Here’s yet more evidence that appearances matter in the labour market. Christian Pfeifer estimates that, among Germans, a one point higher rating for physical attractiveness on a 1-11 scale is associated with 3% higher wages, controlling for other obvious influences. The effect is slightly larger for men than for women.
This implies that, among men the earnings difference between being very ugly and very attractive is greater than the return to a university degree.
What’s more, in contrast to some research, this is not due merely to there being a penalty for being ugly. Although the ugliest men do suffer low wages, very handsome ones do better than middlingly attractive ones. Among women the looks premium is more linear.
Why should this be? There are many possibilities, but several of them are flawed, for example:
- Customers prefer to deal with attractive people. This runs into the problem that, even in occupations where you’d think there would be a big customer premium on attractiveness, such as prostitution, the returns to looks aren’t much different from those in the labour market generally.
- Looks are correlated with other productive traits, such as intelligence (pdf) - the Vorderman effect. However, this might not be the case, and anyway most studies on the beauty premium control for the big and obvious measures of ability, such as academic qualifications.
- Looks are associated with self-confidence, which enables its owners to push for better jobs. However, Pfeifer shows that there is no correlation between men’s assessment of their looks and earnings; it is only the interviewers’ opinion of their looks that are correlated with earnings*.
With these theories flawed, here’s another theory. The beauty premium exists because the labour contract is typically incomplete and workers’ performance cannot always be easily monitored. In such cases, employers will want people they can trust - and, for reasons which might not be rationally grounded, good-looking people are considered to be more trustworthy (pdf).
Perhaps, therefore, the beauty premium isn’t just a funny quirk, but is instead an artefact which arises from the very structure of the labour market - the same structure which gives us both efficiency wages (and thus persistent unemployment) and rising inequality generally.
* This raises the possibility of reverse causality; maybe interviewers get the impression that a man is well-off and subconsciously rate him as more attractive because of this.