Heritability of Wealth, and Greed

Here is an interesting blog posting by Bryan Caplan. He's an economist at George Mason U. and a libertarian, that a right wing political stance. I generally ignore right wingers, but libertarians tend to be more thoughtful than most, so I will read their material. Here's his thoughts on wealth, heredity, and greed:

Is Greed in the Genes?
Bryan Caplan

Behavioral geneticists will tell you that intelligence and personality are highly heritable. But at least for economists, intelligence and personality are mainly interesting insofar as they predict that variable that "really" counts - income. How heritable is that?

Quite. This 2002 paper by Bowles and Gintis reports that identical twins' incomes have a correlation of .56, versus .36 for fraternal twins. Using standard formulae, this implies that genes explains 40% of the variance of income, family environment 16%, and non-shared environment 44%. A recent working paper by David Cesarini gets income correlations of .545 for identicals versus .266 for fraternals, implying that genes explain 56% of the variance, shared environment -1%, and non-shared environment 45%.

It's easy at this point to say, "Of course! Intelligence has a large effect on income and is highly heritable, so it follows that income will be highly heritable, too." But Bowles and Gintis show that the heritability of income is far larger than the IQ effect can explain. (See Arnold's doubts here).

What if you add in personality measures? David Cesarini does just this - and finds that measures of IQ and personality explain a bit more than one-third of the heritaibility of income. That's a lot more than B&G got, but the glass is still two-thirds empty.

So where are the other two-thirds of the income heritability coming from? Here's an hypothesis that seems promising to me:

1. Standard personality tests largely neglect the personality trait of greediness. (Alternate labels: Orientation toward money, materialism...)

2. Greediness is moderately-strongly heritable.

3. Greediness strongly predicts income, all else equal.

Take me, for instance. IQ tests say I'm smart, and personality tests say I'm conscientious. But money doesn't matter much to me. When someone leaves academia to earn five times the income, I don't feel envious; I feel relieved not be to leaving academia! The end result: While I'm financially comfortable, I earn a lot less than many people with similar intelligence and work ethic.

So what do you think? If measured intelligence and conscientiousness account for one-third of the heritability of income, how much could measured greediness explain?

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