Friday, April 07, 2006

Why Beauty Matters

In class yesterday, we discussed that your appearance is an important part of your social capital. For many years, economists have known that more attractive people earn more money. Steven Landsburg summarizes several of the key findings in this slate column. Here's the highlight:

In their published research, Professors Daniel Hamermesh and Jeff Biddle estimate that if you're perceived as beautiful, you probably earn about 5 percent more than your ordinary-looking counterparts.

As beauty is rewarded, so ugliness is penalized. Ugly women earn about 5 percent less than other women, and ugly men earn about 10 percent less than other men. That's right; the market punishes men more than women for being unattractive. Moreover, men's looks haunt them at every stage of their careers: Better-looking men get more job offers, higher starting salaries, and better raises. For women, good looks will get you better raises but usually not better job offers or starting salaries. (A note on Hamermesh and Biddle's methodology: Beauty was assessed by panels of people who judged photographs of the study's subjects.)

But why is beauty rewarded? Do employers "pay" because they just like to have pretty people around? Do employer's know that customers prefer to work with pretty people? Are pretty people more productive? Or do employers (and the pretty people themselves) just think that they are?

Spiffy research by Harvard's Markus Mobius and Wesleyen's Tonya Rosenblat addresses these questions using an experimental labor market. Berkeley professor Hal Varian conveniently summarized this paper in yesterday's NYTimes:

Armed with the data from these experiments and surveys, the economists found several interesting results. It turned out that beautiful people were no better than ordinary people in solving mazes. But despite having the same productivity as others in this task, beautiful people were a lot more confident about their own abilities. Being good looking seems to be strongly associated with self-confidence, a trait that is apparently attractive to employers.

When employers evaluated employees only on the basis of resumes, physical appearance had no impact on their estimates, as one would expect. But all of the other treatments showed higher productivity estimates for beautiful people, with the face-to-face interviews yielding the largest numbers.

Interestingly, employers thought beautiful people were more productive even when their only interaction was via a telephone interview. It appears that the confidence that beautiful people have in themselves comes across over the phone as well as in person.

But even when the experimenters controlled for self-confidence, they found that employers overestimated the productivity of beautiful people. The economists estimated that about 15 to 20 percent of the beauty premium is a result of the self-confidence effect, while oral and visual communication each contribute about 40 percent.

It seems that good-looking people are good communicators as well, and their oral communication skills contribute about as much to employers' perceptions as their looks.

As the researchers put it, "Employers (wrongly) expect good-looking workers to perform better than their less-attractive counterparts under both visual and oral interaction, even after controlling for individual worker characteristics and worker confidence."

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