Does Beauty Matter? Evidences from Public Goods Provision

1. Does Beauty Matter? Evidences from Public Goods Provision ArtiAdji Faculty of Economics and Business UniversitasGadjahMada

2. Background (1) The existence of a beauty premium in the labor market and the male–female wage gap suggests that appearance can matter in the real world. Among the randomly selected people who responded to the survey, more felt that discrimination based on looks in the US exceeded discrimination on ethnicity/national background.

3. Background (2) It is crucial to know how beauty generates its effects if we are to guard against giving undue importance to its role in the functioning of labor markets. It is also important in weighing the benefits and costs to society of our attitudes about human beauty.

4. Some Facts The average American husband spends thirty-two minutes on a typical day washing, dressing, and grooming, while the average American wife spends forty-four minutes. American women age seventy and older spend forty-three minutes. In 2008, the average American household spent $718 on women’s and girls’ clothing; $427 on men’s and boys’ clothing; $655 on infants’ clothing, footwear, and other apparel products and services; and $616 on personal care products and services. Such spending totaled roughly $400 billion and accounted for nearly 5 percent of all consumer spending that year.

5. Previous Studies (1) Hamermesh and Biddle (1994): there is a significant premium to beauty, with attractive people earning more money than unattractive people. O’Neill (2003): when controlling for age and experience, men earn about 25 percent more than women. While some of these differences can be attributed to labor market factors, much of the beauty premium and wage gap remains unexplained.

6. Previous Studies (2) Andreoni and Petrie (2008): there is an evidence for a beauty premium. This premium, however, disappears once people know exactly what each group member contributed to the public good. When only the total group contribution is observable, attractive people make more money than unattractive people, even though they are no more or less cooperative, on average, than unattractive people. When individual contributions are observable, the reward to being beautiful disappears. People seem to expect beautiful people to be more cooperative than others, and when their behavior does not meet expectations, people are less cooperative with them. There is also a difference in payoffs for men and women, but not always favoring men.

7. Why Experiments? Replicability Control Purpose: searching for the facts.

8. Validity of Experimental Design Non-satiation Saliency Reward dominance

9. Design (1) – Firdaus (2010) Subjects are given 4 cards: 2 black cards and 2 red cards. Subjects are asked to hand in 2 (out of 4) cards that she/he has: 2 red cards or 2 black cards or 1 black and 1 red card. For each red card that a subject hands in is donated in a group exchange, i.e. she/he and the whole class will get Rp1000 from each red card that she/he gives. For each red card that a subject keeps will go to the individual exchange, i.e. she/he will get Rp4000 from each red card that she/he keeps and the class will NOT get any Rp from it. Black cards do not generate Rp. Payoffs = (number of red cards that a subject keeps x Rp4000) + (number of red cards that are handed in or in the group exchange x Rp1000) There are 3 sessions. There are 4 rounds in each session

10. Design (2) Subjects are divided into two groups in Session 1 and into six groups in Session 2 and Session 3. Prior to the experiment, subjects are asked to fill in ‘closeness’ form and ‘attractiveness’. Prior to the experiment, subjects are also asked to fill in demographic questionnaire.

11. Results (1) In earlier rounds, attractiveness does matter. In latter round, it doesn’t. In earlier rounds, closeness matters. In latter round, it doesn’t. Female subjects donate more. Non-javanese subjects donate more.