Is There Really a Beauty Premium or an Ugliness Penalty on Earnings?

Abstract

Economists have widely documented the “beauty premium” and “ugliness penalty” on earnings. Explanations based on employer and client discrimination would predict a monotonic association between physical attractiveness and earnings; explanations based on occupational self-selection would explain the beauty premium as a function of workers’ occupations; and explanations based on individual differences would predict that the beauty premium would disappear once appropriate individual differences are controlled. In this paper, we empirically tested the three competing hypotheses about the “beauty premium”. We analyzed a nationally representative and prospectively longitudinal sample from the National Longitudinal Survey of Adolescent Health (Add Health). The results contradicted the discrimination and self-selection explanations and strongly supported the individual differences explanation. Very unattractive respondents always earned significantly more than unattractive respondents, sometimes more than average-looking or attractive respondents. Multiple regression analyses showed that there was very weak evidence for the beauty premium, and it disappeared completely once individual differences, such as health, intelligence, and Big Five personality factors, were statistically controlled. Past findings of beauty premium and ugliness penalty may possibly be due to the fact that: 1) “very unattractive” and “unattractive” categories are usually collapsed into “below average” category; and 2) health, intelligence (as opposed to education) and Big Five personality factors are not controlled. It appears that more beautiful workers earn more, not because they are beautiful, but because they are healthier, more intelligent, and have better (more Conscientious and Extraverted, and less Neurotic) personality. This is the first study to show that: 1) very unattractive workers have extremely high earnings and earn more than physically more attractive workers, suggesting evidence for the potential ugliness premium; and 2) the apparent beauty premium and ugliness penalty may be a function of unmeasured traits correlated with physical attractiveness, such as health, intelligence, and personality.