The Promise and Pitfalls of Genoeconomics

This paper reviews existing research at the intersection of genetics and economics, relates some of our own experiences, presents some new findings, and surveys the prospects of this emerging field. Twin studies imply that economic outcomes and preferences appear to be about as heritable as many physical and psychological traits, once measurement error is accounted for. We present new evidence on the heritability of permanent income and wealth, highlighting the high degree of heritability of this important economic variable. Turning from traditional twin studies to modern genetic association studies, we overview what we see as the main ways that direct measurement of genetic variation across individuals is likely to contribute to economics, and we outline the challenges that have slowed progress in realizing these contributions. The most urgent problem facing researchers in this field is that most existing studies using genetic data are dramatically underpowered, leading to a large fraction of false positives in the set of published associations. We suggest a number of possible strategies for improving power and remedying this problem: (i) pooling datasets; (ii) using statistical techniques that examine the joint effects of genes on outcomes; and (iii) measuring more biologically proximate traits. We briefly touch on some of the important social and ethical consequences of the soon-to-be widespread availability of genetic data. [PUBLICATION ABSTRACT]