Family Background, Self-Confidence and Economic Outcomes

27 Pages Posted: 28 Nov 2011

See all articles by Antonio Filippin

Antonio Filippin

Università degli Studi di Milano; IZA Institute of Labor Economics

Marco Paccagnella

Bank of Italy

Multiple version iconThere are 2 versions of this paper

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 initial 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: self-confidence, family background

JEL Classification: D83, J24, J62

Suggested Citation

Filippin, Antonio and Paccagnella, Marco, Family Background, Self-Confidence and Economic Outcomes. IZA Discussion Paper No. 6117, Available at SSRN: https://ssrn.com/abstract=1965134 or http://dx.doi.org/10.2139/ssrn.1965134

Antonio Filippin (Contact Author)

Università degli Studi di Milano ( email )

Milan, 20122
Italy

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Marco Paccagnella

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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