Johan Fourie's blog

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Posts Tagged ‘parents

How our emotional intelligence makes us productive

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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.


Written by Johan Fourie

June 23, 2017 at 07:49

Women’s work

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Today we celebrate Women’s Day in South Africa, commemorating a national march of women in 1956 to petition against legislation that required black South Africans to carry a special identification document. South Africa has moved far since 1956 in terms of women’s rights: we now have a constitution that instils gender equality, and in politics we see more women in leadership positions. Although South Africa has not yet had a female president, Nkosazama Ndlamini-Zuma is chairperson of the African Union Commission and three women, Helen Zille, Lindiwe Mazibuko and Patricia de Lille lead the largest opposition party.

WomensliberationYet gender inequality persists, not only in South Africa but across the globe. Sheryl Sandberg, who served as Chief Operating Officer of Facebook, recently authored a popular book on women in the workplace, Lean In. It won’t be the best book you’ve read, but it suggests some interesting reasons why women still only fill a small proportion of the top leadership roles in business. (The main thesis summarised: She asks women to not step back when making decisions about their career with the expectation that they will have to scale down when children arrives. Go for that leadership position you would love, and then deal with the demands of pregnancy and parental care when it arrives.) On the whole, though, she fails to address the most obvious concern from the demand-side: that shareholders care only about profits, and if child-birth means lower levels of efficiency for women than for men, then appointing men, ceteris paribus, may be a rational decision.

In academia, however, where the demands of profitability are less pervasive, one would expect that the gender gap has closed. Not so. As a recent article in Slate argues: for men, having children is a career advantage, while for women a child can be a ‘career killer’.

The pressure cooker years as an assistant professor leading up to tenure usually number four to seven years. At the end of this trial, the university decides “up or out”—tenure for life or dismissal. It is well established that women are less likely to be awarded tenure than men. There is a baby penalty, especially strong in the sciences—but women without children also receive tenure at a lower rate than men. There are other factors than children that cause women to fail at this critical juncture. The women who do make it often do so alone. Women professors have higher divorce rates, lower marriage rates, and fewer children than male professors. Among tenured faculty, 70 percent of men are married with children compared with 44 percent of women.

What can be done to combat this?

Sweden offers one alternative. Swedish parents are entitled to 480 days of parental leave for each child, but more importantly, they are encouraged to split these days equally between both parents. If this is done, there is an additional ‘equality’ bonus of extra leave. This equality is not forced, though, as one parent can take up to 420 of the 480 days. And it’s fully funded by the State: 420 of these days are paid at 80% of your normal wage.

The important tenet here is not the length of time, but the fact that it is shared equally between husband and wife. There is no reason to discriminate in appointments for reasons of profitability or efficiency if both men and women pay an equal ‘cost’ at childbirth. Three Swedish researchers in the Journal of Public Economics (Jan 2013) exploit a Swedish policy change in 1995 to show that one month extra parental leave for fathers have no effect on their lifelong earnings, but have a positive (but small) effect for mothers, suggesting that women gain from greater equality with men.  I would go so far as to say that an equal share of parental leave should be legislated; that men and women’s share of leave are not allowed to differ. This is because men (yes, even Swedish men!) more easily shirk their parental leave duties, as recent research shows. Only when men and women are forced to share equally in the duties of parental leave will businesses have no reason to discriminate against women.

We associate gender inequality with uplifting women. But perhaps our focus is on the wrong gender. In South Africa, most companies offer three months of paid parental leave for women, but only three days for men. If we are to combat gender inequality, on this Women’s Day, women country-wide should be marching for men’s rights to more paternity leave.

Written by Johan Fourie

August 9, 2013 at 10:21