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Heritability of Overconfidence

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Author Info
David Cesarini
Magnus Johannesson
Paul Lichtenstein
Björn Wallace

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Abstract

Empirical evidence suggests that people on average overestimate their own ability in a variety of circumstances. Little is known, however, about the origins of such overconfidence. To shed some light on this issue, we use the classic twin design to estimate the genetic and environmental contributions to individual differences in overconfidence. We collect data on overconfidence among 460 twin pairs. Overconfidence is measured as the difference between the perceived and actual rank in cognitive ability. Cognitive ability is measured using a 20-minute test of general intelligence. We find a highly significant joint effect of genes and common environment, but our estimates of the relative contributions of genetic and common environmental variation are less precise. According to our point estimates, genetic differences explain 16-34% of the variation in overconfidence depending on the definition of overconfidence used and common environmental differences explain 5-11%. (JEL: C91, D87, Z13) (c) 2009 by the European Economic Association.

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File URL: http://www.mitpressjournals.org/doi/pdfplus/10.1162/JEEA.2009.7.2-3.617
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Publisher Info
Article provided by MIT Press in its journal Journal of the European Economic Association.

Volume (Year): 7 (2009)
Issue (Month): 2-3 (04-05)
Pages: 617-627
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Handle: RePEc:tpr:jeurec:v:7:y:2009:i:2-3:p:617-627

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Find related papers by JEL classification:
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
D87 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Neuroeconomics
Z13 - Other Special Topics - - Cultural Economics - - - Social Norms and Social Capital; Social Networks Economic Anthropology

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This page was last updated on 2009-11-16.

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