The efficient allocation of human capital is crucial for a country’s economic success. Discrimination based on characteristics irrelevant to a person’s productivity may impose a sharp cost on the efficiency of an economy. Yet numerous economic studies report that discrimination based on physical attributes is as widespread as discrimination based on gender or race/ethnicity.
Compared with other personal characteristics that can lead to discrimination, such as gender and race/ethnicity, beauty is easy to change—up to a point. People can alter their face and body using surgical procedures (such as liposuction and eyelid surgery), enhance their youthful look using non-surgical treatments (such as grooming, cosmetics, Botox, fillers), and increase their height with growth hormone therapy or surgical limb extension. Given fairly widespread beauty-based discrimination, it is important to assess the extent to which a person can mitigate such discrimination through goods and services to enhance beauty. Having this knowledge is important not only from an individual’s perspective but also from society’s, given the implications for economic efficiency.
Discussion of pros and cons
The beauty premium
People whose faces are considered very attractive enjoy considerable benefits in earnings compared with their counterparts with less attractive faces . Individuals who are tall or weigh less have better labor market opportunities than their counterparts with the same productivity who are shorter or heavier , . It is possible that the premiums associated with an attractive face and body (beauty premium) may be accounted for by other differences that are associated with beauty. For example, physically attractive people may have greater self-confidence, which may lead to greater productivity at work.
However, a growing number of studies report that beauty premiums exist even after controlling for more detailed characteristics of individuals, such as self-esteem and other personality traits. When workers in Canada and the US were classified into two groups—above-average attractiveness and below-average attractiveness—researchers found that people in the above-average group earned 12% more than people in the below-average group, a wage disparity that is comparable to those associated with race and gender . The premium associated with attractive facial beauty was also found in studies in various countries, including Australia, Brazil, China, South Korea, Germany, and Luxembourg. Taller height, too, is associated with a wage premium. Each extra inch in height yields a 1.8–2.2% wage increase in the UK and the US, implying that the median wage of the tallest quarter of workers is more than 13% higher than that of the shortest quarter . Being obese has negative implications for labor market outcomes. For example, if a white female worker in the US gains 65 pounds but all other factors remain the same, her wages are likely to drop 9% .
How much do people invest in their beauty?
Across societies and time periods, people have spent substantial resources—time, effort, and money—to enhance their beauty. A wide variety of goods and services are available for this purpose in both developing and developed countries, and the industries that produce them are large and often fast-growing. Women on average use beauty-related goods and services more than men.
Beauty-related goods and services range from grooming, hair dressing, cosmetics, and clothing that may require a modest amount of money, time, and discomfort to medical procedures, both surgical and non-surgical, that may entail higher costs across all three dimensions. Spending on these goods and services is substantial, and their markets have been growing fast.
Consider cosmetics ranging from skin care products to makeup. The market value of the cosmetics industry as of 2006 was $48 billion in the US, $30 billion in Japan, $15 billion in Germany, $13 billion in France, $11 billion in Italy, and $8 billion in Spain . In the US, the cosmetics market in 2006 was composed of haircare products (22%), skincare products (21%), makeup (18%), and fragrances (12%; Figure 1). The composition of the cosmetics market in France was comparable to that in the US except that skincare products accounted for 31% of the market, 11 percentage points higher than in the US. The market in Japan in the same year featured much greater prominence for skincare products (44%) than in the US and European countries, while the share for fragrances, at just 2%, was much lower than in Western countries, where it averaged more than 10%. The composition of the cosmetics market in other Western European countries, including Germany, Italy, and Spain, was comparable to that in France, while Spain had a larger share for fragrances (23%) than the other European countries.
The composition of cosmetics markets in
France, Japan, and the US vary, 2006
Among the 27 EU member countries, per capita spending on cosmetics was $161 in 2006, reflecting a 2.2% annual growth rate during the period 2000–2006 . While growth in per capita spending averaged 1.9% among the 15 wealthiest EU countries, it averaged 6.8% among the 12 less wealthy EU countries (EU12) during the same period. Figure 2 shows the annual growth rate of per capita spending on cosmetics in the EU12. Growth was fastest in the Czech Republic (11.4%), followed by Romania (9.7%) and Lithuania (8.9%). All EU12 countries except Cyprus exceeded the EU15’s average growth rate. In mainland China, retail sales of cosmetics, which were valued at $8 billion in 2008, had tripled in market value just five years later . Its cosmetics market composition in 2006 was comparable to that of Japan: skincare products made up the largest share (39%), followed by haircare products (22%); the market share for fragrances was less than 2% .
Per capita spending on cosmetics has been
growing rapidly in Europe (annual per capita growth rate 2000–2006)
The clothing industry is considerably larger than the cosmetics industry. In 2012, its market size was $225 billion in the US, $350 billion in the EU27, $150 billion in China, and $110 billion in Japan . In developing countries such as China and India, annual growth in the clothing industry is expected to top 10% over the next two decades . In the US, women’s clothing accounts for 1.6% of household expenditure, while in Shanghai, China, women’s clothing together with cosmetics accounts for 6.3% of household expenditure .
The market for weight loss products is booming in developed countries. Examples include food-management programs consisting of pre-packaged food, weight-control supplements, and devices and services to track calorie consumption and physical activity. The market value in 2014 is expected to reach $310 billion in the US (12% annual growth from 2009) and $238 billion in Europe (11% annual growth) .
The plastic surgery market around the world is also large and growing. Information on market size (both sales and profits) is scarce, but in the US, total spending on both surgical and non-surgical procedures rose 13-fold between 1992 and 2014, from $927 million to $12.9 billion .
The use of surgical procedures that reshape a person’s face and body is the most aggressive method that can be used to improve a person’s beauty. Use of plastic surgery began to grow in the early 1910s, when it was used to treat wounded soldiers in Europe. Since then, it has exhibited remarkable expansion. In 2014, more than 33,000 plastic surgeons around the world performed more than 9.6 million surgical procedures, for a 22% increase in the number of plastic surgeons and a 43% increase in the number of surgical procedures since 2010 . Women accounted for more than 85% of these plastic surgery procedures, and men for 15% .
The five most frequently performed plastic surgery procedures in 2014 were lipoplasty, breast augmentation, eyelid surgery, abdominoplasty, and rhinoplasty (see illustration on page 1). Liposuction removes unwanted fat deposits to improve facial and body contours. Breast augmentation changes the size and appearance of the breasts. Eyelid surgery is used for two purposes. One is to address signs of aging by tightening upper eyelid skin and reducing bags under the eyes. The other is to create an artificial crease in the upper eyelids to make eyes rounder, wider, and bigger (sometimes called “Asian eyelid surgery”). Abdominoplasty, also called “tummy tuck surgery,” removes excess skin and fat to improve the appearance of the abdominal area after pregnancy or significant weight loss. Finally, rhinoplasty improves the contours of the nose by reshaping, reducing, or enhancing the tip or nose bridge.
Figure 3 shows the top 10 countries in number of plastic surgery procedures and their share of the total number of procedures performed in 2010 . The US and Brazil top the list, each with more than one million procedures; together, they account for more than 30% of plastic surgery procedures worldwide. When the data are adjusted for population size, Greece, Brazil, Italy, Columbia, and South Korea top the list of countries in the number of surgical procedures per 1,000 people (Figure 4).