth the trouble and longer working hours are better for performance. On the other hand, longer working hours can result in fatigue, which is likely to cause lower performance as the number of hours worked increase.

Although scholars have started to analyze the relation between working hours and worker performance already in the early 20th century, there is still not much conclusive evidence about how exactly and how much working hours affect performance. Existing studies have either relied on historical data, e.g. from munition workers during WW1 or from the Hawthorne experiments, or on data from the health sector, in which fatigue can result in human errors with crucial consequences.

Fatigue plays an important role

In a recent IZA Discussion Paper, Marion Collewet and Jan Sauermann use data on working hours and performance of a sample of call agents from a call center located in the Netherlands. Although call agents in this call center predominantly have part-time contracts, their job is demanding due to the constant inflow of calls generating constant pressure to perform. The authors find that agents have lower performance per hour on days on which they work longer hours. If one increases the length of a shift by 1 percent, the call agent’s output, measured by the total number of calls handled, increases by only 0.9 percent. This result suggests that fatigue plays an important role. Interestingly, the quality of the service provided seems to slightly increase with hours worked.

Since these results are found for workers who are employed in part-time contracts, fatigue effects might be stronger in other service jobs with longer average working hours.

Download the paper (IZA DP No. 10722):

Read also these IZA World of Labor articles on related topics:

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