Optimism in the labour market

It’s well-known by now that lots of strange things affect our earnings such as looks and ugliness, height, marital status, sexual orientation (pdf), left-handedness, personality (pdf) or participation in sport, not to mention ethnicity and gender. We can add another to the list - an optimistic disposition. This new paper (pdf) looked at the job offers to new MBAs and found that:

Optimists out-perform their peers in the job market. They search less intensively than their peers but receive job offers more quickly. Moreover, they are more likely to be promoted in the first two years after graduation.

You might think this is because optimism is a proxy for some other personal attribute. If a guy is charming or good-looking or unusually smart, he’ll rightly believe that good things are more likely to happen to him, and he will indeed prosper in the labour market.
But this explains only a fraction of optimists’ success. The authors asked MBA students to rank their fellows by charisma or their chances of becoming a CEO, and found that even controlling for the results, optimists still did well.
So, why do they? I’d like to think that bosses want to employ optimists, because these are more likely to be conformist yes-men: people who look on the bright side are more likely to believe that their employers addle-brained ideas will succeed. However, the problem with this is that a candidate’s optimism need not come across in job interviews.
Instead, the authors suggest that optimists do well because they are better able to cope with setbacks; they don’t lose heart after a poor interview, or after adverse feedback when they start work.
Whatever the reason, the bottom line is the same. If we are accept the notion that human capital determines earnings, we must define human capital very widely - to include many things that can’t be taught at school or college. Or, of course, we could recognise that human capital is only part of the story.

Comments

[Nick Rowe]

There's human capital, which needs investment to create.

And there's human "land", which we are born with.

[Paolo Siciliani]

The two reasons are also linked. optimists cope better with set backs which is what you need when you have to give in to your boss on something you disagree with in principle (that is, the essential asset of a yes-man).
I guess that with the financial crises it has turned out that many of those delusional traders were uber-optimists.
The problem is that I guess the mantra is to link optimism with enthusiasm at work, which is not necessarily the truth.

[Laban]

You could perhaps have mentioned IQ, which isn't 'a strange thing' but is a pretty strong indicator. A handsome, tall, married optimist with an IQ of 80 isn't likely to be a top earner.

http://www.bus.ucf.edu/mdickie/Research%20Methods/Student%20Papers/Other/Moedinger-IQ%20&%20earnings.pdf

[botogol]

perhaps there's nothing special about earnings, perhaps optimists are simply more successful in ALL walks of life.

- The optimist in me believes that is so
- The pessimist in me believes it as well.

[Bill Gilmore]

hey great blog entry, thanks for the info