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The Importance of Being an Optimist: Evidence from Labor Markets

Author

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  • Ron Kaniel
  • Cade Massey
  • David T. Robinson

Abstract

Dispositional optimism is a personality trait associated with individuals who believe, either rightly or wrongly, that in general good things tend to happen to them more often than bad things. Using a novel longitudinal data set that tracks the job search performance of MBA students, we show that dispositional optimists experience significantly better job search outcomes than pessimists with similar skills. During the job search process, they spend less effort searching and are offered jobs more quickly. They are choosier and are more likely to be promoted than others. Although we find optimists are more charismatic and are perceived by others to be more likely to succeed, these factors alone do not explain away the findings. Most of the effect of optimism on economic outcomes stems from the part that is not readily observed by one's peers.

Suggested Citation

  • Ron Kaniel & Cade Massey & David T. Robinson, 2010. "The Importance of Being an Optimist: Evidence from Labor Markets," NBER Working Papers 16328, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:16328
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    File URL: http://www.nber.org/papers/w16328.pdf
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    References listed on IDEAS

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    1. Marianne Bertrand & Antoinette Schoar, 2003. "Managing with Style: The Effect of Managers on Firm Policies," The Quarterly Journal of Economics, Oxford University Press, vol. 118(4), pages 1169-1208.
    2. Kuhnen, Camelia M., 2010. "Searching for Jobs: Evidence from MBA Graduates," MPRA Paper 21975, University Library of Munich, Germany.
    3. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
    4. Augustin Landier & David Thesmar, 2009. "Financial Contracting with Optimistic Entrepreneurs," Review of Financial Studies, Society for Financial Studies, vol. 22(1), pages 117-150, January.
    5. John R. Graham & Si Li & Jiaping Qiu, 2011. "Managerial Attributes and Executive Compensation," NBER Working Papers 17368, National Bureau of Economic Research, Inc.
    6. Puri, Manju & Robinson, David T., 2007. "Optimism and economic choice," Journal of Financial Economics, Elsevier, vol. 86(1), pages 71-99, October.
    7. Ulrike Malmendier & Geoffrey Tate & Jonathan Yan, 2010. "Overconfidence and Early-life Experiences: The Impact of Managerial Traits on Corporate Financial Policies," NBER Working Papers 15659, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Kuhnen, Camelia M., 2010. "Searching for Jobs: Evidence from MBA Graduates," MPRA Paper 21975, University Library of Munich, Germany.
    2. Graham, John R. & Harvey, Campbell R. & Puri, Manju, 2013. "Managerial attitudes and corporate actions," Journal of Financial Economics, Elsevier, vol. 109(1), pages 103-121.
    3. Camelia M. Kuhnen & Paul Oyer, 2016. "Exploration for Human Capital: Evidence from the MBA Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 255-286.
    4. Kuhnen, Camelia M. & Oyer, Paul, 2012. "Exploration for human capital: Theory and evidence from the MBA labor market," MPRA Paper 39411, University Library of Munich, Germany.
    5. Urbig, Diemo & Monsen, Erik, 2012. "The structure of optimism: “Controllability affects the extent to which efficacy beliefs shape outcome expectancies”," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 854-867.
    6. Martin Koudstaal & Randolph Sloof & Mirjam van Praag, 2015. "Are Entrepreneurs more Optimistic and Overconfident than Managers and Employees?," Tinbergen Institute Discussion Papers 15-124/VII, Tinbergen Institute.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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