Do Social Resources Matter? Social Capital, Personality Traits, and the Ability to Plan Ahead

This paper is motivated by growing interest in noncognitive skills and the fact that many, if not most, economic and social actions require agents to plan ahead. More specifically, we use unique data from the US, UK, and Italy to show that two major classes of social resource—personality and social capital—are significant predictors of planning capacity. We use the data to estimate frontier models that help establish three empirical facts about the ability to plan. First, planning ability depends on a rich array of social resources including networks, the freedom to participate, neighbourhood co-operation, and trust (social capital) and personality traits such as extroversion, conscientiousness, and emotional stability. Secondly, we provide evidence that some personalities are more efficient than others in using resources to help them plan. Thirdly, we develop evidence of three personality profiles, referred to as ‘over-controlled’, ‘resilient’ and ‘under-controlled,’ and highlight the fact that these three profiles benefit differently from various aspects of social resources capital. We discuss these findings and conclude that a wide range of economic policies designed to facilitate individual planning may need to allow for heterogeneities in social resources if they are to be successful.