Underlying factors

Three more for the "underlying factors cause most observed correlations" files.

Item the first: Limited numerical ability predicts mortgage default for reasons not related to choice of mortgage contract. That is, those who are bad at maths are more likely to default even after correcting for sociodemographic characteristics and other measures of cognitive ability.

Item the second: Men in the control group who remembered to take their placebos had higher survival rates than those in the control group who forgot to take their placebos.

Item the third (via Jason Collins): those higher in conscientiousness (as measured by survey question answers) also report higher happiness and life satisfaction (also as measured by answers to survey questions).

The first suggests that banks weren't really putting the "can't do maths" clients onto contracts that would ensure default but rather that those who are bad at maths wind up more likely to screw up things like figuring out whether they can afford a given mortgage or structuring their affairs such that they can consistently make their mortgage payments. If banks weren't able to lay off mortgage risk on the government, and if they were legally allowed to do it, they might then wish to administer a maths test for prospective mortgage clients and provide a bit more hand-holding and advice for those who fail.

The second follows on nicely from Linda Gottfredson's work suggesting that IQ is the fundamental underlying health determinant. Sure, low-income predicts poor health. But that's mostly because low IQ predicts low income. And low IQ or low conscientiousness seems likely to predict forgetting to take the full course of prescribed medicines, as well as a pile of other health-relevant behaviours. It also suggests that the returns from quality nurses are higher than the returns from doctors: having better nurses who can help low IQ clients understand and follow doctor's orders seems a worthwhile investment. Or at least one more likely to yield reasonable returns than using income redistribution as health policy.

Remember how Van Halen would hide a line about M&M provision in their concert rider as a way of checking whether the venue had followed all of their stage direction instructions? I wonder whether doctors mightn't add some markers to their prescriptions that aren't themselves necessarily medically useful but that would show up on a patient's tests afterwards to indicate whether they're likely following doctor's orders.

The third perhaps tells us something about links between income and happiness. If conscientiousness drives both income and happiness, then perhaps it isn't low income that's the sole driver of low happiness among those on low income. I'm always a bit sceptical about these studies: questions about conscientiousness are pretty loaded with "how I want to see myself" and social desirability confounds. But there's a reasonably simple (albeit limited) test: if the link between before-tax-and-transfer income and happiness is stronger than the link between after-tax-and-transfer income and happiness, that's pretty consistent with underlying type driving things. We can't rule out underlying type if it goes the other way though as the effects of the change in income could dominate the effects of type.