Behavioral tasks (e.g., Stroop task) that produce replicable group-level effects (e.g., Stroop effect) often fail to reliably capture individual differences between participants (e.g., low test-retest reliability). This “reliability paradox” has led many researchers to conclude that most behavioral tasks cannot be used to develop and advance theories of individual differences. However, these conclusions are derived from statistical models that provide only superficial summary descriptions of behavioral data, thereby ignoring theoretically-relevant data-generating mechanisms that underly individual-level behavior. More generally, such descriptive methods lack the flexibility to test and develop increasingly complex theories of individual differences. To resolve this theory-description gap, we present generative modeling approaches, which involve using background knowledge to specify how behavior is generated at the individual level, and in turn how the distributions of individual-level mechanisms are characterized at the group level—all in a single joint model. Generative modeling shifts our focus away from estimating descriptive statistical “effects” toward estimating psychologically meaningful parameters, while simultaneously accounting for measurement error that would otherwise attenuate individual difference correlations. Using simulations and empirical data from the Implicit Association Test and Stroop, Flanker, Posner Cueing, and Delay Discounting tasks, we demonstrate how generative models yield (1) higher test-retest reliability estimates, and (2) more theoretically informative parameter estimates relative to traditional statistical approaches. Our results reclaim optimism regarding the utility of behavioral paradigms for testing and advancing theories of individual differences, and emphasize the importance of formally specifying and checking model assumptions to reduce theory-description gaps and facilitate principled theory development.