Genetic Variation in Preferences for Giving and Risk Taking^*

Abstract

In this paper, we use the classical twin design to provide estimates of genetic and environmental influences on experimentally elicited preferences for risk and giving. Using standard methods from behavior genetics, we find strong prima facie evidence that these preferences are broadly heritable and our estimates suggest that genetic differences explain approximately twenty percent of individual variation. The results thus shed light on an important source of individual variation in preferences, a source that has hitherto been largely neglected in the economics literature.

The visible hand: finger ratio (2D:4D) and competitive bidding

“…If a lower digit ratio is correlated with higher circulating testosterone (Manning et al, 1998) and higher circulating testosterone is correlated with higher risk-taking (Apicella et al, 2008), then we should expect that a lower digit ratio is correlated with lower bids and higher profits. 10 We observe exactly the opposite for the White subsample. The finding with respect to bids of Whites is robust to dropping controls for demographics (except gender) and to additionally controlling for session fixed effects.…”

“…In the same investment decision task, Dreber et al (2009) associate significantly more risk-taking behavior of men with the presence of the 7-repeat allele of the dopamine receptor D 4 gene. Using a lottery choice task in a design with monozygotic and dizygotic twins, Cesarini et al (2009) conclude that risk preferences are to a certain extent heritable. Finally, Zak, Kurzban, and Matzner (2005) report that blood plasma levels of oxytocin are positively correlated with trustworthy behavior in a trust game and Kosfeld et al (2005) observes that exposing humans to the hormone oxytocin increases trust.…”

Employment sector and pay gaps: Genetic and environmental influences

“…This is relatively surprising given that the behavioral genetics literature provides convincing empirical evidence regarding heritable effects on a variety of sociological and economic outcomes. This branch of the literature includes Miller et al (2001), who investigate the genetic heritability of education; Johnson et al (2004), who find that marital status is mainly explained by genetic factors; Whiston and Keller (2004) for their review of occupational preferences; Keller et al (1992), who study the heritability of work values; Plomin and Spinath (2004), who focus on ability; and Cesarini et al (2009), who examine the genetic heritability of risk-taking. Because all of these attritubes also contribute to public sector 3 See also Maczulskij and Pehkonen (2011), who found evidence that differences in industry-specific valuations of skills explain a significant part of the pay gaps in Finland (together with human capital variables).…”

A neurochemical approach to valuation sensitivity over gains and losses

“…Recently, the heritability of economic risktaking has been investigated using classical twin studies (Cesarini et al 2009;Zhong et al 2009). At the same time, the question about specific genes being associated with risk-taking has been investigated in two studies that were carried out independently of the present study (Dreber et al 2009;Kuhnen & Chiao 2009).…”