The Behavioral Genetics of Behavioral Anomalies

Abstract

A number of recent papers have examined the environmental and genetic sources of individual differences in economic and financial decision making. Here we contribute to this burgeoning literature by extending it to a number of key behavioral anomalies that are thought to be of importance for consumption, savings, and portfolio selection decisions. Using survey-based evidence from more than 11,000 Swedish twins, we demonstrate that a number of anomalies such as, for instance, the conjunction fallacy, default bias, and loss aversion are moderately heritable. In contrast, our estimates imply that variation in common environment explains only a small share of individual differences. We also report suggestive evidence in favor of a shared genetic architecture between cognitive reflection and a subset of the studied anomalies. These results offer some support for the proposition that the heritable variation in behavioral anomalies is partly mediated by genetic variance in cognitive ability. Taken together with previous findings, our results underline the importance of genetic differences as a source of heterogeneity in economic and financial decision making.

Genes, psychological traits and civic engagement

“…As a field, behaviour genetics represents an impressive collection of findings on the influence of genetic variation on a large range of behaviours, including: altruism [9], entrepreneurism [10], financial risk taking [9,11], impulsivity [12], intelligence [13,14], leadership [15][16][17], non-rational decision-making [18], smoking addiction [19], socioeconomic status [20] and trust [21]. Indeed, so widespread are findings of heritable behaviour that one scholar has coined the 'first law' of behaviour genetics: 'All human behavioural traits are heritable' [22].…”

Risk taking, behavioral biases and genes: Results from 149 active investors

“…various behavioral biases such as loss aversion, the conjunction fallacy and the default bias (e.g., Cesarini et al, 2009Cesarini et al, , 2010Cesarini et al, , 2012.…”

Are genetic markers of interest for economic research?

“…6 Jensen (1967) previously conducted a study published in a general interest scientific journal that tried to isolate the role of heredity, environment, and luck in earnings. 7 More recent research has shifted from using data collected in traditional surveys to using data from either incentivized experiments or surveys, to explore the heritability in different measures of economic preferences (e.g., Wallace et al 2007;Cesarini et al 2008Cesarini et al , 2009Cesarini et al , 2010Cesarini et al , 2012. See Kohler et al (2011) for a discussion of how to leverage twin studies to model unobserved genetic endowments and causal pathways.…”