Heritability and public policy – a reappraisal

Abstract Economists firmly disagree on the public policy relevance of heritability studies. Going beyond a descriptive interpretation of the variance component estimates in these studies, I propose a quasi-experimentally controlled comparison of the estimates in a gene-environment interaction framework. If the environments individuals are exposed to are under such control in this model, changes in the variance components underlying inter-individual differences can be ex-post informative regarding the evolvement of equality of opportunity in a population. Using administrative data from the Netherlands, I empirically illustrate this reappraisal of heritability studies by estimating two different gene-environment interactions in test scores from a high-stakes national educational achievement test. Most interestingly, genes and the family environment together disproportionally explain test scores of younger-for-grade pupils.