We show that genetic endowments linked to educational attainment strongly and robustly predict wealth at retirement. The estimated relationship is not fully explained by flexibly controlling for education and labor income. We therefore investigate a host of additional mechanisms that could account for the gene-wealth gradient, including inheritances, mortality, risk preferences, portfolio decisions, beliefs about the probabilities of macroeconomic events, and planning horizons. We provide evidence that genetic endowments related to human capital accumulation are associated with wealth not only through educational attainment and labor income, but also through a facility with complex financial decision-making.

Abstract We discuss how to estimate the interplay between genes (nature) and environments (nurture), with an empirical illustration of the moderating effect of school starting age on one’s genetic predisposition towards educational attainment. We argue that gene–environment (G×E) studies can be instrumental for (i) assessing treatment effect heterogeneity, (ii) testing theoretical predictions, and (iii) uncovering mechanisms, thereby improving understanding of how (policy) interventions affect population subgroups. Empirically, we find that being old-for-grade and having a higher genetic propensity for education benefits children on assessment tests as they progress through school. In this setting, families appear to increase genetic inequalities while schools seem to reduce them.