Data from German TwinLife Study: More than 30% of individuals’ perceived income justice can be attributed to genes, the rest is driven by idiosyncratic environmental effects; found no evidence of influence of upbringing

What determines perceived income justice? Evidence from the German TwinLife study. Michael Neugart, Selen Yildirim. Economics & Human Biology, November 20 2019, 100826. https://doi.org/10.1016/j.ehb.2019.100826

Highlights
•    Individuals’ perceived income justice is important for labor market outcomes.
•    Data from German TwinLife Study is analyzed within classical twin design.
•    More than 30% of individuals’ perceived income justice can be attributed to genes.
•    Rest is driven by idiosyncratic environmental effects.
•    No strong indications for gene–environment interactions are found.

Abstract: Whether individuals perceive their income as being fair has far-reaching consequences in the labor market and beyond. Yet we know little about the determinants of variation in perceived income justice across individuals. In this paper, we ask to what extent differences in genes are related to variation in individuals’ perceived income justice, and whether there is a gene–environment component. Analyzing data from the German TwinLife study, we find that more than 30% of individuals’ perceived income justice can be attributed to genes. The rest is mostly related to an idiosyncratic environment.

4.4 Extensions

Parents' (un)equal treatment:

A common critique of twin studies is that they usually
cannot take into account unequal treatment of identical twins and fraternal twins by the
parents (see, e.g., Joseph, 2002). If parents treat MZ twins more similarly than they treat
DZ twins, the estimate of the heritability component (A) may be upward biased. Samples
of twins who were reared apart provide a basis to study the relevance of the unequal
treatment critique as one, in this case, does not have to rely on the equal environment
assumption. Bouchard Jr (1998), for example, analyzes measures of personality in such a
setting and nds that twins who were reared apart produce estimates similar to a sample
of twins who were reared together. While we cannot draw on information of twins reared
apart, we attempt to remedy concerns in relation to the equal environment assumption
by making use of a large set of questions to the parents in the TwinLife study on how
they have been treating their children.

In total we have 13 questions that relate to the parenting style. For example, one such
question to the twin is on how many times the father or mother ... shows you that s/he
likes you. We use this information to compare the parenting styles of fathers and mothers
who either have MZ or DZ twins. In only three out of the 13 answers to the questions on
the parenting style we nd signi cant di erences in how the father and mother have been
treating MZ and DZ twins, respectively. These results are reported in detail in Table 6
in Appendix. Furthermore, we conduct an analysis in which we restrict the sample to the
twin pairs who responded to the parenting style question with the same answers or the
di erence between answers is less than 2. We, then, re-run the variance decomposition on
the sample of twins who report a more equal treatment of parents. Again, we opted for
delegating a rather large table reporting on the results of this exercise to the Appendix.
Overall, we get very similar estimates on the heritability component for the reduced
sample that perhaps is closer to the equal treatment assumption. We interpret this as
evidence in support of an un-biased estimate of the heritability component when we do
the variance decomposition on the full sample.

Assortative mating:

In Section 3 we explained that the behavioral genetic model assumes
the absence of assortative mating. Positive assortative mating, a correlation of the
genes of the spouses, would bias the estimates of heritability downwards, see Falconer
(1984, pp. 231) and our more detailed explanation in the Appendix. The TwinLife data
allows us to check whether such a bias is likely in our case as information of perceived
income justice as also available for the twin's parents (N=145). Based on the parents'
answers to this question, we nd that there is actually positive assortative mating between
our twins' parents. While Pearson's correlation coe cient is 0.1979, which is usually interpreted
as small, the p-value is 0.0171. Thus, it could be the case that actual heritability
is slightly higher for perceived income justice than our estimates suggest.
E ects of being close to each other: Finally, we discuss whether social interactions
between the twins play a role for the estimated relative sizes of the components explaining
the variance in perceived income justice. A large literature on social comparisons
suggests that individuals' behavior and well-being is related to their peers or reference
groups (Persson, 1995; Clark and Oswald, 1998; Ireland, 2001; Corneo, 2002; Goerke and
Pannenberg, 2015; Goerke and Neugart, 2017; Aronsson and Johansson-Stenman, 2018).
It is conceivable that also perceived income justice is a function of social comparisons, and
that the tendency to compare with the twin brother or sister di ers among MZ and DZ
twins. In particular, if identical twins had more contact than fraternal twins and contact
intensity ampli ed social comparisons, heritability could be overestimated.
The TwinLife data provides a measure on self-reported closeness of the twins. We use
it to learn more on the importance of closeness of twins for the results derived so far. To
this end, we restrict the sample to observations where both twins give the same answer on
how close they feel to the other twin. Table 4 (Panel A) shows summary statistics on the
closeness of twins. There are statistically signi cant di erences in how close identical and
fraternal twins feel to be to each other. For the identical twins the fraction of twins who
report being close to each other is 94.09% and for the fraternal twins we have a fraction of
86.75%. These fractions are statistically di erent from each other at a signi cance level
below 0.1%, underscoring the importance of the following analysis in which we re-estimate
the "ACE"-model splitting the sample into close and not close twins.

The heritability component estimated for the sub-sample of close twins becomes 32.5%,
see Panel B, as compared to the previously estimated 32.8%. For the not close twins we
get an increase in the heritability component. The explained variance is almost 50% now.
However, we have only a small number of twins who report that they are not so close
and, consequently, the estimate is rather imprecise. The observation, however, that we
get a genetic e ect of the same magnitude as in our baseline estimates when we restrict
our sample to twins who feel close to each other, irrespective of whether they are MZ or
DZ twins, suggests that the estimated genetic component is rather not biased by more
closely interacting twins.