Family Background, Self-Confidence and Economic Outcomes

Antonio Filippin and Marco Paccagnella

No 6117, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: family background; self-confidence (search for similar items in EconPapers)
JEL-codes: D83 J24 J62 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2011-11
New Economics Papers: this item is included in nep-hrm and nep-neu
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Published - published in: Economics of Education Review, 2012, 31, 824-834

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Related works:
Journal Article: Family background, self-confidence and economic outcomes (2012)
Working Paper: Family background, self-confidence and economic outcomes (2012)
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