Why start with high happiness or high confidence?

Does that just START you with those skills?

Or do they give you a consistent modifier to them throughout the game,
making all boosts to happiness and confidence affect you more, and having
them decrease at a slower rate.

these are like the ‘default’ base levels for thos attributes, so they are like a disposition that has effect throughout your life.

So if you started with low IQ and you increased it loads, over time it would decrease?

Yes, the IQ, confidence, happiness, and culture have a natural decay rate, so you have to keep working on them. I believe the selection in the beginning gives a higher level to start with, plus makes those skills easier to acquire.