Academic journal article Monthly Labor Review

Optimism Leads to Improved Labor Market Outcomes

Academic journal article Monthly Labor Review

Optimism Leads to Improved Labor Market Outcomes

Article excerpt

Is the glass half full or half empty? This common question is a litmus test that categorizes a person as one of two personality types: optimist or pessimist. Economists Ron Kaniel, Cade Massey, and David T. Robinson believe that the answer to this question tells a lot about a person--including how he or she may fare in the labor market.

In their recent National Bureau of Economic Research (NBER) study entitled "The Importance of Being An Optimist: Evidence from Labor Markets" (NBER Working Paper 16328, September 2010) the authors explore how optimism shapes the economic behavior and labor market outcomes of a panel of MBA students at a major U.S. university. Specifically, the authors focus on dispositional optimism, a personality trait associated with people who believe that good things tend to happen to them more often than bad things. The authors focus on dispositional optimism because uncertainty is central to economic choice; when making a decision that may yield an uncertain future, an optimist places more weight on positive outcomes than a pessimist does.

The authors calculated dispositional optimism by measuring generalized expectations of the future, observing job search behavior during the MBA program, analyzing admissions records and data on classroom performance, and administering surveys designed to capture the perceptions of other students. In addition, the authors followed up with alumni two years after they graduated to learn about their post-MBA job-market experience. …

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