This paper explores inequalities in IQ and economic preferences between children from high and low socio-economic status (SES) families. We document that children from high SES families are more intelligent, patient and altruistic, as well as less risk-seeking. To understand the underlying causes and mechanisms, we propose a framework of how parental investments as well as maternal IQ and economic preferences influence a child’s IQ and preferences. Within this framework, we allow SES to influence both the level of parental time and parenting style investments, as well as the productivity of the investment process. Our results indicate that disparities in the level of parental investments hold substantial importance for SES gaps in economic preferences and, to a lesser extent, IQ. In light of the importance of IQ and preferences for behaviors and outcomes, our findings offer an explanation for social immobility.
C90: Design of Experiments: General
D64: Altruism; Philanthropy
D90: Intertemporal Choice and Growth: General
D81: Criteria for Decision-Making under Risk and Uncertainty
J13: Fertility; Family Planning; Child Care; Children; Youth
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
J62: Job, Occupational, and Intergenerational Mobility; Promotion