Molecular Genetics and Economics

Abstract

The costs of comprehensively genotyping human subjects have fallen to the point where major funding bodies, even in the social sciences, are beginning to incorporate genetic and biological markers into major social surveys. How, if at all, should economists use and combine molecular genetic and economic data from these surveys? What challenges arise when analyzing genetically informative data? To illustrate, we present results from a "genome-wide association study" of educational attainment. We use a sample of 7,500 individuals from the Framingham Heart Study; our dataset contains over 360,000 genetic markers per person. We get some initially promising results linking genetic markers to educational attainment, but these fail to replicate in a second large sample of 9,500 people from the Rotterdam Study. Unfortunately such failure is typical in molecular genetic studies of this type, so the example is also cautionary. We discuss a number of methodological challenges that face researchers who use molecular genetics to reliably identify genetic associates of economic traits. Our overall assessment is cautiously optimistic: this new data source has potential in economics. But researchers and consumers of the genoeconomic literature should be wary of the pitfalls, most notably the difficulty of doing reliable inference when faced with multiple hypothesis problems on a scale never before encountered in social science.

Employment sector and pay gaps: Genetic and environmental influences

“…Most recently, the relevance of policy analysis based on variance decomposition has also been disputed (e.g., Beauchamp et al 2011, Manski 2011. Manski (2011) argues that because h 2 and c 2 are only symbolic representations of hypothesised latent forces, variance decomposition does not yield estimates of political relevance or provide evidence of the relative importance of either genetic nor environmental factors.…”

Biology and Gender in the Labor Market

“…10 Behavioral geneticists exploit family relationships, twin births, and adoption as a means of decomposing the heterogeneity in individual outcomes into two components; one due to environmental factors and the other due to genetic factors. In its simplest form, the behavioral genetic model relies on very strong assumptions about functional form and, importantly, the independence of genetic and family effects (see Beauchamp et al 2011 Goldberger (1979, 346), in particular, cautions against using heritability estimates to undermine active socioeconomic policy through the simplistic argument that "current inequalities are the inevitable dictates of nature". Manski (2011, 83) goes even further by arguing that conceptual and technical issues make research on heritability "fundamentally uninformative for policy analysis".…”

“…Parents, for example, are likely to modify the environment in response to their children's genetic endowments. This implies that estimates from behavioral genetics models are difficult to interpret because they are essentially reduced-form estimates from a more general model in which environmental influences are endogenous with respect to genotype (see Beauchamp et al 2011, Benjamin et al 2012 for a discussion). Using such estimates for policy development requires a great deal of caution.…”

“…While research findings are intriguing, it is fair to say that genoeconomics has not as yet realized its full potential. Results have been remarkably difficult to replicate, leading some to suggest that many findings are spurious (Beauchamp et al 2011). Most studies are seriously underpowered because sample sizes are too small, and although much of the promise of geneconomics lies in uncovering the causal mechanisms behind biological processes, the evidence thus far is strictly correlational (Beauchamp et al 2011, Benjamin et al 2012, Chabris et al 2015.…”

“…Results have been remarkably difficult to replicate, leading some to suggest that many findings are spurious (Beauchamp et al 2011). Most studies are seriously underpowered because sample sizes are too small, and although much of the promise of geneconomics lies in uncovering the causal mechanisms behind biological processes, the evidence thus far is strictly correlational (Beauchamp et al 2011, Benjamin et al 2012, Chabris et al 2015. Moreover, research has not yet explicitly investigated whether heredity and genetic variation operates differently for men and women -and whether this is an important source of gender disparities.…”