Self-love, earnings and rationality

Everyone knows that the rich are rarely deficient in self-esteem. However, it’s not just wealth that causes self-esteem. It’s also the case that high self-esteem causes wealth. This new paper estimates that a one-standard deviation above-average level of self-esteem causes 3.7% higher earnings, even controlling for education and cognitive ability, as measured by AFQT scores.
Why might self-esteem raise earnings? One possibility is that we take people at their own estimation, so folk with high self-love are more likely to impress at job interviews. As Adam Smith said:

The frequent, and often wonderful, success of the most ignorant quacks and imposters, both civil and religious, sufficiently demonstrate how easily the multitude are imposed upon by the most extravagant and groundless pretensions. (Theory of Moral Sentiments, VI.iii.27)

The other possibility is that self-esteem is a genuinely useful attribute, as it causes people to put in more effort. Here’s Smith again:

Great success in the world, great authority over the sentiments and opinions of mankind, have very seldom been acquired without some degree of this excessive self-admiration. The most splendid characters, the men who have performed the most illustrious actions, who have brought about the greatest revolutions, both in the situations and opinions of mankind; the most successful warriors, the greatest statesmen and legislators, the eloquent founders and leaders of the most numerous and most successful sects and parties; have many of them been, not more distinguished for their very great merit, than for a degree of presumption and self-admiration altogether disproportioned even to that very great merit. This presumption was, perhaps, necessary, not only to prompt them to undertakings which a more sober mind would never have thought of, but to command the submission and obedience of their followers to support them in such undertakings. (TMS, VI.iii.28)

All this has two implications. One is for schools and parents. It might be a good idea to inculcate self-esteem in children, by praising rather than punishing them.
The other is for the nature of rationality. Irrational beliefs - self-admiration disproportioned even to very great merit - can have beneficial effects.

Comments

[reason]

Couldn't there be a selection bias in this. I imagine that high self esteem individuals also cause much more mischief. But because the downside is limited (by jail or bankrupcy) the average looks better.

[reason]

Note also that Adam Smith's quacks and imposters would have also had a good average income.

[kinglear]

I can't remember who said it ( it might have been Freud) but " no man can help but have an inestimable view of his self if he has been the cynosure of his mother's eyes" - or something like that

[Jon]

OTOH:

http://www.amazon.com/Hollow-Kids-Recapturing-Generation-Self-Esteem/dp/0761516743

http://www.jrf.org.uk/pressroom/releases/281101.asp

[Charlieman]

I guess that others read this piece at Freakonomics blog which links to "Ugly Criminals":
http://freakonomics.blogs.nytimes.com/2008/07/18/vengeance-is-whose/

Possibly a converse result?

My group worked with the Physics Olympiad organisers when the event was held in the UK a few years ago. The 18 year olds were asked to address plausible but difficult physics problems. Alas, I can't find a good link to the UK tutors seeking participants, but their argument today is that only privately educated children would have received the education (A Level Plus) sufficient for the youths to participate in the event.

It is not that pubicly educated students are unanalytical or stupid; Just that they have not been taught enough physics. First year Engineering and Physics are seriously difficult subjects.

And for our 16+ year olds, self confidence is good. As long as they don't insist in stupid arguments in classroom.

[Dipper]

No surprise here. Organisations treat you as badly as they can get away with. People with high self-esteem will tend not to put up with it. And people with rich parents will also not put up with it, because they don't have to. But if you've got bills to pay and mouths to feeds, you just have to suck it up.

[gracchi]

I read a really good column in the FT recently pointing out that businessmen are often junior sportsmen- for precisely that reason, they go for the delusional belief because ultimately that is a helpful thing if you are say trying to design a computer to replace the IBM, it helps to be delusional.

[Steve Mills]

High self esteem could also be a factor in people going after more promotions or opportunities because they believe they can handle them. A little bit of self confidence can go a long way.

[reason]

Dipper got it.

[reason]

By the way, Dippers argument is also the same argument Chris used for a GMI instead of a minimum wage.

[jameshigham]

It might be a good idea to inculcate self-esteem in children, by praising rather than punishing them.

Hug the hoodie instead of incarcerating him, you mean, Chris?

[Amala]

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[Tom]

From what I've seen such over-confidence (if one can call it that in this context) can often lead to failure. Why give 100% if you think you can get by putting just 50% in? A friend of mine has superb confidence in himself but it is completely misplaced. He could argue about his opinions very well for hours on end, but if you're wrong, you're wrong. He's unemployed. Silly boy.

That, and I fuckin hate arrogant twats stuck up their own arses. Cunts.