Assessing (un)observables: culture, abilities, and ugliness

Does Culture Affect Economic Outcomes?
by Paola Sapienza, Luigi Zingales – #11999 (CF EFG)

Abstract: Economists have been reluctant to rely on culture as a possible
determinant of economic phenomena. The notion of culture is so broad
and the channels through which it can enter the economic discourse so
vague that it is difficult to design testable hypotheses. In this
paper we show this does need to be the case. We introduce a narrower
definition of culture that allows for a simple methodology to develop
and test cultural-based explanations. We also present several
applications of this methodology: from the choice to become
entrepreneur to that of how much to save, to end with the political
decision on income redistribution.

The Effects of Cognitive and Noncognitive Abilities on Labor
Market Outcomes and Social Behavior
by James J. Heckman, Jora Stixrud, Sergio Uzrua – #12006 (CH ED)

Abstract: This paper establishes that a low dimensional vector of cognitive and
noncognitive skills explains a variety of labor market and behavioral
outcomes. For many dimensions of social performance cognitive and
noncognitive skills are equally important. Our analysis addresses the
problems of measurement error, imperfect proxies, and reverse
causality that plague conventional studies of cognitive and
noncognitive skills that regress earnings (and other outcomes) on
proxies for skills. Noncognitive skills strongly influence schooling
decisions, and also affect wages given schooling decisions.
Schooling, employment, work experience and choice of occupation are
affected by latent noncognitive and cognitive skills. We study a
variety of correlated risky behaviors such as teenage pregnancy and
marriage, smoking, marijuana use, and participation in illegal
activities. The same low dimensional vector of abilities that
explains schooling choices, wages, employment, work experience and
choice of occupation explains these behavioral outcomes.

Ugly Criminals
by Naci Mocan, Erdal Tekin – #12019 (CH HE LS)

Abstract: Using data from three waves of Add Health we find that being very
attractive reduces a young adult’s (ages 18-26) propensity for
criminal activity and being unattractive increases it for a number of
crimes, ranging from burglary to selling drugs. A variety of tests
demonstrate that this result is not because beauty is acting as a
proxy for socio-economic status. Being very attractive is also
positively associated adult vocabulary test scores, which suggests
the possibility that beauty may have an impact on human capital
formation. We demonstrate that, especially for females, holding
constant current beauty, high school beauty (pre-labor market beauty)
has a separate impact on crime, and that high school beauty is
correlated with variables that gauge various aspects of high school
experience, such as GPA, suspension or having being expelled from
school, and problems with teachers.
These results suggest two handicaps faced by unattractive
individuals. First, a labor market penalty provides a direct
incentive for unattractive individuals toward criminal activity.
Second, the level of beauty in high school has an effect on criminal
propensity 7-8 years later, which seems to be due to the impact of
the level of beauty in high school on human capital formation,
although this second avenue seems to be effective for females only.