A full understanding of child development draws on knowledge from economics
and psychology. Both cognitive and noncognitive capabilities produce a variety of behaviors
and outcomes. An emerging literature relates psychological measurements of
personality and cognition to economic preference parameters and extends conventional
preference specifications in economics. Comparative advantage is an empirically important
feature of economic and social life. The same bundle of personal traits has different
productivity in different tasks, and people with different bundles sort into tasks
according to their comparative advantage.
Recent empirical work on the technology of capability formation provides an operational
empirical framework that captures these ideas (see Cunha and Heckman,
2009). Capabilities are not invariant traits and are causally affected by parental investment
and early social environments. Moreover, capabilities are not solely situational
specific. They are stable, but they evolve over the life cycle. Measures of capabilities
should standardize for the environments in which they are taken – a basic tenet of
science. Otherwise traits may appear to be unstable across situations (Borghans -
Duckworth - Heckman - ter Weel, 2008).
The technology of capability formation rationalizes a large body of evidence in
economics, psychology, and neuroscience. Capabilities are self-productive and crossproductive.
Synergies in the technology (2) explain why it is so productive to invest in
the cognitive skills of disadvantaged young children but why the payoffs are so low
for cognitive investments in disadvantaged older children and are even lower for disadvantaged
adults. There is no equity-efficiency trade-off for investment in the capabilities
of young disadvantaged children. There is a substantial equity-efficiency trade-off
for investment in the capabilities of older disadvantaged children. Later remediation
should focus on fostering noncognitive traits related to personality.
This paper reviews the evidence from recent research that addresses the origins of
inequality and the evolution of the capabilities that partly determine inequality. Both cognitive and noncognitive capabilities are important in producing a variety of outcomes.
An emerging literature relates psychological measurements of personality and
cognition to economic preference parameters and extends conventional preference specifications in economics.
Comparative advantage is an empirically important feature of economic and social
life. The same bundle of personal traits has different productivity in different tasks. Recent
empirical work on the technology of capability formation provides an operational
empirical framework. Capabilities are not invariant traits and are causally affected by
parental investment. Genes and environments interact to determine outcomes. The
technology of capability formation rationalizes a large body of evidence in economics,
psychology, and neuroscience. Capabilities are self-productive and cross-productive.
Dynamic complementarity explains why it is productive to invest in the cognitive skills
of disadvantaged young children but why the payoffs are so low for cognitive investments
in disadvantaged older children and are even lower for disadvantaged adults.
There is no equity-efficiency trade-off for investment in the capabilities of young disadvantaged
children. There is a substantial equity-efficiency trade-off for investment in
the cognitive skills of disadvantaged adolescents and adults. The trade-off is much less
dramatic for investment in the noncognitive skills of adolescents. Parental environments
and investments affect the outcomes of children. There are substantial costs to
uninhibited libertarianism in one generation if the preferences and well-being of the
next generation are ignored41.
The preferences, motivations, and skill endowments of adults that are created in
part in their childhoods play important roles in creating inequality. They can be influenced,
in part, by policy. But incentives matter too. Society can reduce crime and promote
well-being by operating at both incentive and investment margins.
The right mix of intervention to reduce inequality and promote productivity remains
to be determined. The optimal timing of investment depends on the outcome
being targeted. The optimal intervention strategies depend on the stage of the life cycle
and endowments at each stage. For severely disadvantaged adults with low levels of
capabilities, subsidizing work and welfare may be a better response for alleviating poverty
than investment in their skills. The substantial heterogeneity in endowments and
effects of interventions at different ages suggests that a universal policy to combat the
adverse effects of early disadvantage is not appropriate. Optimal investment should be
tailored to the specifics that create adversity and to the productivity of investment for
different configurations of disadvantage. As research on the economics of capability
formation matures, economists will have a greater understanding of how to foster successful
Exploring the Interface Between Personality Psychology and Economics
by Eugenia Scabini, Gian Vittorio Caprarapages: 25€ 6.00
Psychology and economics have recently reconnected themselves in a new area of collaboration as shown by recent studies by Heckman.
The aim of this paper is to call for a more comprehensive view of personality as a complex system including several psychological structures.
The findings presented attest to the role that both values and self-efficacy beliefs exert with respect to traits, and in concert with them, on academic achievement and prosocial behaviour.
The same findings suggest the need of interventions in order to favour the course of action that individuals should take to promote desirable changes.
These changes take place mostly within the family and in school where children may find proper
models, and experiences conducive to their successful performance.
To conclude, it is essential to invest in family and school settings to assure each child the full
expression of his/her potential.
Key words: personality traits, values, self-believes, family/school environment.
JEL Classification: A1.
High School Graduates, Skill Formation and Labour Demand
by Gilberto Antonelli, Roberto Antonietti, Giovanni Guidettipages: 31€ 6.00
By exploiting a new and rich firm-level dataset, we provide some evidence on labour demand
by Italian manufacturing firms, with a focus on high school graduates, and we estimate the factors underlying the decision to engage in work-based training, as well as its relative intensity. Relying on a job competition mechanism of skill formation, we stress the role of the strategic complementarity between innovation and firm organization. Our results show that training propensity is affected by firm size, capital intensity, skill composition, R&D, investments in new machinery and organizational change following technological change. No relevant effects emerge from labour cost and internationalization activities. These results hold particularly for the decision to provide both formal and informal training together. Finally, R&D and techno-organizational innovations also affect the intensity of training, both in terms of training costs and in terms of the employment share of trainees.
Key words: High school, Labour demand, Skill, Training.
JEL Classification: J23, J24, L25, O32, O33.
Investing in the Human Potential: Improving Cognitive Life Skills in Young People
The paper presents four possible ways to devise interventions aimed at enhancing thinking abilities in children. The assumptions underlying each perspective are highlighted by making reference to training programs implemented to foster problem-solving and creativity skills. The critical role of self-awareness and self-regulation is stressed as the key element which makes intervention effective. Implications for designing and managing interventions are discussed.
Key-words: Life skills, Creativity, Problem solving, Decision making, Learning, Self-regulation.
JEL Classification: I20, I21.
Young People in the XXI Century
by S. Montrasio, Gian Carlo Blangiardo, Stefania Rimoldipages: 19€ 6.00
The Italian young people account for less than 24% of total population (the lowest percentage in the European Union) and they are going to fall down to 19% by the 2050. On the contrary, young Americans are going to raise for the next 40 years. At the same time the age of young Italians when leaving the parental household can be considered high (about 31 for men and 29 for women) compared to the other Europeans. The reasons can be found in a combination of cultural and financial constraints, but choices of convenience are important too. Finally the analysis of the prevailing values of young people shows that human rights (46,9%), peace (41,5%) and respect for human life (39,2%) are the three main personal values for the Europeans, and that rule of the law (38,3%), respect for human life (38,2%) and human rights (35,8%) are the main for the Italians.
Key words: Age structure, Migration, Transition to adulthood, Sociodemographic.
JEL Classification: J110, R230.
From the Welfare State to the Social Investment State
The paper discusses the basic rationale which has inspired the intellectual re-orientation from
«social protection» to «social investment», with particular attention to child policy. The first section outlines the main features of the social investment approach contrasting it with the more traditional «Fordist» approach. The second and third sections explain why and how early child education and care can make a difference in both efficiency and equity terms. The fourth section briefly summarizes the British experience under New Labour governments, while the fifth section analyses issues of quality and accessibility. The conclusion wraps up the argument, highlighting the need to step up the shift towards social investments, overcoming the institutional and political obstacles to reform.
Key words: Child support, Preschool childcare, Welfare programs, Poverty.
JEL Classification: I300, I380.
The paper considers the current challenges that organizations have to cope with in managing
people and knowledge at the present time, moved by turbulent contexts and crisis at a social and at an organizational level.
It begins with a question around the possibility of a dialogue between the two disciplines that
could jointly contribute to the development of organizational responses, economics and psychology, and it discusses their relationship on the basis of field experiences.
In discussing what is nowadays sustainable in the relations between society and organizations,
the paper argues the role of intersubjectivity in organizational processes as the resource that allows to cope with unpredictable events and changes both for individuals and groups challenged to live and contribute to their work contexts. Four approaches in organizing the management of technical, economical and social/human resources are presented and analysed in their capacity to offer an interdisciplinary dialogue.
Key words: Organizational change and crisis, Interdisciplinary dialogue, Intersubjectivity, Business; Organizational psychology.
JEL Classification: L29, M14, M21.
Investing in our Young People: Family Lives, Reconciliation Policies and Social Capital
Early childhood investment is of major importance in human and social capital theory, but can
be a relevant issue even in policy making since there is evidence that an equity-efficiency trade-off does not exist for investments in very young people. Our analysis compares governments’ policies across OECD countries by three main dimensions: an overview of child well-being indicators and governments’ spending on children; a summary of different approaches to childcare policies for children 0-3 years of age; and a comparative analysis of the role of reconciliation policies between work and family responsibilities. The aim of this analysis is to contribute to a debate on investment in young children by posing some policy questions about the family role in childcare, the social responsibility in childrearing and the State auspices in increasing social capital formation through investment in young people and a more effective reconciliation between employment targets and family daily lives.
Key words: Childhood investment, Childcare policies, Reconciliation policies, Family policies,
Social capital formation.
JEL Classification: I38, J13, J21, J22, J81, M14
Early Childhood and Disability, Some Preliminary Reflections
The importance of early investment on disabled children is discussed with reference to the social model of disability, following the mainstreaming approach of discussing issues related to disabled children within the general context of issues related to children. Data on child early education and evidence on its effects on child development and achievements are presented, emphasizing both cognitive and non cognitive results; the relevance of both these aspects is stressed for the social inclusio of people with disabilities. Government involvement in the early education of disabled children is advocated both on efficiency and on distributional grounds, as households with high time preference rates are likely to under invest in the human capital of children with disability, with subsequent individual and social losses. A picture of the different concern of international institutions for early childhood disability is drawn, and the delay in identifying disability in Italy is shown.
Key words: Human capital, Economics of the handicapped, Childcare.
JEL Classification: J13, J14.
Eliciting Risk and Time Preferences in Field Experiments: Are They Related to Cognitive and Non-Cognitive Outcomes? Are Circumstances Important?
This study investigates how cognitive and non-cognitive personality traits, and economic preference parameters, such as risk aversion and impatience, relate to each other and to characteristics pertaining to the individual, family and society paying special attention to the role played by circumstances and responsibilities as the result of individuals’ effort. The analysis uses data about cognitive abilities, non-cognitive personality traits, economic preferences and the socio-economic circumstances of a sample of High School leavers in the Veneto region, located in the North-East of Italy, and two samples of university students, one covering the nation as a whole and the other from the University of Verona. We show that it is both feasible and reliable to elicit risk and time attitudes in field experiments. The study of the relations linking cognitive skills, non-cognitive traits, economic parameters and socio-economic circumstances has revealed interesting regularities.
Key words: Cognitive abilities, Non-cognitive traits, Risk and time preferences, School performance,
Reservation wages, Equality of opportunity, Circumstances, Responsibility, Effort.
JEL Classification: I20, J24, K4.
Are Children Human Beings or Human Becomings? A Critical Assessment of Outcome Thinking
The section presents a critical assessment of so-called outcome or displacement perspectives.
Common to them is a preference – under the pretext of showing interest for children – for looking forward to adulthood. This was characteristic for psychology and has recently obtained focus by prominent economists and politicians: being basically preoccupied with future productivity among adults they appear to have found its secret in childhood-investments. As such it is a worthy cause.
Its potential drawback is that investments do not produce the desired «outcome» and thus the critical question is raised, if politicians are ready to continue investments that «merely» favour children? Since 1980s a new sociology of childhood has been critical to these forward-looking perspectives and insisted that children’s welfare is significant enough in itself as an investment object and needs no instrumentalising arguments to be justified, for instance in terms of future profitability.
Key words: Children, Childhood, Outcome, Displacement, Investments, Human capital, Economy,
Sociology, Corporal punishments, Generations, Win, Lose.
JEL Classification: J13, J24.