Investigating the psychological black box behind individual economic decision making is, without a doubt, one of the most prevalent concerns in recent empirical microeconomics. This is based on the urge of modern behavioral economics to provide the stochastic idiosyncratic shocks in standard economic models with meaningful content. Especially the growing availability of large microdata sources such as in longitudinal household panel studies has tremendously supported this scientific movement. This data regularly includes important self-reported information on inherent attributes such as personality traits which have a high potential of explaining large parts of the deviations which have previously been labeled as stochastic shocks and idiosyncratic errors.
This is the point at which also this doctoral thesis lines up. The present thesis contains four studies that investigate the relationship of inherent personality traits with individual behavior and economic outcomes. Concretely, the studies address the domains female labor force participation, labor market mobility, drinking behavior and unemployment. The unifying element of all four studies is the focus on one specific personality trait within this context: the individual perception of control or locus of control (LOC). LOC is characterized as a ``generalized attitude, belief, or expectancy regarding the nature of the causal relationship between one's own behavior and its consequences'' (Rotter 1966, p.2) and describes whether individuals believe in the causal effects of their own efforts and abilities on their lives' outcomes.
Chapter 2 initiates the discussion by analyzing the implications of LOC for female labor force participation. In the empirical analysis, internal women are found to have a significantly higher probability of being available for market production, which also translates into higher employment probabilities at the extensive margin. These effects are additionally found to be highly heterogenous with respect to underlying monetary incentives for participation and home production as well as prevalent social norms for working. In a quite similar manner, Chapter 3 discusses the role of LOC for regional labor market mobility within Germany. The empirical analysis identifies a distinct positive effect of an internal LOC on the general self-reported willingness to move as well as the probability of moving between regions. A prove that the importance of LOC for decision making cross the boarders of labor economics is provided within Chapter 4. The chapter is devoted to the question of whether LOC is also able to explain alcohol consumption as an important domain of risky health behavior. The study identifies a strongly positive effect of an internal LOC on moderate as well as regular drinking which is comparable to effect of traditional preference parameters such as risk aversion and time preferences. Eventually, Chapter 5 importantly contributes to the value all parts of this thesis adds to the body of literature on behavioral consequences of LOC by carefully discussion the stability of the trait and thus potential problems with reverse causality in the three other studies as well as in the existing literature in general. In order to access the stability of LOC, the study investigates the reaction of reported LOC to an exogenous unemployment shock. Reassuringly, the empirical analysis finds no long-lasting effects of job losses due to plant closures on LOC and thus cannot reject the common assumption of its stability during adulthood. Nevertheless, the study identifies an important temporary deviation in the measurement of LOC during periods of unemployment and therefore concludes that the reported LOC is affected by unemployment likely due to a situation-specific state effect.