St. Louis Fed Analysis Asks: Do Good Looks Mean More Pay?

ST. LOUIS — Most of us expect our wages and promotions to be judged by our productivity, but being tall, slim and good-looking may also affect employment outcomes, based on an analysis from the Federal Reserve Bank of St. Louis.

In the April issue of The Regional Economist, the Reserve Bank's quarterly publication of business and economic issues, research analyst Kristie M. Engemann and economist Michael T. Owyang analyzed the possible links between appearance and wages. (The Regional Economist is also available online at the St. Louis Fed's web site.)

One study cited by Engemann and Owyang found a "plainness penalty" of 9 percent and a "beauty premium" of 5 percent. In other words, a person with below-average looks tended to earn 9 percent less per hour and an above-average person tended to earn 5 percent more per hour than an average-looking person.

Regarding weight, another study showed that women who were obese earned 17 percent lower wages, on average, than women within their recommended body mass index.

In terms of the long and short of it, research also suggests that increasing height at age 16 by 1 inch increased male adult wages by 2.6 percent, on average. "In other words," said Engemann and Owyang, "for two adult men of the same height, the taller one at 16 would most likely earn the higher wage." A survey by journalist Malcolm Gladwell found that the average CEO is approximately 3 inches taller than the average American male.

Engemann and Owyang also noted how appearance can affect confidence and communication, which in turn can influence productivity. A study by economists Markus Mobius and Tanya Rosenblat, for example, estimated that confidence accounts for approximately 20 percent of the beauty premium. "Employers might believe that customers or co-workers want to interact with more-attractive people," said Engemann and Owyang.

At the same time, Engemann and Owyang said that "it is also conceivable that either weight or height can have an effect on unmeasured productivity." The authors of a study regarding weight, for example, argued that productivity might be negatively correlated with body mass, perhaps because of factors such as health or self-esteem. One of the studies they cited theorized that height increases the odds that teenagers will engage in social activities, such as non-academic clubs and sports. "This participation, in turn, helps them learn skills that are rewarded by employers and may enhance productivity," said Engemann and Owyang.

Nevertheless, Engemann and Owyang conceded that researchers have found some evidence difficult to reconcile with unmeasured productivity. They said another possible explanation for these wage differences is discrimination, since one of the studies they referenced found that the beauty premium exists even outside of occupations that require frequent interpersonal contact. "Moreover," they emphasized, "the wage differential for obesity seems to be limited to white women, which seems to contradict an unmeasured productivity explanation."

"As these results suggest," Engemann and Owyang concluded, "disentangling the effects of productivity differences and discrimination can be problematic. Though discrimination is a possible explanation, anti-discrimination laws might not guarantee that these wage differentials would evaporate."

With branches in Little Rock, Louisville and Memphis, the Federal Reserve Bank of St. Louis serves the Eighth Federal Reserve District, which includes all of Arkansas, eastern Missouri, southern Indiana, southern Illinois, western Kentucky, western Tennessee and northern Mississippi. The St. Louis Fed is one of 12 regional Reserve banks that, along with the Board of Governors in Washington, D.C., comprise the Federal Reserve System. As the nation's central bank, the Federal Reserve System formulates U.S. monetary policy, regulates state-chartered member banks and bank holding companies, and provides payment services to financial institutions and the U.S. government.

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