A new IZA paper "Skill Uncertainty and Social Inference" (Oxoby) gets at something relevant to occupational choice that myself, Kevin and Liam were talking about last week. Essentially that school-leavers may under-estimate their capabilities (or lack confidence about their ability) because they lack a familiar reference point for academic achievement.
Oxoby suggests that full information regarding one’s own ability is not always available. This may seem like a strange suggestion but the logic is that unless an individual undertakes tasks that test their prior beliefs, he/she may be uncertain about how much human capital to acquire. To solve this problem, the individual may also use public, socially observable information to form beliefs about their own ability.
2 comments:
Martin,
These are really great ideas. We should make sure that our Universities study becomes a flag-ship for this type of rigorous thinking.
Liam
Definitely. There's also a really neat link here to "reference dependency". There is a twist though. In the context of human capital investment, reference dependency is not affecting satisfaction. Instead, it is affecting expectations and contributing to the individual level of investment in human capital. I can see it now: "Reference Dependency, Expectations and Investment in Human Capital": QJE'08.
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