New directions in behavioural economics : essays on personality and well-being

Abstract

This thesis is divided into two parts, each consisting of two self-contained chapters. The first part provides new findings in the economics of personality, and well-being. Chapter 1 studies the implications of ‘personality mismatch’. Mismatch in labour economics has generally been treated as a ‘black box’. Therefore, the well-being impact on a poorly matched worker is not well understood. I find that workers whose personalities are more poorly matched to the requirements of their job have substantially lower levels of life satisfaction, and a lower wage. Chapter 2 is the first study that attempts to uncover the determinants of well-being prioritisation. There is no consistent evidence of variation in priorities over the life cycle. Life satisfaction is the most valued aspect of well-being throughout life, yet people overestimate the relative value placed by others on happiness. Well-being prioritisation is strongly influenced by well-being levels and by individual fixed effects such as personality, health level, and smoking frequency. The second part of this thesis explores two novel ideas previously unconsidered. It represents a first attempt at providing some insight to these issues. Chapter 3 develops a model describing how consumers might adjust for a potential bias in extreme online review scores. A randomised experiment finds that individuals do not seem to be making such adjustments. Hence, there are negative implications for consumer welfare from false or biased extreme reviews. Finally, Chapter 4 is an ambitious investigation into how personality characteristics of workers within an economy may influence the composition of its industrial output. Big Five personality factors are predictive of future industry change, but further work needs to be done to verify this. This work highlights the relevance of personality data in the analysis of long-standing economic issues.