Take two children from seemingly similar advantaged, affluent backgrounds – perhaps parents with similarly prestigious jobs, the same type of family structure, high SAT scores, same GPAs, even the same interests and career plans. Why, in the future, would one end up with a significantly higher income than the other?
It may be self-concept, or more specifically, core self-evaluations (CSEs): a set of psychological characteristics that include a belief in one’s worth and one’s overall efficacy for being effective in new situations, a belief in having control in the decisions and outcomes of decisions, and lower levels of stress and anxiety.
Examining sets of data from the National Longitudinal Survey of Youth, Drs. Timothy Judge and Charlice Hurst demonstrated that the advantaged childhood to income relationship is not simple (Judge & Hurst, 2007). As expected, children from more advantageous backgrounds had higher income levels. But, they found that children with a high self-concept with advantageous backgrounds had very different income levels (that is, much higher) than did their low self-concept, but equally advantaged, peers. The authors state:
These resources [family advantages, high SAT, GPA] barely seemed to make a difference to individuals with low CSE and, in some cases (i.e., SAT scores) actually seemed to have a slight negative impact.
The authors conclude:
It seems that resources, such as family advantages, and positive CSE together are necessary to the attainment of above average levels of income.
Considering net worth instead of income for a moment, Data Points has found that self-concept in general and specifically related to financial matters (e.g., investing, financial planning) significantly impacts net worth, regardless of age, income, and percentage of inherited wealth. While self-concept is generally a stable or unchanging trait, understanding self concept and changing related financial behaviors may have benefits to income and net worth in the long run.
Judge, T. A., & Hurst, C. (2007). Capitalizing on one’s advantages: role of core self-evaluations. Journal of Applied Psychology, 92 (5), 1212.