LASER Discussion Papers- Paper No. 3

There is a small economic literature suggesting that some part of the variation in earnings can be attributed to individuals ’ psychological attributes. Using data from the BHPS for the first time, all basic traits from the Five Factor Personality Inventory are employed to examine the relationship between personality traits and wages. The estimates indicate no clear patterns for openness, conscientiousness and extraversion. The results however suggest wage penalties for neuroticism and agreeableness for both male and female workers in the UK, i.e. being nice does not pay