Genetic and environmental influences on household financial distress

Research output: Contribution to journalArticle

Abstract

Heterogeneity of household financial outcomes emerges from various individual and environmental factors, including personality, cognitive ability, and socioeconomic status (SES), among others. Using a genetically informative data set, we decompose the variation in financial management behavior into genetic, shared environmental and non-shared environmental factors. We find that about half of the variation in financial distress is genetically influenced, and personality and cognitive ability are associated with financial distress through genetic and within-family pathways. Moreover, genetic influences of financial distress are highest at the extremes of SES, which in part can be explained by neuroticism and cognitive ability being more important predictors of financial distress at low and high levels of SES, respectively.

Original languageEnglish (US)
Pages (from-to)404-424
Number of pages21
JournalJournal of Economic Behavior and Organization
Volume142
DOIs
StatePublished - Oct 2017

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Financial distress
Household
Socioeconomic status
Cognitive ability
Environmental factors
Individual factors
Predictors
Financial management
Pathway
Neuroticism

Keywords

  • Behavior genetics
  • Cognitive ability
  • Household finance
  • Personality traits
  • Socioeconomic status

ASJC Scopus subject areas

  • Economics and Econometrics
  • Organizational Behavior and Human Resource Management

Cite this

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title = "Genetic and environmental influences on household financial distress",
abstract = "Heterogeneity of household financial outcomes emerges from various individual and environmental factors, including personality, cognitive ability, and socioeconomic status (SES), among others. Using a genetically informative data set, we decompose the variation in financial management behavior into genetic, shared environmental and non-shared environmental factors. We find that about half of the variation in financial distress is genetically influenced, and personality and cognitive ability are associated with financial distress through genetic and within-family pathways. Moreover, genetic influences of financial distress are highest at the extremes of SES, which in part can be explained by neuroticism and cognitive ability being more important predictors of financial distress at low and high levels of SES, respectively.",
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author = "Yilan Xu and Briley, {Daniel Andrew} and Brown, {Jeffrey R} and Roberts, {Brent W}",
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AU - Briley, Daniel Andrew

AU - Brown, Jeffrey R

AU - Roberts, Brent W

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AB - Heterogeneity of household financial outcomes emerges from various individual and environmental factors, including personality, cognitive ability, and socioeconomic status (SES), among others. Using a genetically informative data set, we decompose the variation in financial management behavior into genetic, shared environmental and non-shared environmental factors. We find that about half of the variation in financial distress is genetically influenced, and personality and cognitive ability are associated with financial distress through genetic and within-family pathways. Moreover, genetic influences of financial distress are highest at the extremes of SES, which in part can be explained by neuroticism and cognitive ability being more important predictors of financial distress at low and high levels of SES, respectively.

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KW - Cognitive ability

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KW - Personality traits

KW - Socioeconomic status

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