Noncognitive skills have provoked substantial research interest in recent years. However, existing evidence for their importance relies heavily upon reduced-form regressions that do not account for the simultaneous production of cognitive and noncognitive skills. Moreover, existing constructs of noncognitive skill are typically chosen for their convenience, or else for their explanatory power over psychological survey items. In response, we analyze a decision-theoretic model of educational development to derive five candidate noncognitive skills, and we test their importance by adapting an established longitudinal and structural econometric model of multidimensional skill formation. We find: first, that noncognitive skills matter for cognitive development; second, that different aspects of noncognitive skills matter to different degrees; and third, that once a child begins to take her own decisions, her propensity to think analytically becomes the most important noncognitive determinant of her ongoing cognitive development.

Canonical economic agents act so as to maximize a single, representative, utility function. However, there is accumulating evidence that heterogeneity in thought processes may be an important determinant of individual behavior. This paper investigates the implications of a vector-valued generalization of the Expected Utility paradigm, which permits agents either to deliberate as per Homo economics, or to act impulsively. This generalized decision theory is applied to explain the crowding-out effect, irrational educational investment decisions, persistent social inequalities, the pervasive influence of non-cognitive ability on socio-economic outcomes, and the dynamic relationships between non-cognitive ability, cognitive ability, and behavioral biases. These results suggest that the generalized decision theory warrants further investigation.

A growing literature demonstrates that production function normalization yields important benefits in both empirical and theoretical macroeconomics. Yet normalization has remained notably absent from the microeconomic literature. This paper introduces the concept of normalization within the microeconomic context, and establishes that it could provide substantial improvements in the interpretability, the tractability, and the applicability of a broad class of economic production functions. Since any production function is merely a specialized interpretation of some decision-maker’s utility function, our analyses also generalize to the wider context of utility functions. We therefore conclude that the benefits of normalization may be pervasive.