How personality shapes earnings

Have you ever thought about why some workers climb the earnings ladder faster than others? Maybe it is not just their skills or training but something more intrinsic – their personality.

Consider two workers. Both are the same age, possess the same level of education, and have identical skills. However, one is open to new experiences and eager to learn, while the other is not.

Which one do you think will fare better in the job market?

Now, imagine these two individuals again, but this time, one is highly conscientious and reliable, while the other lacks these traits. Would you expect a difference in their earnings?

In labour economics, cognitive skills have long been established as one of the main drivers of career growth. However, new research highlights the role of personality traits in determining career success.

Traits such as openness, conscientiousness, and extraversion often act as golden tickets rewarded by employers. In contrast, agreeableness and neuroticism might hinder full earning potential. This might be because employers seek traits that match their ideal job profile, leading to higher productivity and lower coordination costs.

Yet, there exists no consensus on which personality traits are the most important and how they affect earnings. A recently published study in the Bulletin of Economic Research compiled results from over 50 studies to provide a clearer picture of the degree to which personality influences earnings.

This approach, called a meta-analysis, estimates the overall effect and identifies factors that could explain differences between studies.

The results confirm that openness to experience and conscientiousness are significantly correlated with higher earnings. Individuals with these traits are more likely to seek higher education and continuous professional development, boosting their income. Extraversion also shows a positive correlation, though to a lesser extent. On the other hand, high agreeableness and neuroticism tend to be associated with lower earnings.

This study also aimed to identify the factors contributing to differences in reported effects across studies, given the significant variability observed in earnings.

Traits such as openness, conscientiousness, and extraversion often act as golden tickets rewarded by employers- Melchior Vella

The results illustrate that socioeconomic factors – such as education, occupation, and cognitive skills – are the most significant factors influencing the variation in the estimated effect of each personality trait. This suggests that social outcomes and contexts influence personality traits.

Moreover, the study identifies the presence of publication bias in the reported effects of the studies examined. Publication bias occurs when studies with interesting results are more likely to be published than uninteresting ones.

Imagine if cinemas only showed films with feel-good endings while those with sad conclusions remained hidden. This would lead to a distorted perception of reality and falsely suggest that feel-goods are more common than they really are.

This research concludes that publication bias leads to overestimating the true effects. Studies showing a strong link between certain personality traits and higher earnings are more likely to be published, making it appear that personality has a bigger impact on earnings than it truly does.

This meta-analysis suggests that understanding factors influencing personality development can help workers and employers utilise the power of personality for greater advancement in the job market.

Melchior Vella is a visiting lecturer at the University of Malta. The study, funded by the Tertiary Education Scholarship Scheme, was published in the Bulletin of Economic Research under the title ‘The Relationship Between the Big Five Personality Traits and Earnings: Evidence from a Meta-Analysis’.