The sensitivity of locus of control to life events and implications for its moderating influence on wellbeing

A growing literature examines the importance of non-cognitive skills (psychological traits) in determining success across many facets of life, as well as their role in moderating the impact of life events on socioeconomic outcomes. While an extensive literature in psychology has found that these skills are mutable over the life course, several papers in the economics literature continue to treat these traits as exogenous to life events for adult populations. Using longitudinal data that measures locus of control (LoC) every 4 years, we show that a subset of life events has large effects on LoC for adults and that some effects persist over several years. We then demonstrate that treating LoC as exogenous to life events can lead to misleading inference when examining its role as a moderator of the impact of life events on socioeconomic outcomes.