In analyzing returns to schooling and in evaluating educational policies, ‘soft skills’ – personality traits like conscientiousness, openness and diligence -- often get under-valued or neglected. This is in part because so much value is placed on standardized test scores in education systems. It’s also because soft skills that are valued in the labor market, in school, and in many other domains are considered too hard to quantify.
Nobel laureate James Heckman delivered a compelling Development Economics lecture  this week at the World Bank where he looked at tests of cognitive skills (for example GED, PISA, ACT, and IQ tests) as well as of personality (Myers-Briggs Type Indicator, Hogan Personality Inventory, Rosenberg Self Esteem Scale) and showed that soft skills can be measured and are vital in predicting and causing economic and social success. Indeed, they are predictive of many life outcomes -- sometimes as strongly as measures of cognition such as IQ and other scholastic achievement tests. He stressed that the extent to which people are endowed in different degrees by traits such as openness, conscientiousness, agreeableness, extroversion and diligence/neuroticism differs widely. These differences in endowments and values of endowments across tasks – whether working as a software engineer, a car salesman, or as a school teacher – give rise to comparative advantage and sorting in the labor market.
To illustrate his point quantitatively, he described research that compares American high school graduates versus GED  graduates. He explored whether those who completed GEDs were more likely to have sub-par social skills than high school graduates and assessed if such traits were a factor in academic and career performance later in life.
Heckman epitomizes the Chicago school tradition of incorporating theory into economic thinking and confronting it with data, yet he fearlessly combines that rigor with a keen interest in human nature, in basic childhood development, and in the importance of work ethic, social skills and other traits that matter immensely in today’s labor market. In our integrated, competitive world where ideas and relationships are the coin of the realm, the ability to connect people and ideas and to persist in the completion of tasks are as important as mathematical acumen and other cognitive skills.
When I sat down for a short interview (see below) with Heckman after his lecture, it was no surprise to learn that Heckman is continually making connections himself, including with researchers globally through the Institute for New Economic Thinking , or INET that Heckman is heading. It is engaging a diverse group of top economists and researchers to study human capital and economic inequality in a way that is integrated with macro markets. The project kicked off a year ago when Heckman was awarded a taskforce grant from INET.
Following his interview, Heckman stayed on to brainstorm with the team writing the World Development Report 2013  on jobs. The WDR 2013, slated for release in the autumn of 2012, will help explain and analyze the connection between jobs and important dimensions of economic and social development. The team is eager to continue tapping Heckman’s knowledge, expertise and soft skills as they advance their work and if you watch his lecture you’ll see why.