Working Paper: NBER ID: w29361
Authors: Daniel S. Hamermesh; Andrew Leigh
Abstract: We examine how the net worth of billionaires relates to their looks, as rated by 16 people of different gender and ethnicity. Surprisingly, their financial assets are unrelated to their beauty; nor are they related to their educational attainment. As a group, however, billionaires are both more educated and better-looking than average for their age. Men, people who reside in Western countries, and those who inherited substantial wealth, are wealthier than other billionaires. The results do not arise from measurement error or nonrandom sample selectivity. They are consistent with econometric theory about the impact of truncating a sample to include observations only from the extreme tail of the dependent variable. The point is underscored by comparing estimates of earnings equations using all employees in the 2018 American Community Survey to those using a sample of the top 0.1 percent. The findings suggest the powerful role of luck within the extremes of the distributions of economic outcomes.
Keywords: billionaires; beauty; wealth; economic outcomes
JEL Codes: C24; J24; J40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| billionaires' beauty ratings (G40) | billionaires' financial assets (D14) |
| billionaires' educational attainment (I24) | billionaires' financial assets (D14) |
| inherited wealth (D31) | billionaires' financial assets (D14) |
| billionaires' nationality (western vs nonwestern) (F23) | billionaires' financial assets (D14) |
| billionaires' gender (male vs female) (J16) | billionaires' financial assets (D14) |