We know from the work of Daniel Hamermesh and others that attractive employees are paid better, other things being equal, than average-looking people. Is the impact of beauty on earnings due to pure discrimination, or might productivity differences be a factor? One of the papers given at last week's ESPE 2006 conference in Verona tackles this question. Productivity or Discrimination? Beauty and the Exams (PDF) by Giam Pietro Cipriani & Angelo Zago provides evidence against the hypothesis of Becker-type discrimination stemming from tastes and in favor of productivity-related discrimination. They do this by distinguishing between oral exams (where beauty is observed) and written exams (where it is not):
Using a rich set of data from the College of Economics at the University of XX, we examine the effects of students’ physical appearance on examination results. We find evidence that beauty has a significant impact on academic performance, a result which is consistent with and comparable to the impact found in the labor market literature.
In addition, since we can compare student performances in oral and written exams, where in the latter the evaluation is blind, i.e., not influenced by physical appearance, we can in fact understand better the source of the “beauty premium”, that is disentangle productivity from discrimination effects. We find that the effect of beauty on academic performance cannot be ascribed to pure professor discrimination. One could then argue that to the extent that wages rise with educational attainments, our findings corroborate the hypothesis that the payoffs to beauty reflect differences in productivity.
The paper suggests that good looks could make people more productive. But what is the mechanism? Drawing on recent experimnental and theoretical literature, the authors point to the greater confidence and self esteem of attractive people, which makes them expend greater effort. As they note, this could be the result of past discrimination:
Essentially the higher productivity of attractive people could be the result of pure discrimination in the past because of different parental (and teacher) solicitude or of past and current social stereotypes that affect self esteem and motivation and hence productivity via a self-fulfilling prophecy.
UPDATE: Greg Mankiw has also cited this paper on his blog.