Overconfidence, ambition, and risk taking and gender inequality in the school-to-work transition and early career labour market outcomes

Recent figures show that progress on eliminating the gender wage gap has been stagnant; nearly eight in 10 employers in the UK still have a gap in favour of men (Parliament. House of Commons 2018). At the same time, a range of studies has shown that men are more likely than women to overclaim knowledge or expertise, believe in their own abilities, demonstrate ambition, and take risks. This project will bring the key concepts of overconfidence, ambition, and risk taking, identified by psychologists and human resources (HR) professionals as important, into the analysis of gender gaps in occupational, university, and early career labour market outcomes. It will also attempt to separate the socialisation of boys and girls from inherited traits through the use of polygenic risk scores on risk tolerance and early measures of the other socio-emotional characteristics using longitudinal data.

Using the British Cohort Study 1970 (BCS70), Next Steps (formerly the Longitudinal Study of Young People in England, LSYPE, 1990), and the Millennium Cohort Study (MCS, 2000), I will explore gender gaps in hourly wages, ambitious university plans, and high-status career aspirations and outcomes. I will create measures of overconfidence, ambition, and risk-taking using existing survey items, administrative data on educational attainment, and polygenic risk scores, which will be made available to future researchers. The overconfidence measure will be constructed by comparing an individual's academic self-concept, how good they think they are at school, from their actual attainment on standardised tests. The measure of ambition will be created using information on whether or not they aspire to attend university or high-status careers. Risk taking is captured in several of the datasets and in two of the datasets, the availability of the polygenic risk score for risk tolerance will allow me to disentangle the nurture vs. nature elements of these gaps. These measures will be used to estimate whether overconfidence, ambition, and risk-taking can explain why women earn less than men, are less likely to aspire to a high-status university or job, or enter into a high status or high earning job even if they have the same level of education. I will conduct this analysis across the earnings distribution and rankings of universities and occupations to explore if these socio-emotional characteristics can explain the gap for the highest paying and most prestigious institutions and jobs.

The transition from school to work is seen as particularly important in terms of career trajectories. The gender wage gap already exists shortly after labour market entry, making early career an important time to understand. Previous research on early career gender gaps has mostly been conducted with generations born 1970 or earlier and only used one cohort. As society and higher education contexts have changed, with the expansion of HE post-1992 for example, exploring early career gender gaps across several recent generations will shed light on how this transition has changed over time. This is especially important as women have overtaken men in higher education participation and in the context of research showing that "soft skills" have become increasingly important in the labour market. This means that overconfidence, ambition, and risk taking may be even more rewarded in recruitment and promotion practices, leading to greater gender inequality, despite the increased educational attainment of women.

This project will create evidence that policymakers and employers can use to close gender gaps in the labour market. Guidance counsellors at schools and human resources teams will be able to use the findings to adapt their recruitment and promotion processes and more fairly assess men and women.

The goal of this project is to create evidence that stakeholders including government departments, charities, firms, schools, and the general public can use to change policies and practices that unfairly reward overconfidence, ambition, and risk taking in the school-to-work transition and labour market outcomes. All of these groups will be beneficiaries of this work.

Government departments: The Department for Education (DfE), the Department for Work and Pensions (DWP), and the Government Equalities Office (GEO) are interested in the findings of this project. Gender gaps in university and occupational aspirations due to overconfidence, ambition, and risk taking will be of interest to DfE given the department's focus on character. I attended the permanent secretary's first roundtable on character where he asked for more evidence on the longer-term impacts of socio-emotional characteristics. The DWP is interested in inequality in the labour market and GEO is tasked with addressing gender inequality in the labour market, so both will benefit from new research using socio-emotional characteristics to explain gender gaps. The GEO is a partner organisation on this project and will ensure that I am able to present to civil servants at their seminar series.

Charities and non-governmental organisations: Organisations such as LeanIn.org, The Rhodes Project, Young Women's Trust or Fawcett actively campaign around the gender wage gap and gender stereotypes, so will be interested in better understanding the role of overconfidence, ambition, and risk taking in explaining gender gaps in the labour market. While there is anecdotal evidence that women face penalties in the labour market due to underconfidence, lower ambition, and less risk taking, they lack the quantitative evidence with which to lobby employers to change recruitment and promotion processes. I have partnered with LeanIn.org and The Rhodes Project and they will assist in the dissemination of the non-technical report to their mailing lists as well as in advertising the policy launch event.

Schools: Since part of the project uses data on a cohort still in school, the results produced will provide evidence on the role of overconfidence, ambition, risk taking in making university application and career plans. Schools play an important role in advising pupils through this process, so they will benefit from understanding the role of these socio-emotional characteristics in order to provide the best guidance for all pupils. If overconfidence is found to play an important role in explaining why boys are more likely to plan to apply to high status institutions, schools can think about specific interventions to promote high-performing, but underconfident girls. DfE will assist in the dissemination of findings to headteachers and guidance counsellors.

Firms/HR departments: Many employers in the UK have to report their gender wage gap and are working to reduce it. This research will be of interest to firms in assessing their recruitment or promotion processes in terms of how much overconfidence, ambition, and risk taking are rewarded. I have budgeted for two workshops just for HR professionals, drawing on contacts from the GEO and LeanIn.org, in order to critically think about how the findings from this project can be implemented by employers to close gender gaps. This might include thinking about questions or tasks posed at interview.

General public: Both women and men will find this research to be of interest. The debate around the gender wage gap is present in the media and there is interest in better understanding its drivers. The popular success of the book Lean In shows that people are interested in understanding gender differences in overconfidence, ambition, and risk taking and how these differences play out in the labour market. I will use existing partnerships with media outlets and build new ones to ensure the findings of this project reach a general audience.