Where we choose to live has a huge impact on everything from the people we date and the schools our kids attend to the jobs we find and how successful we are in our careers. Big cities do more than just attract the educated and talented. They also add to their earning power and present them with a lifelong economic advantage.
And yet more than half of all Americans, and 40 percent of college grads, live in the same community at 40 as they did when they were 14. Why do some people move, while others stay behind?
A new study suggests that our likelihood of moving to a big city has less to do with talent or ability and much more to do with our self-confidence. The study, by the economists Jorge De la Roca of the University of Southern California (formerly of New York University), Gianmarco Ottaviano of the London School of Economics, and Diego Puga of the Center for Monetary and Financial Studies in Madrid, takes a close look at the role of self-confidence—compared to ability, education, and other factors—in determining who locates in big, economically advantageous cities.
To get at this, the study examines the effects of self-confidence on cities using panel data from the Bureau of Labor Statistics’ National Longitudinal Survey of Youth and other sources. The authors define self-confidence broadly as “self-esteem” or “the overall value one places on oneself as a person.” They then measure the effects of self-confidence, ability, and location on younger, more “junior” workers (roughly 20-23 years old) and older, relatively more “senior” young workers with ten additional years of professional experience (around 30-33 years old). The study focuses on large metro areas with populations of two million or more.
Altogether, the study generates three key findings of interest not just to mayors and economists, but to anyone who wants to get the most out of their career.
The chutzpah effect
Self-confidence is a main factor in who moves to big cities. It’s self-confident young people, after all, who have the chutzpah to leave small towns behind. (An increase of the self-confidence percentile by one standard deviation raises the probability of initially moving to a big city by 12 percent, according to the study.) This decision compounds over time as younger workers in big cities gain the experience and background they need to get ahead in their careers and earn more money. Highly confident people with lesser abilities benefit the most here, since they gain access to the opportunities, networks, and experiences that these big cities provide.
At the same time, younger workers with lots of ability, but somewhat less self-confidence, are no more likely to choose big-city living from the start. Meanwhile, the least confident employees, including those with high ability, are much more likely to stay put in smaller cities. Of course, in addition to drawing people to big cities in the first place, it is also likely that self-confidence shapes one’s ability to network, identify promising professional opportunities, switch jobs, and do all the things needed to move up in a career.
Other factors beyond self-confidence matter, too. Having a college education increases the likelihood of young workers moving to a big city by a whopping 120 percent, according to the study. Being single (or having never been married) increases this likelihood by 44 percent, while having children reduces it by 13 percent. Yet self-confidence remains more important than any of these factors in deciding which younger workers head to big cities.
Too little, too late
As they age and gain experience, workers with low self-confidence may come to realize that big cities offer more opportunities later on. That said, even workers who decide to move later in their careers have a hard time making up the economic ground they lost compared to those who moved at earlier stages.
Older, more experienced workers are more likely to head to the big city if they have a college degree or if they are part of a two-income household with a working partner. They are less likely to make this move if they have children, or hail from a smaller town. In contrast to their younger peers, self-confidence has little influence on whether more experienced workers move to big cities.
Interestingly, neither ability nor self-confidence plays much of a role in motivating older, more experienced workers to make the reverse move from big to small cities. Instead, this move is largely motivated by a lack of success in big cities.
When confidence becomes self-validating
These two facts lead to a considerable irony. The most self-confident, not necessarily the most able or talented, workers are the ones who move to big cities. These cities then add value to these young people’s careers and contribute to their earning power. As the study notes, workers in big cities gain more valuable experience and greater economic benefits than those in smaller cities. In this way, younger workers’ initial over-confidence in their own abilities “becomes self-validating,” according to the study. Meanwhile, less confident workers who choose to stay in small towns place themselves at a life-long economic disadvantage.
Ultimately, the study has important implications for both individuals and cities. For one, it means that those of us with the hubris of youth can gain more than our talent warrants. It also means that big cities gain much of their economic advantage by capturing and then adding value to their most self-confident residents. No matter how hard they try to attract people later in life, smaller cities and towns are less likely to fully recapture what they have lost.