Earlier empirical evidence indicates that locus on control (LoC), a non-cognitive skill reflecting an individual’s belief that life’s outcomes result from their own efforts, is relatively unresponsive to major life events. This study re-examines this evidence by utilizing a longer panel dataset and employing more robust econometric models.
Results from an individual fixed effects model applied to five waves of data sourced from the Household, Income, and Labour Dynamics in Australia (HILDA) reveal that 14 of the 20 considered major life events statistically significantly influence LoC at the 5% level or better. Among the five events positively associated with LoC, pregnancy exhibits the largest effect, increasing internal LoC by 0.10 standard deviations (SD). Conversely, among the nine negatively associated events, major financial decline has the most substantial impact, reducing internal LoC by 0.28 SD. Additionally, individual fixed effects quantile regressions show that the effects of many life events are more pronounced for individuals at the lower end of the internal LoC distribution. The analysis also uncovers heterogeneity in the effects of life events across gender and age groups, with certain events exhibiting persistent, albeit short-term, impacts on LoC. Furthermore, we find that the effects of major life events on LoC are not only statistically significant but also economically meaningful.
These findings have significant methodological and policy implications. Methodologically, the substantial instability of LoC necessitates a reconsideration of its treatment as a fixed or exogenous variable in future research. Moreover, the study’s utilization of recent data and advanced empirical methods, including individual fixed effects quantile regression, provides a foundation for future investigations into the stability of other personality traits. From a policy perspective, the findings underscore the need for targeted interventions to support individuals, particularly those with lower perceived control, when confronting adverse life events.