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Family background, self-confidence and economic outcomes

Antonio Filippin () and Marco Paccagnella

No 875, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

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.

Keywords: human capital; self-confidence; socio-economic status (search for similar items in EconPapers)
JEL-codes: D83 I24 J24 J62 (search for similar items in EconPapers)
Date: 2012-07
New Economics Papers: this item is included in nep-hrm
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Related works:
Journal Article: Family background, self-confidence and economic outcomes (2012) Downloads
Working Paper: Family Background, Self-Confidence and Economic Outcomes (2011) Downloads
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