These 3 Traits Will Earn You More Money
The saying that nice guys finish last is true.
In fact, a new study published in the journal Labour Economics finds that agreeableness is one personality trait that negatively affects a man’s earning potential after age 40.
Dr. Miriam Gensowski, a professor in the Department of Economics at the University of Copenhagen, recently published a paper that looked at the connection between personality traits and lifetime earnings among men at different ages.
What I like about Dr. Gensowski’s paper compared to most articles and books you’ll find on this topic is that her findings are not anecdotal. She’s not saying, I interviewed several rich people and this what I found in common…
Dr. Gensowski’s study used data from the Terman study, one of the longest running studies in psychology that examines the development of gifted individuals since 1922.
“It has followed over 1,000 men and women in California who were selected for having IQs of at least 140 (the top 0.5% of the population),” says Dr. Gensowski. “It is probably the only study that has U.S. data on earnings throughout a lifetime, which allowed me to relate early measures of personality to annual earnings from age 18 to 75.”
The benefit of linking earnings later in life to personality measured at a young age, says Dr. Gensowski, is that it ensures the association between traits and earnings was not because someone lucked into a high income and became more extroverted as a result.
“Instead, we can interpret the association as personality influencing earnings.”
Okay, but how much can personality really affect earnings?
According to Dr. Gensowski, the overall effect of personality on lifetime earnings is large. “In the same order of magnitude as the average lifetime earnings difference between high school and college graduates in my sample: over $1.2 million.”
So what are the three personality traits?
Let’s take a closer look at all three.
Personality Trait #1
Dr. Gensowski defines conscientiousness as someone who is hard-working, driven, reliable, and organized. This isn’t all that surprising for a high achiever. And other… studies… have proven similar findings.
Around age 30 is when men who are more conscientious start to earn more.
“I found that in early years, earnings were no different for men with strong personality traits. At around age 30, a gap emerged, as men who were more conscientious, extroverted, and less agreeable started earning more,” says Dr. Gensowski.
But not until age 40+ do earnings skyrocket for men… “These gains from conscientiousness and extraversion (between $10-20,000 annually) fully unfolded in the prime working years, between the ages of 40 and 60.”
She also adds that conscientious men typically receive higher wages for being more productive on the job. They are more likely to obtain higher education, which in turn boosts earnings. And individuals that are more conscientious tend to lead longer and healthier working lives, therefore accumulating higher lifetime earnings.
Personality Trait #2
It’s easy to imagine why someone more extroverted might have an edge in the workforce. The old saying, (it’s not what you know…) plays in favor of those people willing to put themselves out there and network. But how much can being an extrovert influence lifetime earnings?
Apparently, a lot.
“Consider two men in the Terman study, who are equal on all background characteristics and all traits, except for extraversion, says Dr. Gensowski. “The man who is average on this trait will earn $600,000 more over a lifetime than his more introverted peer (whose extraversion is, say, in the bottom 20% of the distribution). This effect size corresponds to about 15% of lifetime earnings.”
Personality Trait #3
In Robert Ringer’s bestselling book Winning Through Intimidation he writes “reality isn’t the way you wish things to be, nor the way they appear to be, but the way they actually are. Either you acknowledge reality and use it to your benefit, or it will automatically work against you.”
It might not seem fair that guys who are less agreeable make more money, but that’s the reality.
Dr. Gensowski says, “I also found that more agreeable men, who tend to be friendly and helpful to others, have significantly lower earnings than less agreeable men. The man who is very agreeable (in the top 20%) will earn about $270,000 less over a lifetime than the average man.”
Takeaway: don’t feel bad about being the old, grumpy, rich guy in the office.
Why This Subgroup Earned More Than Twice As Much As Others
One last bit from the paper I found interesting: highly educated men benefit more than twice as much from these three personality traits (conscientiousness, extraversion, and low agreeableness) than less educated men.
For example, when comparing two men with a bachelor’s degree, the introvert (bottom 20% of extraversion) will earn about $290,000 less than his peer with average extraversion. This earnings difference increases to about $760,000 when we compare an introvert to someone at the average extraversion when both hold a Master’s or doctorate, says Dr. Gensowski.
But wait… aren’t all these men geniuses?
One caveat you might have noticed was that all the subjects in the Terman study had higher-than average IQs. Is it fair to compare the average person who’s strong in these three personality traits to Terman subjects?
Dr. Gensowski thinks yes, it’s fair, and her argument is pretty sound: “This depends on whether careers develop in a similar way now as they did back then. We have reason to believe that the basic mechanisms that determine which skills drive earnings – such as productivity, promotions, and health behaviors – are still quite similar. And they seem to be. In fact, the personality traits that have the strongest association with lifetime earnings in Terman are exactly the same traits that are found to be most important for wages among today’s workers.”
To a richer life,
Editor, Rich Life Roadmap