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Family background, self-confidence and economic outcomes

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  • Antonio Filippin

    ()
    (University of Milan and IZA)

  • Marco Paccagnella

    ()
    (Bank of Italy)

Abstract

In this paper we analyze the role played by self-confidence, modeled as beliefs about one’s ability, in shaping task choices. We propose a model in which fully rational agents exploit all the available information to update their beliefs using Bayes’ rule, eventually learning their true type. We show that when the learning process does not converge quickly to the true ability level, small differences in initial confidence can result in diverging patterns of human capital accumulation between otherwise identical individuals. If differences in self-confidence are correlated with socio-economic background (as a large body of empirical literature suggests), self-confidence can be a channel through which education and earning inequalities perpetuate across generations. Our theory suggests that cognitive tests should take place as early as possible, in order to avoid that systematic differences in self-confidence among equally talented people lead to the emergence of gaps in the accumulation of human capital.

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Bibliographic Info

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 875.

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Date of creation: Jul 2012
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Handle: RePEc:bdi:wptemi:td_875_12

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Keywords: human capital; self-confidence; socio-economic status;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Self-confident children have it best
    by Economic Logician in Economic Logic on 2012-07-27 14:04:00
  2. [??][??]???????????
    by himaginary in himaginaryの日記 on 2012-08-01 07:00:00
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Cited by:
  1. Dasgupta, Utteeyo & Gangadharan, Lata & Maitra, Pushkar & Mani, Subha & Subramanian, Samyukta, 2011. "Selection into skill accumulation: evidence using observational and experimental data," MPRA Paper 32383, University Library of Munich, Germany.
  2. Otto, Annette, 2013. "Saving in childhood and adolescence: Insights from developmental psychology," Economics of Education Review, Elsevier, vol. 33(C), pages 8-18.
  3. Brown, Sarah & McHardy, Jolian & Taylor, Karl, 2014. "Intergenerational analysis of social interaction and social skills: An analysis of U.S. and U.K. panel data," Economics of Education Review, Elsevier, vol. 40(C), pages 43-54.
  4. Utteeyo Dasgupta & Lata Gangadharan & Pushkar Maitra & Subha Mani & Samyukta Subramanian, 2012. "Choosing to be Trained: Evidence from a Field Experiment," Development Research Unit Working Paper Series 43-12, Monash University, Department of Economics.

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