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Does Empathy Pay? Evidence on Empathy and Salaries of Recent College

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 Does Empathy Pay?
Evidence on Empathy and Salaries of Recent College Graduates

Linda Kamas Anne Preston

Department of Economics Department of Economics
Santa Clara University Haverford College
500 El Camino Real 370 Lancaster Ave.
Santa Clara, CA Haverford, PA 19041
lkamas@scu.edu apreston@haverford.edu
(Corresponding Author)

September 2018

Abstract

This paper examines the relationship between worker empathy and earnings. While it has been
suggested that greater empathy enhances performance because empathic individuals work well
with others and are good leaders, it is also possible that they will be less productive due to lower
motivation to compete for pecuniary awards or being perceived as too accommodating. In
addition, more empathic individuals may choose occupations that are more socially oriented and
less well remunerated. Utilizing Davis’s Interpersonal Reactivity Index empathy scale, we
examine linkages between empathy and earnings of recent college graduates. We find a
significant and large negative relationship between empathy and earnings for both men and
women. There is evidence that empathic individuals sort into college majors and sectors of
employment that are less-well paid, however, gender, major, and sector together do not account
for the full negative effect of empathy on salaries. While it seems likely that preferences lead
more empathic people to choose lower paying occupations that are more oriented toward social
welfare or caring for others, we cannot rule out the possibility that greater empathy has a
negative effect on productivity.

JEL Codes: D64, J24, J31

PsycINFO classification: 3120
Key Words: Empathy, Earnings, Personality, Prosocial

Funding: This work was funded by the Russell Sage Foundation, Haverford College, Santa
Clara University, and the Leavey School of Business, Santa Clara University

Declarations of interest: none

 Does Empathy Pay?
Evidence on Empathy and Salaries of Recent College Graduates

1. Introduction

Empathy has been identified as an important personality characteristic that leads to

successful job performance and positive labor market outcomes. Empathic people may work

well with others, building and maintaining relationships in diverse organizations, and empathy

may be a key component of effective managerial leadership. This position has recently been

adapted as part of the conventional wisdom and is found in the business press and postings on

the web. Some examples include: Wilson in Fortune (2015) cites empathy as one of five

essential talents senior executives say they need (the other four are intellectual curiosity, 360-

degree thinking, cultural competence, and adaptability); Boyers in Forbes (2013) says, “behind

every successful business, you are likely to find a leader who has mastered the skill of empathy.”

and Greenfield in Bloomberg (2016) states, “The future of American labor lies in jobs that

require empathy and critical thinking.” These statements imply that greater empathy may “pay”

and lead to higher earnings. However, it could be that more empathy has a negative impact on

salaries if more empathic people are less driven to succeed or are so agreeable that others

undervalue them. Moreover, those with greater empathy may choose careers that are more

socially oriented, such as in those in caring fields or in the non-profit sector that are less

financially remunerative. Therefore, it is not self-evident that empathy “pays,” at least with a

pecuniary return.

To date, there is not much empirical evidence on the effects of empathy on labor market

earnings. In this paper, we examine the linkages between empathy and compensation for recent

college graduates one to six years after graduation from four institutions. The virtue of using a

1
sample of college graduates is that the effect of empathy and other personality traits on schooling

outcomes will be less of a confounding factor because all subjects have college degrees from

well-regarded institutions. However, it should be pointed out that the findings may not

generalize to those with less education. We use a well-validated measure of empathy, the Davis

Interpersonal Reactivity Index (IRI), and send annual surveys about labor market outcomes to

the graduates. We find that subjects in our sample who score higher on the empathy scale have

lower earnings one to six years after graduation. Some of this effect is due to the fact that

women are more empathic than men as well as sorting into college majors and sectors of

employment that are less-well paid, however, gender, major, and sector together do not account

for the full negative effect of empathy on salaries. While it seems likely that preferences lead

more empathic people to choose lower paying occupations that are more oriented toward social

welfare or caring for others, we cannot rule out the possibility that greater empathy has a

negative effect on productivity.

2. Literature on Noncognitive Abilities; Relationship between Empathy and Earnings

Cognitive abilities and schooling are important determinants of labor market outcomes as

has been widely established in the economics literature. However, psychologists have long

stressed the importance of personality in addition to cognitive abilities in affecting educational

and occupational success.1 Recently, economists have begun to examine the effects of

“noncognitive abilities” on labor market outcomes. An early paper, Duncan and Dunifon

1
For example, Barrick and Mount (1991) examine the relationship between personality and outcomes such as job
proficiency, training proficiency, and personnel data. They find important linkages, but the correlations differed by
occupation and the personality characteristics considered. Tett et al. (1991) conduct a meta-analysis of the
predictive value of personality measures on job performance. Reviewing 97 studies, they conclude that personality
traits predict job performance. Employers appear to agree, often giving job candidates personality tests before
hiring them.

2
(1978), summarizes the literature on “soft skills” but the authors say, “we are not aware of

studies testing explicitly whether workers entering the labor market with problem-solving “soft”

skills are more successful in their subsequent labor-market careers.” 2 However, by 2012, in

their introduction to the reprint of the article (Duncan and Duniforn, 2012), they summarize the

“burgeoning literature based on many longitudinal studies.” The authors point out that there is a

lack of consensus regarding the general role of noncognitive abilities on labor market outcomes

and on which skills are the most important.

The absence of a theoretical model linking personality or noncognitive abilities to work

performance or salaries was partly responsible for the lack of attention of economists to the role

of such traits in labor market outcomes. Traditional economic models center on the role of

human capital (skills or capacities that contribute to productivity) in determining worker

earnings. Noncognitive abilities could increase workers’ productivity but the linkages are often

not well specified. A major difficulty in the empirical work in this area is that the precise

definition of noncognitive abilities differs and at times is not carefully linked theoretically to

employment outcomes. And, it seems clear that different jobs require and reward different

noncognitive skills. As a result, research has measured noncognitive skills in various ways,

often determined by the availability of measures of such characteristics in the data.

Economists have modeled the role played by noncognitive abilities on salaries and other

career outcomes in several ways. In early work on noncognitive skills and earnings, Bowles, et

al. (2001a) sketch two behavioral models incorporating noncognitive traits. One is a

“Schumpeterian model”, where workers with certain capabilities are better able to search out and

2
In earlier work, economists referred to “hard” and “soft” skills (Duncan and Dunifon, 1978, 2012), but recently
most use the terms “cognitive” and “noncognitive abilities.” However, Borghans et al. (2008) say they eschew the
use of the term “noncognitive” because most human behavior includes some sort of cognition. Furthermore,
cognitive processes affect personality and personality can influence measurements of cognitive ability.

3
capture disequilibrium rents in factor payments. The other is a principal-agent model (presented

in more detail in Bowles et al., 2001b). “Incentive-enhancing preferences” of employees lead

them to increase effort in response to wages so employers are willing to pay employees with

these characteristics higher wages. Some examples of incentive-enhancing preferences provided

by the authors include: greater orientation toward the future (raises the evaluation of costs of

losing future wages), sense of personal efficacy (own work effort has larger influence on the

probability of retaining job as opposed to the influence of external factors, often termed “locus of

control”), and higher marginal utility of income or shame at losing a job (increases effort by

raising the value of holding a job).

An alternative approach is based on comparative advantage where workers choose tasks

or jobs based partly on cognitive and noncognitive abilities (Almlund et al., 2011). Productivity

in different tasks depends on worker traits (cognitive, personality, physical, etc.), effort, and

actions resulting from the former two. Traits are treated as endowments at a given point in time.3

Workers maximize expected utility which is a function of goods consumed, productivity, effort,

preferences, and their information set. This leads to a set of response functions for consumption

of goods, effort, and actions with respect to each task/job. The determinants of the response

functions are: the reward to doing the task (wage and non-pecuniary benefits), price of goods, a

vector of traits, situational experiences, unearned income, and the information set. Preferences

affect these choices via trade-offs and goals.

In another trade model, Deming (2017) considers “social skills,” where these skills

reduce coordination costs so that workers can better sort into doing tasks for which they have

comparative advantage. He provides empirical evidence that social skills positively impact

3
Traits can evolve over time as a function of own actions and skills, investments (such as parental nurturance,
schooling, and learning by doing), and the situations the individual experiences.

4
wages, and the effect has increased over time with the more rapid growth in demand for

employees with both high math skills and social skills.

There is substantial evidence in the empirical literature that noncognitive abilities and

personality affect educational achievement, job performance, and earnings. We provide a brief

summary here of the literature in economics focusing on effects on earnings; more detailed

summaries of the broader literature can be found in Almlund et al. (2011), Duncan and Dunifon

(2012), and Humphries and Kosse (2017).

Economists often borrow the “Big Five” personality factors from the psychology

literature to identify personality traits. The Big Five are: openness to experience,

conscientiousness, extraversion, agreeableness, and neuroticism or emotional stability (acronym

is OCEAN). It should be pointed out that different personality traits are likely to be valued

differently in different occupations so that the expected sign of the relationship between traits

and earnings in an aggregate sense is not always evident. Also, the relationships may be non-

linear so that a moderate degree of a personality trait may have a positive effect on earnings

while a more extreme version of the trait could have a negative effect (for example, an agreeable

person may get along well with people he or she works with, but too much agreeability might be

seen as submissive or weak).

Openness to experience refers to the degree to which people are curious, creative, artistic,

and receptive to new ideas. Mueller and Plug (2006), Heineck (2011), and O’Connell and

Sheikh (2011) find a positive link between openness of experience and salaries, but most other

studies do not find a significant relationship. Conscientiousness is the tendency to be

dependable, organized, efficient, and hardworking. One would expect this trait to lead to success

in employment and hence higher wages, and the evidence generally supports this to be the most

5
important of the Big Five in affecting educational and labor market outcomes. A positive

relationship is found in O’Connell and Sheikh (2011), Fletcher (2013), Prevoo and ter Weel

(2015), Gensowski (2018), and Maczulskij and Viinikainen (2018), while conscientiousness is

found to affect earnings only for women by Mueller and Plug (2006) and Heineck (2011).

Extraversion is an orientation to the outside world, characterized as being sociable, energetic,

adventurous, and assertive. The empirical work finds some linkages between extraversion and

salaries, there is a positive effect in O’Connell and Sheikh (2011) and Maczulskij and

Viinikainen (2018), who find a positive impact of “activity” which they identify as a facet of

extraversion. Mueller and Plug (2006) find a negative effect for women that disappears with

additional controls and effect is positive for men only in Fletcher (2013), and Gensowski (2018).

Agreeableness is the tendency to be cooperative, helpful, and compassionate. This trait is often

found to be negatively associated with earnings (Heineck, 2011, Gensowski 2018); some find the

negative effect only for men (O’Connell and Sheikh, 2011) and other for women (Nyhus and

Pons, 2005, 2012, Heineke and Anger, 2010). The interpretation of the negative effect of

agreeableness might be that being agreeable could hurt career prospects if being too cooperative

hurts own performance or leads to the perception of superiors that the individual is submissive

rather than a leader. Of the Big Five, agreeableness may be the trait most closely related to

empathy and the negative relationship with wages is consistent with our results below. The last

trait, neuroticism refers to experiencing distressful emotions such as anxiety, fear, and

nervousness. Mueller and Plug (2006), Fletcher (2013), and Maczulskij and Viinikainen (2018)

find a negative relationship between neuroticism and earnings while Heineck (2011) finds a

negative effect for women only. Studies sometimes focus on the other side of neuroticism,

emotional stability, which consists of self-regulation, calmness, and consistency. Nyhus and

6
Pons (2005) and O’Connell and Sheikh (2011) find emotional stability to be positively related to

earnings for both men and women.

Another personality characteristic that has been often studied is locus of control, the

degree to which individuals believe that outcomes depend on their own abilities and actions

rather than on outside factors. The logic is that the greater the worker’s belief that he or she has

control over own life outcomes, the more likely the worker will put in effort to be successful

which is expected to have positive effects on wages. Heineck and Anger (2010) find that having

an external locus of control is associated with lower wages for men and women; while Grooves

(2005) and Semykina and Linz (2007) find lower earnings for women. Heckman et al. (2006)

use a composite measure of locus of control and self-esteem and find this positively related to

earnings for men and women at all educational levels except for male college graduates

We contribute to this literature by examining the link between empathy and labor market

earnings, a relationship not previously investigated. In a principal-agent context (Bowles et al.,

2001a, 2001b), empathy could be an “incentive-enhancing” trait in that workers with greater

empathy might exhibit greater feelings of reciprocity (more prosocial attitude) in response to

higher wages; if higher wages prompt greater effort, employers will respond with increased

pay. However, more empathic people might also be less motivated by pecuniary incentives so

their effort response to higher wages would be less, implying lower pay.

Applying the comparative advantage model of Almhud et al. (2011), empathy can be

considered to be a trait that affects productivity and it can have different effects on productivity

in different jobs, either positive or negative. Greater empathy might increase a worker’s

productivity in occupations that require people to work well with others in teams or on joint

projects and it could increase managerial effectiveness in supervising employees. On the other

7
hand, it is possible that being more empathic could reduce productivity in some jobs, for

example, if empathic workers are less motivated to work hard in the absence of perceived social

benefits of the output or are less productive in a more independent, competitive environment, for

example in commission work. We would expect workers to sort into jobs for which greater

empathy increases their productivity implying a positive effect on earnings, but we cannot rule

out the possibility that more empathic people have lower productivity and lower wages. At the

same time, preferences associated with being more empathic might lead workers to choose

occupations that provide sources of satisfaction (utility) other than financial earnings. For

example, those with altruistic or social preferences may prefer to work in jobs that serve the

disadvantaged or provide care for others. There is extensive evidence in the psychology

literature showing that more empathic people act more prosocially,4 therefore, greater empathy

may be linked to prosocial preferences leading these workers to sort into this type of job. In the

U.S. economy, these jobs are usually relatively low paying so that more empathic workers

employed in these jobs would earn less than similarly qualified peers in less “caring” jobs.

In summary, there is not an unambiguous prediction about the sign of the relationship

between empathy and earnings. Because preferences would likely reduce wages as people

choose into lower paid professions, if a positive association between earnings and empathy is

found this suggests that it is due to greater productivity and comparative advantage sorting.

However, if a negative association is found, it could either be due to lower productivity (that is

not offset by sorting into occupations with comparative advantage) or to preferences for socially

oriented work that is lower paid. The absence of a significant linkage between empathy and

earnings indicates that either the positive effects of productivity and comparative advantage is

4
See Kamas and Preston (2018a) for a detailed summary of this literature.

8
offset by negative sorting due to preferences or that empathy does not affect either productivity

or sorting by preferences. We now turn to examining the empirical evidence linking empathy to

earnings.

3. Defining and Measuring Empathy

Empathy has been defined differently by different people, both in academic work and in

real life. Empathy has both cognitive and affective components: Theory of the Mind (ToM)

refers to being cognizant or knowing what another person is thinking or feeling; Sharing

includes thinking or feeling the same way as the other, and compassion (empathic concern)

means feeling for as well as with the other. The complexity of the concept of empathy is

revealed by the categorization of Batson (2011) who identifies eight concepts of empathy:

1: Knowing another person’s internal state, including his or her thoughts and feelings
2: Adopting the posture or matching the neural responses of an observed other
(mirroring)
3: Coming to feel as another person feels
4: Intuiting or projecting oneself into another’s situation
5: Imagining how another is thinking or feeling
6: Imagining how one would think and feel in the other’s place
7: Feeling distress at witnessing another person’s suffering
8: Feeling for another person who is suffering (Empathic Concern)

Because empathy is an internal state, measuring it usually relies on self-report.5 We

utilize the Davis (1994) Interpersonal Reactivity Index (IRI), which is a well validated

instrument for measuring empathy in the psychology literature.6 The IRI consists of 24

statements (such as “I try to look at everybody's side of a disagreement before I make a

5
See Kamas and Preston (2018a) for a detailed discussion of the literature on measuring empathy.
6
The IRI been validated in numerous studies (Davis, 1980, 1983, Carey et al.,1988, Pulos et al., 2004, Hawk et al.,
2013, Chrysikou and Thompson, 2016). It has also been shown that the IRI correlates with neurological measures of
empathy (Singer et al., 2004, 2006, and Jabbe et al., 2007).

9
decision.”) asking subjects to choose on a five point scale from A: Does Not Describe Me Well

to E: Describes Me Very Well. The 24 statements are provided in Table 1, in some cases there is

reverse scoring so that higher numbers always reflect higher empathy. The IRI has the virtue of

representing the various categories of empathy identified by Batson with four subscales:

Empathic Concern: experience feelings of sympathy and compassion for unfortunate others.

Perspective Taking: spontaneously adopt the psychological of view of others in everyday life.

Fantasy: imaginatively transpose oneself into fictional situations.

Personal Distress: experience distress and discomfort in response to extreme distress in others.

4. Data and Methodology

The data on empathy and labor market outcomes are taken from a longitudinal study

conducted on college graduates from four colleges: Haverford College, Mills College, Wellesley

College, and Santa Clara University. In 2011, 2012, and 2013, we ran laboratory experiments

with seniors at the four schools to measure willingness to compete, confidence, personality

characteristics, and other behaviors.7 From 2012 to 2018, the subjects were sent post-graduation

surveys which were filled out on Google Forms. The surveys cover a broad set of questions,

including occupation, salary, years at job, marital status, etc. Participants were paid $10 in

Amazon.com or Starbucks gift cards in 2012-13 for filling out the survey, a sum that was

increased to $20 in 2014-18 to encourage a higher response rate. The Davis IRI questions were

added to the surveys in 2016 and thereafter. Therefore most subjects completed the IRI

questions more than once. In our analysis, we utilize the average of the person’s scores on the

7
See Kamas and Preston (2018b) for a more detailed discussion of the experiment and surveys. The experiment
instructions and survey are provided in the supplemental materials.

10
 Table 1: Davis Interpersonal Reactivity Index (IRI)

(Statements describing empathic tendencies are grouped according to the sub-category of

empathy. The number preceding each statement gives the order in which it is presented in the
questionnaire.)

Empathic Concern
2. I often have tender, concerned feelings for people less fortunate than me.
4. Sometimes I don't feel very sorry for other people when they are having problems.
(reverse scored)
9. When I see someone being taken advantage of, I feel kind of protective towards them
14. Other people's misfortunes do not usually disturb me a great deal. (reverse scored)
18. When I see someone being treated unfairly, I sometimes-don't feel very much pity for
them. (reverse scored)
20. I am often quite touched by things that I see happen.
1. I would describe myself as a pretty soft-hearted person.
Perspective-Taking
3. I sometimes find it difficult to see things from the "other guy's" point of view. (reverse
scored)
8. I try to look at everybody's side of a disagreement before I make a decision.
11. I sometimes try to understand my friends better by imagining how things look from their
perspective.
15. If I'm sure I'm right about something, I don't waste much time listening to other people's
arguments. (reverse scored)
21. I believe that there are two sides to every question and try to look at them both.
25. When I'm upset at someone, I usually try to "put myself in his shoes" for a while.
28. Before criticizing somebody, I try to imagine how I would feel if I were in their place.
Fantasy
1. I daydream and fantasize, with some regularity, about things that might happen to me.
5. I really get involved with the feelings of the characters in a novel.
7. I am usually objective when I watch a movie or play, and I don't often get completely
caught up in it. (reverse scored)
12. Becoming extremely involved in a good book or movie is somewhat rare for me. (reverse
scored)
16. After seeing a play or movie, I have felt as though I were one of the characters.
23. When I watch a good movie, I can very easily put myself in the place of a leading
character.
26. When I am reading an interesting story or novel, I imagine how I would feel if the events
in the story were happening to me.
Personal Distress
6. In emergency situations, I feel apprehensive and ill-at-ease.
10. I sometimes feel helpless when I am in the middle of a very emotional situation.
13. When I see someone get hurt, I tend to remain calm. (reverse scored)
17. Being in a tense emotional situation scares me.
19. I am usually pretty effective in dealing with emergencies. (reverse scored)
24. I tend to lose control during emergencies.
27. When I see someone who badly needs help in an emergency, I go to pieces.

11
IRI if they answered more than once.8 Using average scores may smooth out the effects of

mood on how the person responds reducing measurement error. We measure compensation as

annual salary plus bonus reported by respondents. If the respondent does not report salary we use

the hourly wage, multiplied by usual hours per week, to calculate the weekly salary. Then we

assume 50 weeks worked per year to calculate the annual salary

Table 2 summarizes the number of participants in each school, the number of surveys

completed, and the percentage of subjects filling out one or more of the annual surveys. The

response rates are quite high, 82% for the total sample and ranging from 69% to 87% for the

individual schools. We do not claim that the participants in the experiment are representative of

the student bodies or university graduates in general. However, within this group of people we

examine the relationship of empathy to earnings.

Table 2: Experiment and Survey Samples

(1) (2) (3) (4) (5)

Haverford Santa Clara Wellesley Mills Total
University
Experiment Subjects 175 450 125 72 822

Survey Responses
655 1531 406 206 2,812
(2012-2018)

Response Rate
87.4% 82.4% 85.6% 69.3% 82.2%
(one or more surveys)

8
In future work, when more years of surveys have been completed, we will examine the stability of empathy as
measured as well as potential work/life effects on empathy. For the current measures the correlation of a response
one year to a response in a future year is always above 0.8.

12
5. Results - Empathy & Salaries

Table 3 provides regressions of log salaries plus bonuses on the total IRI empathy score

and each of the empathy subscales. To control for human capital (ability, work experience, and

additional education beyond a college degree), we include in the regressions years since

graduation, year of the postgraduate survey, a part-time dummy, GPA, and a dummy for having

earned a post graduate degree. Empathy measured by the total IRI score is significantly

negatively correlated with earnings, with a one point increase in the empathy score associated

with 17% lower salaries plus bonuses. The three empathy subscales, empathic concern,

perspective taking, and fantasy all have significant negative coefficients, with empathic concern

having the largest negative effect. Personal distress has a small negative but insignificant

coefficient. These results indicate a negative relationship between empathy and salaries, similar

to findings for agreeableness in studies using the Big Five personality traits discussed above.

These findings appear to contradict expectations that greater empathy will lead to greater

career success and higher salaries. However, they are also consistent with the following:

women are more empathic but earn less than men for reasons not linked to empathy; more

empathic people choose majors that lead to jobs that are less well-paid (e.g. humanities as

opposed to business); and more empathic people choose into sectors of employment that pay less

(nonprofit as opposed to for-profit). Therefore, we cannot ascertain whether the negative

correlation between empathy and salaries is due to lower productivity of the more empathic

people or preferences that lead them to choose into occupations that pay less. It may also be that

studying the material in a major or working in a sector of employment affects empathy in that the

activities one undertakes and the persons with whom one interacts influence empathic thoughts

or feelings. We can use the data to estimate a correlation between sector and major and

13
 Table 3: Log Salaries & Bonuses Regressions - All Empathy Scales

Empathy Subscales
(1) (2) (3) (4) (5)
Total IRI Empathic Perspective Fantasy Personal
Concern Taking Distress
Empathy Measure - 0.173*** - 0.133*** - 0.068** - 0.081*** - 0.013
(0.041) (0.031) (0.032) (0.023) (0.027)

Observations 2,050 2,050 2,050 2,050 2,050

R-squared 0.455 0.454 0.459 0.457 0.453
Notes: Robust standard errors clustered by id in parentheses; *** p<0.01; **p<0.05. Controls include: years since
graduation, year of postgraduate survey, part-time dummy, GPA, and a dummy for having earned a post graduate
degree.

empathy, but we cannot determine the direction of causation. However, we can see how

controlling for sector and major impacts the relationship between empathy and compensation.

We turn to investigating these possible interrelationships.

Table 4 provides salaries plus bonuses and the empathy scales for men and women.

Consistent with most studies, we find that women in our sample have significantly higher scores

then men on the total IRI and the empathy subscales and that women earn 22% less than men,

with average salaries plus bonuses of $59,019 for women and $72,278 for men (significantly

different at the 0.01 significance level). Therefore, gender may explain part of the negative

correlation between empathy and earnings.

14
 Table 4: Mean Salaries & Bonuses and Empathy by Sex

Empathy Subscales
(1) (2) (3) (4) (5) (6)
Salary & Total IRI Empathic Perspective Fantasy Personal
Bonuses Concern Taking Distress

$63,462 3.38 3.87 3.69 3.46 2.49

Total (n=2,050)
(43,641) (0.40) (0.57) (0.57) (0.72) (0.67)

Men $72,278*** 3.21*** 3.61*** 3.65** 3.27*** 2.30***

(n=687) (52,052) (0.39) (0.61) (0.57) (0.70) (0.62)

Women $59,019 3.46 4.00 3.71 3.56 2.59

(n= 1,163) (37,967) (0.38) (0.50) (0.57) (0.71) (0.68)

Notes: Standard deviations in parentheses. ***, ** mean for men significantly different from women at 0.01 and 0.05
levels respectively.

Table 5: Mean Salaries & Bonuses and Empathy by Major

Empathy Subscales
(1) (2) (3) (4) (5) (6)
Salary & Total IRI Empathic Perspective Fantasy Personal
Bonuses Concern Taking Distress
Humanities $44,337*** 3.50*** 4.06** 3.75* 3.75*** 2.44
(n=190) (26,043) (0.36) (0.49) (0.49) (0.71) (0.61)

Sciences $55,211*** 3.30*** 3.78*** 3.65 3.31** 2.46

(n=350) (41,692) (0.35) (0.57) (0.55) (0.71) (0.70)

Social Sciences $60.045*** 3.41*** 3.96*** 3.74*** 3.52*** 2.44***

(n=907) (41,613) (0.41) (0.57) (0.60) (0.73) (0.69)

Engineering $76,330*** 3.33* 3.67*** 3.60** 3.42 2.61**

(n=186) (32,387) (0.42) (0.51) (0.53) (0.67) (0.68)

Business $80,929*** 3.33*** 3.74*** 3.62*** 3.35*** 2.60***

(n=416) (52,445) (0.41) (0.56) (0.53) (0.67) (0.62)

Notes: Standard deviations in parentheses. ***, **, * significantly different from other majors at 0.01, 0.05, and 0.10
levels respectively.

15
 We examine linkages between empathy, major, and earnings in Table 5. We group

majors into five categories: humanities, sciences, social sciences, engineering, and business.

Column (1) provides mean salaries and bonuses for each major, ranked by amount. As expected,

students who major in humanities earn the least ($44,337) while those majoring in business earn

the most ($80,929). Salaries of each major grouping differ significantly at the 0.01 level from

the full sample. For the most part, total IRI scores follow the same pattern, with humanities and

social sciences majors displaying the highest empathy and engineering and business majors

displaying lower empathy. However, sciences majors have the lowest total IRI score but earn

less than engineering or business majors. Each of the major’s empathy scores are significantly

different from the rest of the sample. The ranking of majors for the subscales varies somewhat,

but are roughly similar to the total IRI where humanities and social sciences display the highest

scores and the other three majors display lower scores with the exception of personal distress

where the rankings reverse with humanities and social sciences the lowest. The personal distress

scale consists of thoughts and feelings that are less positive in terms of being other-regarding

(e.g. “When I see someone who badly needs help in an emergency, I go to pieces.”) and appears

to measure a form of empathy that is less connected to feeling with or for others but instead

focuses more on one’s own uncomfortable feelings. This type of empathy can lead to avoidance

rather than prosocial behavior, i.e. leaving the scene to avoid discomfort rather than helping the

victim. Overall, the evidence in Table 5 confirms linkages between choice of major, empathy

scores, and earnings.

Table 6 presents salaries plus bonuses and empathy scores for people working in different

sectors of the economy, categorized as for-profit, non-profit, and government, again ranked by

earnings. Mean salaries are the highest in for-profit sector ($70,092) and lowest in the non-profit

16
 Table 6: Mean Salaries & Bonuses and Empathy by Sector of Employment

Empathy Subscales
(1) (2) (3) (4) (5) (6)
Salary & Total IRI Empathic Perspective Fantasy Personal
Bonuses Concern Taking Distress

Non-Profit $44,263*** 3.40 3.98*** 3.75** 3.42 2.47

(n=353) (23,735) (0.39) (0.54) (0.55) (0.73) (0.67)

Government $50,026*** 3.42 3.98*** 3.78*** 3.52 2.40**

(n=224) (49,149) (0.40) (0.54) (0.53) (0.80) (0.67)

For-Profit $70,092*** 3.37** 3.82*** 3.66*** 3.47 2.52**

(n=1,450) (44,239) (0.41) (0.58) (0.58) (0.71) (0.67)

Notes: Standard deviations in parentheses. ***, **, * significantly different from other sectors at 0.01, 0.05, and 0.10
levels respectively.

sector ($44,263), and the differences in salaries are significant at the 0.01 confidence level for all

three categories. The total IRI score for those working in the highest paid sector, for-profit, is

significantly lower than those of the other two sectors, which are similar. This also holds for

both empathic concern and perspective taking. Empathy scores are not significantly different for

fantasy and the rankings again reverse for personal distress with employees in for-profit sectors

having the highest score. These results confirm that those working in the highest paid sector

have the lowest empathy scores.

The evidence of Tables 4, 5, and 6 shows that there are significant differences in empathy

and salaries & bonuses between sexes, majors, and sectors of employment and that these

differences in empathy are negatively related to earnings for each category. This suggests that

people with higher empathy may be sorting into majors and sectors of employment. We

17
investigate this by estimating multinomial logits on major and sector in Tables 7 and 8, where

the omitted major is humanities and the omitted sector is for-profit. We control for female in

these equations since females are also more likely to be in low paying majors and low paying

sectors.

The results in Table 7 support the hypothesis that empathy is associated with sorting into

majors. For the total IRI, the coefficients on engineering and sciences are negative and

significant. Further, the joint hypothesis that empathy sorts by major has a p-value of 0.088.

Empathic concern and fantasy appear to drive this result. Surprisingly, distress is also a

significant predictor of sector choice but predominantly because it increases the probability that a

respondent is a business major.

The evidence of sorting into sector in Table 8 is strongest for empathic concern, which

has a strong positive relationship between empathy and choosing employment in the non-profit

and government sectors with p-value of 0.045. For perspective taking, there is also a positive

relationship with a p-value 0.097. Neither fantasy nor personal distress have significant

coefficients and p-values indicate lack of significance, contributing to the result of the total IRI

also not having significant effects.

18
 Table 7: Multinomial Logits – Sorting into Major
(Omitted category is humanities.)

(1) (2) (3) (4)

Engineering Business Sciences Social Sciences

-.990* - 0.500 - 0.919** - 0.308

Total IRI
(0.526) (0.430) (0.405) (0.377)

Test Total IRI: chi2(4) = 8.09; Prob > chi2 = 0.088

Empathy Subscales:

- 1.151*** - 0.685** - 0.554* - 0.190

Empathic Concern
(0.369) (0.335) (0.330) (0.307)

Test empathic concern: chi2(4) = 16.08; Prob > chi2 = 0.003

- 0.421 - 0.368 - 0.201 - 0.021

Perspective Taking
(0.334) (0.268) (0.264) (0.245)

Test perspective taking: chi2(4) = 4.36; Prob > chi2 = 0.360215

- 0.578** - 0.540** - 0.738*** - 0.312

Fantasy
(0.291) (0.259) (0.255) (0.235)

Test fantasy: chi2(4) = 11.62; Prob > chi2 = 0.020

0.403 0.671*** 0.093 0.059

Personal Distress
(0.308) (0.241) (0.242) (0.218)

Test distress: chi2(4) = 13.97; Prob > chi2 = 0.0074

Observations 578 578 578 578

Notes: Robust standard errors clustered by id in parentheses. *** p<0.01; **p<0.05; *p<0.10.

19
 Table 8: Multinomial Logits – Sorting into Sector of Employment
(Omitted category is for-profit)

(1) (2)
Non-Profit Government
0.073 0.201
Total IRI
(0.270) (0.308)

Test Total IRI: chi2(2) = 0.44; Prob > chi2 = 0.803

Empathy Subscales:

0.407** 0.422*
Empathic Concern
(0.201) (0.231)

Test empathic concern: chi2(2) = 6.23; Prob > chi2 = 0.045

0.251 0.372*
Perspective Taking
(0.164) (0.202)

Test perspective taking: chi2(2) = 4.66; Prob > chi2 = 0.097

- 0.146 0.045
Fantasy
(0.142) (0.184)

Test fantasy: chi2(2) = 1.28; Prob > chi2 = 0.526

- 0.178 - 0.327*
Personal Distress
(0.158) (0.181)

Test distress; chi2(2) = 3.80; Prob > chi2 = 0.150

Observations 2027 2027

*** ** *
Notes: Robust standard errors clustered by id in parentheses. p<0.01; p<0.05; p<0.10.

20
 We next examine whether sex, major, or sector of employment explain the negative

association between empathy and earnings. We estimate log salary & bonuses regressions with

dummies for sex, major, and sector of employment, beginning with just including sex, then

successively adding majors and sectors. The full model regressions are provided in Appendix

Table A. The dummies for sex, major, and sector of employment all have significant coefficients

in the regressions indicating that these variables are important determinants of earnings. In

Table 9, we summarize these results by providing the coefficients on the empathy variables of

the original regressions with basic controls from Table 3 in column 1 (basic controls are years

since graduation, year of the postgraduate survey, a part-time dummy, GPA, and a dummy for

having earned a post graduate degree). In column 2 we add a dummy for female. Including the

female dummy reduces the effect of empathy on salaries & bonuses from – 0.173 to – 0.128, a

reduction of about a quarter. However, empathy continues to have a large significant effect on

earnings beyond differences caused by gender. Examining the effects by empathy subscale,

empathic concern (row 2), perspective (row 3), and fantasy (row 4) all have negative significant

coefficients with the largest effect coming from empathic concern. In the third column, we add

dummies for major with the omitted category humanities continuing to include the female

dummy. The coefficient on total IRI declines only slightly and remains significant at the 0.01

level. Both empathic concern and fantasy continue to reveal significant effects, but the effect of

perspective declines and is no longer significant. Finally, in column 4 we add sectors of

employment to the other controls and the results do not change much from column (3).

Therefore, even after including sex, major, and sector of employment we continue to find a

21
 Table 9: Coefficients on Empathy Measures in Log Salary plus Bonus Equations
with Increasing Numbers of Controls

(1) (2) (3) (4)

*** *** ***
Total IRI - 0.173 - 0.128 - 0.113 - 0.112***
(0.041 (0.042) (0.040) (0.037)
Empathic Concern - 0.133*** -0.098*** -0.066** - 0.053*
(0.031) (0.033) (0.031) (0.030)
Perspective Taking - 0.068** -0.061** - 0.040 - 0.030
(0.032) (0.031) (0.030) (0.028)
Fantasy - 0.081*** - 0.063*** - 0.051** - 0.058***
(0.023) (0.023) (0.022) (0.021)
Personal Distress - 0.013 0.016 - 0.024 - 0.030
(0.027) (0.026) (0.025) (0.024)
Basic & Dummies
Basic & Dummy Basic & Dummies
Controls Basic for Female, Major, &
for Female for Female & Major
Sector
Number of
2050 2050 2049 2026
Observations
Note: Robust standard errors clustered by id in parentheses; *** p<0.01; **p<0.05; *p<0.10. Basic controls
include: years since graduation, year of postgraduate survey, part-time dummy, GPA, and a dummy for having
earned a post-graduate degree. Controls are added cumulatively from column 1 to column 5. The omitted major is
humanities and omitted sector is for-profit.

negative relationship between empathy and earnings. While there are differences in empathy by

sector and major, these differences do not seem to explain the differences in salary by empathy

once we control for gender. Further, the magnitude of empathy on salary is not small with a one

standard deviation increase in the IRI scale (0.4) corresponding to a 4.5% decrease in earnings,

controlling for sex, major and sector.

Because of well-documented differences between men and women in occupations and

salaries, we estimate the salaries plus bonuses equations for men and women separately

including the full set of controls. Table 10, column 1 presents the coefficients on the total IRI

empathy score for men and women. The results reveal that the negative empathy effect on

22
 Table 10: The effect of total IRI scale on compensation by sex, major and sector

(1) (2) (3)

Gender Major Sector
Male - 0.130**
(n=676) (0.062)
Female - 0.106**
(n=1,350) (0.047)
Humanities Major 0.057
(n=186) (0.107)
Sciences Major - 0.134
(n=347) (0.132)
Social Sciences Major - 0.167***
(n=901) (0.051)
Engineering Major 0.048
(n=186) (0.115)
Business Major - 0.095
(n=406) (0.073)
Nonprofit Sector - 0.034
(n=353) (0.076)
Government Sector - 0.119
(n=224) (0.077)
For-Profit Sector - 0.125***
(n=1,449) (0.043)
Notes: Robust standard errors in parentheses, *** p<0.01, ** p<0.05, * p<0.1
Column (1) controls include: years since graduation, year of postgraduate survey, part-time dummy, GPA, a
dummy for having earned a post-graduate degree, dummies for major with humanities the excluded major, and
dummies for sector with for-profit the excluded sector.
Column (2) controls include: female dummy, years since graduation, year of postgraduate survey, part-time
dummy, GPA, a dummy for having earned a post-graduate degree, and dummies for sector with for-profit the
excluded sector.
Column (3) controls include: female dummy, years since graduation, year of postgraduate survey, part-time
dummy, GPA, a dummy for having earned a post-graduate degree, and dummies for major with humanities the
excluded major.

23
salaries plus bonuses is significant for both men and women, and, while the coefficient is larger

for men, significance testing reveals that the effects are not statistically different.

With the persistence of the negative salary effect of empathy, we investigate whether the

effect is consistent across sector and major, or whether there are only certain majors and sectors

where productivity differences or further sorting may be present. We estimate the salary plus

bonuses equations within each major and within each sector. Column 2 in Table 10 displays the

coefficients on the total IRI for the different majors. The coefficients reveal that the effect is

significantly different from zero only for social science majors. This suggests that for the other

majors, once preferences lead people to choose their major, there is not a negative productivity

effect of empathy on earnings, while for social sciences majors, the negative relationship

persists. This could be due to lower productivity of the more empathic or to further sorting into

service oriented jobs that hire social sciences majors. However, the lack of significance of the

negative coefficients on the total IRI for sciences and business students may be due to the

smaller number of observations for these majors, and significance testing cannot reject the

hypothesis that these negative coefficients equal that of the social science majors.

Similarly in column 3 of Table 10 where the regressions are run by sector, the coefficient

on empathy is significant only for the for-profit sector, although one cannot reject the hypothesis

that the coefficient is equal across sectors, and point estimates of the coefficients for the

government and for-profit sectors are almost identical.

These results are suggestive that the negative empathy differential holds only for a subset

of majors (business, sciences, and social sciences) and a subset of sectors (for-profit and

government). It may be that the kind of jobs in these sectors and held by these majors punish

empathy; empathic workers are less productive because of lack of appropriate skills or inability

24
to thrive in work environments that characterize these jobs. Alternatively, the jobs held by

humanities and engineering majors and nonprofit workers do not punish and may even reward

empathy.

While the evidence supports sorting into majors and sectors based on preferences, it is

not consistent with sorting based on comparative advantage. For example, empathic individuals

are least likely to be engineers, whose jobs do not seem to punish empathy, and government

employees have high empathy scores, even though the negative point estimate for the empathy

coefficient for government workers is above ten percent. Therefore, it does not seem that

empathic workers are sorting into jobs where they are more likely to have comparative advantage

and be rewarded.

It may be that there is additional sorting among the jobs within these sectors and held by

these majors that is the cause of the negative coefficient on empathy; empathic individuals are

further choosing jobs whose services, work environments, or clients meet their preferences and

that are relatively low paying. Certainly the jobs within the for-profit and government sectors

are quite varied and the students majoring in social sciences, business and science have varied

skills and interests. Unfortunately, with the current data available, we cannot distinguish

between preference sorting and a causation, low productivity explanation of the negative

linkages between empathy and earnings.9

9
We turned to instrumental variables to try to address the potential endogeneity of empathy and to differentiate the
sorting story form the low productivity story. However, we were unable to find appropriate instruments in our data
set. We used dummies for liberal political leanings and for non-heterosexual orientation as instruments, but in the
total sample and subsamples where the empathy coefficient is negative and significant, the instruments do not pass
minimum relevance tests; therefore, these results are not an improvement on estimates provided here.

25
6. Conclusion

In this study, we examine the linkages between empathy and earnings of college

graduates from four institutions utilizing six years of survey data. While it might be thought that

empathy would enhance productivity and wages (e.g. via better personal skills that foster

working with others and enhance leadership ability), it is also possible for greater empathy to

have a negative impact on productivity (e.g. through less commitment to the profit-making goals

of an employer). In addition, greater empathy would likely have different effects on productivity

in different occupations and industries so that empathy might be rewarded or punished

depending on the job and sector. And the effects of empathy on earnings could be non-linear so

that some empathy raises productivity and earnings while too much empathy reduces both.

Comparative advantage implies that people would sort into occupations that reward their skills

so that the more empathic should sort into employment that values empathy, increasing their

productivity and earnings. At the same time, more empathic people may have preferences for

jobs that provide services and caring for others and where workplaces are less competitive. It is

likely that in the U.S. such occupations pay lower salaries.

Our empirical results show that in our sample of college graduates, on balance empathy

has a negative relationship with compensation and this is true for both men and women. The

negative effects persist even with the inclusion of controls for gender, human capital variables,

major, and sector. We find evidence of sorting into major and sector consistent with preferences

that are likely to be held by more empathic people: humanities and social science majors score

higher on the empathy scale while business and engineering students score lower, and workers in

non-profit and government sectors score higher while those in for-profit sector have lower

empathy scores. This evidence is supported by multinomial logits. However, we cannot rule out

26
that empathy levels of people in certain majors or employed in some sectors may be affected by

experiences and people with whom they interact so we cannot claim causation.

Examining the variables within major and within sector shows that the negative link

between empathy and earnings continues to be significant only for social science majors and

individuals working in the for-profit sector. However, the coefficients on empathy for business

majors and sciences majors are not significantly different from that for social sciences and the

coefficient for government sector does not differ from for-profit sector. Therefore, there

continues to be evidence within some majors and sectors of a negative link between

compensation and empathy, while there is no such negative relationship for humanities or

engineering majors or those working in the non-profit sector. It may be that more detailed

information on jobs within major and sector would show further sorting by preferences but the

negative link between empathy and earnings could be due to lower productivity of empathic

workers. However, a sorting story in which high empathy individuals sort into low paying jobs

that satisfy preferences for a certain type of service or work environment does not rule out the

possibility that within a job, more empathic individuals are more productive. Our data does not

preclude this but much more detailed information on jobs would be needed to test such a theory.

27
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 Table A1: Full Models of Log Salary & Bonus Equations with Different Empathy Scales
(1) (2) (3) (4) (5)
Total IRI Empathic Perspective Fantasy Distress
Concern
Empathy Measure - 0.112*** - 0.053* - 0.030 - 0.058*** - 0.030
(0.037) (0.030) (0.028) (0.021) (0.024)
Female - 0.098*** - 0.106*** - 0.124*** - 0.110*** - 0.116***
(0.032) (0.032) (0.032) (0.031) (0.032)
Business Major 0.364*** 0.364*** 0.370*** 0.354*** 0.380***
(0.057) (0.058) (0.057) (0.058) (0.057)
Engineering Major 0.437*** 0.435*** 0.449*** 0.435*** 0.460***
(0.066) (0.066) (0.064) (0.065) (0.065)
Science Major 0.151*** 0.158*** 0.169*** 0.146** 0.173***
(0.058) (0.057) (0.057) (0.058) (0.057)
Social Sciences Major 0.183*** 0.188*** 0.191*** 0.178*** 0.191***
(0.049) (0.049) (0.048) (0.049) (0.048)
Non-profit Sector - 0.316*** - 0.312*** - 0.314*** - 0.322*** - 0.317***
(0.038) (0.037) (0.038) (0.038) (0.038)
Government Sector - 0.223*** - 0.222*** - 0.222*** - 0.225*** - 0.229***
(0.039) (0.039) (0.039) (0.039) (0.039)
Years Since Graduation 0.059*** 0.062*** 0.062*** 0.058*** 0.062***
(0.019) (0.019) (0.019) (0.019) (0.019)
Year Post Graduate Survey 0.082*** 0.078*** 0.079*** 0.083*** 0.079***
Conducted (0.018) (0.019) (0.019) (0.019) (0.019)
Part Time Dummy - 1.074*** - 1.070*** - 1.076*** - 1.073*** - 1.072***
(0.045) (0.045) (0.045) (0.045) (0.045)
GPA 0.192*** 0.186*** 0.191*** 0.192*** 0.197***
(0.041) (0.041) (0.041) (0.042) (0.041)
Post-Graduate Degree Dummy - 0.002 0.001 - 0.005 - 0.008 - 0.005
(0.035) (0.035) (0.035) (0.035) (0.035)
Constant - 154.4*** - 147.8*** - 148.3*** - 157.8*** - 150.0***
(37.09) (37.38) (37.39) (37.15) (37.53)
Observations 2,026 2,026 2,026 2,026 2,026
R-squared 0.567 0.564 0.563 0.566 0.563
Note: Robust standard errors clustered by id in parentheses; *** p<0.01, ** p<0.05, * p<0.1. Controls include: years
since graduation, year of postgraduate survey, part-time dummy, GPA, a dummy for having earned a post-graduate
degree, dummies for sector, and dummies for major.

31

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