Non-cognitive skills and earnings in Canada

This newly published paper (click on the first link here) by McLean, Bouaissa, Rainville, and Auger confirms some more general results, usually taken from American data:

Our results indicate that conscientiousness is positively associated with wages, while agreeableness, extraversion, and neuroticism are associated with negative returns, with higher magnitudes on agreeableness and conscientiousness for females. Cognitive ability has the highest estimated wage return so, while significant, non-cognitive skills do not seem to be the most important wage determinant.

The main difference seems to be that in Canada extraversion is correlated with lower earnings, but in the United States in general it is not.  And note that a one standard deviation increase in agreeableness for women is associated with a 7.4-8.7% income penalty, but no corresponding income penalty for men.  Finally, (p.112) that the rate of return on education is over seven percent, and after adjusting for cognitive level this falls by only 30 percent, relevant for the signaling model of education of course.

Comments

IQ is measurable and useful. Glad someone's here to tell us these things. Next maybe someone can tell us that bigger muscles make lifting things easier.

So difficult to figure what is allowed and not allowed here. Questioning the Big 5 personality traits model is apparently fine, but pointing out that IQ is simply measures the test itself is apparently beyond the pale. Maybe some of the less generous (which is a giant understatement) Mefites are right, to be honest.

Can we please get away from the Big 5 personality traits model? It is overused, underwhelming, and inaccurate. No two people can agree on the basic definition of things like introversion/extraversion let alone even more nebulous concepts like conscientiousness. At this point it is no better than palm reading.

Spoken like a true ENTP.

Or INTP, or ENTJ, or INTJ ....

We'll narrow it down as Edgar elaborates more.

We won't be. I agree with Edward, and find any of these systems to be about as scientifically useful as horoscopes, when they are not utterly tautological.

I guess referencing the obvious fact that Meyers-Briggs has problems with its classification system was just a bit too subtle.

Myers Briggs is mostly ....muh....but the Big 5 has a lot more validity as a metric system. It is not perfect and can be criticised, but it's silly to pretend that it isn't supported by at least some proper factor analysis.

The big 5 (and IQ) pass the common sense filter as well. We can easily tell intelligent people from not so intelligent, extroverts from introverts and so on. It is pretty silly to deny them being valid characterisations of people.

Conscientiousness as assessed by the big 5 model correlates reliably with income/wealth (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3498890/). Other big 5 factors have measurable correlations as well.

These correlations are large enough to matter. Dismissing the big 5 is silly.

Along the way I observed a distinction between "conscientiousness" and "scrupulosity" other than the spelling: the former I took to mean "requisite attention to axiological concerns", the latter "an excessive concern with the appearance of holding axiological concerns". (The distinction I learned from observing the two terms' respective usages over the years in contemporary discourse.)

While "conscientiousness" remains for me a cue for "due axiological consideration", "scrupulosity" has become a cue for "unstinting axiological considerations intended to be perceived by others".

If this nuance is perceived or shared by others, does it have a place in contemporary models of personality traits?

What do such contemporary models say concerning "personality traits" such as mere volition or the ruthless exercise thereof? What hallmarks of affectivity are taken into due account?

How reliably can such thumbnail models of personality traits actually model human complexity?

I recall many years ago when tech-skilled employees at IBM were transferring to sales because that's where the money (and potential for advancement) was. Some made the transition but many did not, the skills required in sales being different from the skills required in tech. Reading about Buttigieg's gig at McKinsey is a reminder that much of business success (and McKinsey is enormously successful) is, well, based on bullshit. What are the skills that make the boy wonders at McKinsey successful?

McKinsey has a mix of both subject matter experts and the usual "Powerpoint with buzzwords delivered confidently" types. There's no mystery to what they do (i.e. give cover to highly political decisions management was going to do anyway but needed some indirection to spare organizational feelings) but they aren't necessarily better than other big consulting firms. They are definitely overpriced.

https://mattstoller.substack.com/p/why-taxpayers-pay-mckinsey-3m-a-year

The main bang for the buck comes from scaring your employees that you're bringing in McKinsey to look you over.

I've spent a lot of hours teaching the McKinsey associates about my industry, company, and job so they could write a report with my recommendations, give it to my senior executives, and earn a lot of money.

Assuming that's true, and assuming McKinsey correctly recognizes that you are both knowledgeable and correct, then they did a great job. It's not McKinsey's fault that your management doesn't completely trust their own peoples recommendations. Indeed, management should look for third party analysis. And when the third party tells them their own staff is correct, then they should follow the recommendations.

"Finally, (p.112) that the rate of return on education is over seven percent, and after adjusting for cognitive level this falls by only 30 percent, relevant for the signaling model of education of course."

Is it? That fact seems quite consistent with both the signaling model and the human capital model. So university grads earn more because of the sheepskin effect (signaling) or because they have gained new skills and knowledge (human capital). And the fact that smarter people get greater returns also does not tell us whether we should favor signaling or human capital theories.

+1. It may, however, help to discern returns to intelligence vs conscientiousness (which is what the Education signal is for...)

"That fact seems quite consistent with both the signaling model and the human capital model. "

Well that would indeed seem relevant to the signaling model of education. It seems to point to a 70/30 level for educational knowledge versus raw intelligence. Which is a far higher ratio than Bryan Caplan seems to indicate.

It doesn't seem that it would be that hard to create a reasonably large pool of candidates that took IQ tests between ages 14-23 and compare them on a given profession / years in the profession / total compensation and largely settle this question.

No, I don't think so -- the fact that a degree makes a bigger difference for higher-IQ students doesn't mean education is mostly about human capital. One interpretation -- the current job marketplace doesn't open up advanced opportunities for even genius-level students without degrees. Without the degree, geniuses can't get their feet in the door. With degrees, geniuses get in and make the most of it. Without degrees, dullards don't get in the door either. With degrees, dullards get in but don't advance that far. You don't need human capital theory to account for the sheepskin having a bigger effect on high-IQ individuals. Of course, you *could* retell this story where the high-IQ students are more able to develop human capital at university when given the chance. It seems to me that either story works for these findings.

+1, thoughtful response

Going out on a limb here, but I'd assume that high agreeableness in women is associated with less engagement in the labor force, trading against more time spent raising children/domestic stuff. Granting that assumption, this implies part-time for women and part-timers tend to earn less per hour anyway. (and I don't think this is due to gender)

So color me smugly unsurprised? Though I'm admittedly too prone to hindsight bias. I often wish there were spoiler tags for such reports so I can test my predictive ability and really think about this.

As for conscientiousness and cognitive ability, I'd say that they bottleneck as well as multiply each other in earning potential.

"The main difference seems to be that in Canada extraversion is correlated with lower earnings, but in the United States in general it is not. "

Fascinating but not surprising result. Great to see empirical evidence that finds a basis for national stereotypes.

I suspect that there's a reversal of causation. Canadian culture disfavors being loud and boisterous, so Canadians project those traits onto the poor, because they're society's less desirable people.

"I suspect that there's a reversal of causation. "

Yes, but probably also a selection bias. There's plenty of cases of high performing, extroverted Canadians migrating to American for the much higher pay. The entire Canadian entertainment industry is one of the minor league feeder systems to the American entertainment industry.

Rush, Jim Carrey, Alanis Morissette, SCTV, and the Kids in The Hall more than make up for Bieber and Bryan Adams.

William Shatner! Born a Quebecois.

He was in the news yesterday. 88 years old and he files for divorce after 18 years of marriage. Maybe his wife is too loud and boisterous.

The Civil Service doesn't have room for folks who run hot. Most "good" jobs in this country are Civil Service or related. So one learns how to hide or one leaves and suffers the hit when it becomes clear business won't pay for the work evasion skills time in the public sector provided.

It doesn't seem like they deal with endogeneity. Bad paper.

"The rate of return on education is over 7%"

WHICH education? Whenever I hear 'education' used this way, I have to wonder how much cover this gives useless humanity degrees that do not provide anything like a decent return on investment.

How much of that 7% is the result of Medicine, Engineering, hard sciences, Ivy League law degrees, etc?

Isn't it time we started breaking this statistic down by major and school? Of course, universities don't want to do that, because it would expose how many programs are just filler meant to separate average or below average students from student loan money.

Isn't it important for young people to know that, for example, a degree in Social Work or Education Studies will earn you a below-average salary? Or that people with a degree in History have a higher unemployment rate than the general population?

We keep burying the information that actually matters in silly aggregates that really don't tell you much and hide important things you should know.

"Isn't it time we started breaking this statistic down by major and school?"

+1, averaging the data isn't helpful in such a broad and distinct topic

That being said, it's much easier to compare like IQ's across college graduates vs non-college graduates. It's much harder when you start selecting for the majors that are on the high IQ end. At that point, your pool of comparative IQ's that didn't get any degree are relatively sparse.

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