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Family Background, Self-Confidence and Economic Outcomes

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  • Filippin, Antonio

    (University of Milan)

  • Paccagnella, Marco

    (OECD)

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 convergence quickly to the true ability level, even small differences in initial confidence can result in diverging patterns of human capital accumulation between otherwise identical individuals. As long as inital differences in the level of self-confidence are correlated with the socioeconomic background (as a large body of empirical evidence suggests), self-confidence turns out to be a channel through which education and earnings inequalities are transmitted 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.

Suggested Citation

  • Filippin, Antonio & Paccagnella, Marco, 2011. "Family Background, Self-Confidence and Economic Outcomes," IZA Discussion Papers 6117, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp6117
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    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 19:04:00
    2. [社会][経済]子供には自信を持たせよ
      by himaginary in himaginaryの日記 on 2012-08-01 12:00:00

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    13. Utteeyo Dasgupta & Subha Mani & Lata Gangadharan & Pushkar Maitra & Samyukta Subramanian, 2012. "Choosing to be Trained: Evidence from a Field Experiment," Fordham Economics Discussion Paper Series dp2012_01, Fordham University, Department of Economics.
    14. 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.
    15. Dessi, Roberta & Zhao, Xiaojian, 2014. "Over-Confidence, Shame and Investments," IDEI Working Papers 838, Institut d'Économie Industrielle (IDEI), Toulouse.
    16. Iain Embrey, 2017. "States of Nature and States of Mind: A Generalised Theory of Decision-Making, evaluated by application to Human Capital Development," Working Papers 209919485, Lancaster University Management School, Economics Department.
    17. Jouini, Elyès & Karehnke, Paul & Napp, Clotilde, 2018. "Stereotypes, underconfidence and decision-making with an application to gender and math," Journal of Economic Behavior & Organization, Elsevier, vol. 148(C), pages 34-45.
    18. 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.
    19. Peña, Pablo A., 2020. "Relative age and investment in human capital," Economics of Education Review, Elsevier, vol. 78(C).
    20. Koch, Alexander & Nafziger, Julia & Nielsen, Helena Skyt, 2015. "Behavioral economics of education," Journal of Economic Behavior & Organization, Elsevier, vol. 115(C), pages 3-17.
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    More about this item

    Keywords

    family background; self-confidence;

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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