Johan Fourie's blog

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Posts Tagged ‘children

How our emotional intelligence makes us productive

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Emotional-Intelligence-1

Economists spend a lot of time investigating the factors that make people more productive. This is because more productive people – producing more, with less – is the reason we can today afford a much higher standard of living than our ancestors – in Africa, India or Europe – two centuries ago.

Many things improve our productivity. Technological improvements like a computer can allow us to use the power of machines to substitute manual labour. Education allow us to build faster and stronger computers. Both technology and education are key if we are to continue building and sharing a prosperous future.

But it is not only technology and education that improve our living standards. There are formal and informal institutions – things like the criminal-justice system, property right regimes and the political system – that create the incentives for us to invest in technology and education. And there are the even less tangible things, like the way we make decisions (often referred to as ‘culture’), or our personalities. Economists are only now beginning to explore the roots of these ‘soft’ determinants.

Psychologists have known for long that our personality affect the way we make decisions. One example: Whether we apply for that senior position may depend on whether we exhibit the leadership qualities that is required to lead a large team. But what determines whether we have those leadership abilities? Is it nature or nurture?

One option is to look at siblings. If genetic traits (nature) were the only source of leadership qualities, then almost all the variation we find in society would be between families. In other words, there should be little variation between brothers, for example, as they have a lot of genetic overlap.

This is not the case, however, at least according to a recent NBER Working Paper written by three economists, Sandra Black, Björn Öckert and Erik Gröngqvist. Almost a third of total variation in personality traits, they note, are within the family. So, if it is not only nature that determine much of your personality, where do these within-family differences come from?

One possibility, they argue, is birth-order. Using a very rich Swedish dataset, the authors find that first-born children are ‘advantaged’ when measured on their ‘emotional stability, persistence, social outgoingness, willingness to assume responsibility and ability to take initiative’. Note: these are non-cognitive abilities, i.e. there is little difference in terms of a first-born and a third-born’s innate ability to do math, for example. It is on the softer abilities, instead, that first-borns clearly outperform their lower-ranked siblings: third-born children, for example, have non-cognitive abilities that are 0.2 standard deviations below first-born children.

These non-cognitive abilities matter. Controlling for many things, they show that first-born children are almost 30% more likely to be Top Managers compared to third-borns. This is because managerial positions, they argue, tend to require all Big Five domains of personality: openness to experience, conscientiousness, extraversion, agreeableness, and emotional stability.

But why does birth-order matter? The authors argue for largely three possible reasons. First, biology. Successive children may have less of the stereotypical male behavioural traits due to the mother’s immunization to the H-Y antigen. But this seems unlikely to explain most of the variation, as the authors also find that birth order patterns vary depending on the sex composition of the older children: third-born sons perform worse on non-cognitive tests when their older siblings are male compared to when they are female.

This suggests that it has something to do with how parents allocate their time and resources, especially in the early years. ‘First-born children have the full attention of parents, but as families grow the family environment is diluted and parental resources become scarcer’, the authors argue. Parents may also have incentives for more strict parenting practices towards the first born to ensure a reputation for “toughness” necessary to induce effort among later born children.

Thirdly, children may also act strategically in competing for parental resources. Siblings compete for possession of property and access to the mother. Older siblings, research shows, tend to take a more dominant role in conflict and have more elaborate conflict strategies. To minimise conflict, parents tend to invest more in the dominant, older sibling.

Using a novel approach, the authors can identify which of these effects is largest. They find that biological factors only explain a small part, and may actually benefit later-born children. It is however in the behaviour of parents that there are distinct differences between first- and later-born children: they find that later-born children spend substantially less time on homework and more time watching TV. Parents are also less likely to discuss school work with later-born children, suggesting that it is the parents that lower their investment which explains the large gap in non-cognitive skills.

What the authors do not do is to link their results with the general improvement in living standards over the last two centuries. We are becoming ‘better angels of our nature’ because we grow up in smaller families with more parental attention and resources, improving our non-cognitive abilities.

It is not only the vast improvement in technology and education that has made us more productive, but also because we have become more conscientious, agreeable, responsible and willing to take the initiative. We are rich, in part, because we are more emotionally intelligent.

*An edited version of this first appeared in Finweek magazine of 1 June 2017.

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Written by Johan Fourie

June 23, 2017 at 07:49

Lovely Lund

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Helanya and I spent the last three weeks in Lund, a university town in the south of Sweden. I’m here on a research visit, working on collaborative projects with Erik Green and Ellen Hillbom who head the Africa group in their Department of Economic History, the largest economic history department in the world.

And it’s been fun and fruitful: Sweden in summer is sunny and soothing, especially if you stay away from the popular holiday destinations. There’s not much to do in Lund itself: the cathedral is impressive and ruggedly beautiful (picture). It includes an astronomical clock and a basement that would be the ideal setting for a crime fiction novel. There is also Kulturen, the second largest open air museum in the world. It’s a nice way to familiarise yourself with Swedish and Danish culture (until 1658, the southern part of Sweden – Götaland – was still part of Denmark). And if you’re after more action then Malmo, the largest city in the south of Sweden and a cultural melting pot, is just ten minutes by train. There’s a fantastic science and technology museum, especially if you have kids. And Denmark’s capital Copenhagen, across the spectacular Øresund bridge, is about 40 minutes away. Here you can enjoy – as we did – a visit to the oldest amusement park in the world, Bakken, a visit to a 100 year-old mermaid statue (the European version of the Kardashians: it’s famous because it’s famous) and a stroll through Nyhavn, the quaint and trendy dock-area lined with bars and hundreds of beer-drinking Danes. (You could also enjoy dinner at the world’s second-best and much-raved about restaurant noma. I suspect it’s an acquired taste.)

But summer in Sweden is best for putting your feet up. We spent a weekend cycling in the surrounding country-side, passing through farms, villages and forests. The beach is only 7km away, so cycling there is on the agenda for the coming weekend. And if you’re lucky, you’ll be invited to a Kräftskiva, a traditional crayfish party. (At least, it’s officially about the crayfish; it’s actually about the schnapps.)

We settled into Lund surprisingly easily. While most grocery labels, television programmes, bus signs and restaurant menus (and washing machine instructions) are in Swedish, most people speak fluent English, and are happy to help. Apart from a greater selection of fish (try the smoked herring), supermarkets would look very familiar to South Africans. (Oddly, chicken is not very popular.) Drinking is a favourite past-time, especially now that the students have returned. (Stellenbosch students would feel right at home: all first-years wear pretpakkies during their introductory week.)  And somehow the Swedes remind me of South Africa in the early 1990s: I can’t exactly put my finger on it, but this ad which currently airs on Swedish TV provides a clue.

Of course, there are also differences. As one of the ten safest countries in the world, security is less of a worry. Sweden hopes to move to a cashless society so credit cards are preferred everywhere; don’t expect to buy tickets on the bus, for example. Bicycles are ubiquitous and there is an excellent cycling infrastructure, which means you can find your way easily across town. This also means that there are nearly no cars in the centre of town and there’s a general unwillingness to use vehicles when other modes of transport are available. (A vision of a future Stellenbosch?) And because wages are so high, any labour that can be substituted by technology is: supermarkets have self check-out lanes, there are no petrol attendants and don’t expect to be frequently interrupted by attentive restaurant waiters. You’ll also pay for that beer, sir: the average bar charges about five times what you would pay for a Heineken in South Africa. (But you can buy good-quality South African wine at a relatively inexpensive price at Systembolaget, which feels more like an upmarket pharmacy than a liquor shop. I’ve been asked for my passport twice: I don’t yet know if it’s a compliment or xenophobia.)

There are many other interesting Swedish cultural traits of which this video is an excellent guide. (For those who don’t know, the actor playing the Prime Minister was actually the Prime Minister at the time.) Swedes really are egalitarian, and loathe anything that may exclude or injure anyone. They’re also very proud of Zlatan. (By the way, if you’re South African, you should know who Tokelo Rantie and May Mahlangu are. They’re big in Sweden.) But the most unique feature of Swedish culture is the massive investment they make in their children, perhaps more in terms of time and effort than actual money  (see my earlier post on parental leave). Education is free, even though the education system is highly liberalised and open to private sector competition (it is not uncommon for schools to go bankrupt). Spanking as a form of corporal punishment is disallowed; many Swedes believe this is explains the low levels of crime in the country. And nearly all the tourist destinations we visited were not only kid-friendly, but seemed designed specifically for them.

Sweden today understands that future success depends on their investment in the next generation. Even as the last few days of summer dwindle away in lovely Lund, the future of Sweden seems bright.

Written by Johan Fourie

August 29, 2013 at 08:53