Misleading, Unfair, and Dangerous
Yet another way that life isn’t fair: “Two economists say . . . that investors assign higher share values to companies run by attractive chief executives.” The report in The New York Times went on to state: “these chiefs are paid more than less-appealing counterparts and that the better looking the C.E.O.’s, the better they are at undertaking financially successful deals.” They can actually measure it.
No one can be thoroughly surprised by this. Studies have shown for years that we are more drawn to attractive people, we rate them higher in interest and intelligence, we want to be associated with them, etc. etc. That is the reason that ads feature attractive people, usually young, but otherwise those who have aged gracefully and kept their shape.
If the difference it too extreme, of course, it can backfire. We might be intimidated. Moreover, beautiful women with large breasts can arouse entirely different associations. But, in general, we are drawn to beauty – and largely unaware of how that attraction skews our judgment.
Andrew Ross Sorokin, writing in The Times went on to note: “As shallow as it may be, better-looking people have been shown in various studies to have higher self-esteem and more charisma, are considered more trustworthy and are better negotiators.”
That makes sense since attractive people, constantly experiencing the advantages they enjoy in the eyes of others, will inevitably come to believe they are actually smarter and more talented than their less attractive colleagues. As a result, they are also likely to become more confident and assertive.
But obviously there are limits. Beauty doesn’t actually make people smarter, more trustworthy or better leaders. Sorokin went on to note the other side of the coin: “managers who are perceived as more trustworthy perform worse and generate lower risk-adjusted returns when compared to those who are perceived as less trustworthy.” People successful at inspiring confidence are likely to be tempted to exploit the trust they arouse, and they might even cultivate the traits that allow them to dupe others. At the very least, it could easily make them lazy.
Another study conducted last year found that “hedge fund managers whose photographs are rated as more trustworthy are able to attract greater fund flows.” That same study, which relied on a group of people to examine photos of hedge fund managers, found, however, that “managers who are perceived as more trustworthy perform worse and generate lower risk-adjusted returns when compared to those who are perceived as less trustworthy.” (See, “Never Mind the Résumé. How Hot Is the C.E.O.?”)
A good thing the researchers dug more deeply into their data. They allow us to see the unfair advantages our biases confer on others, but they also alert us to the dangers – for us and for those who are endowed with beauty, self-confidence and charisma. Those advantages are seductive, misleading, and dangerous.
In fact, if we look at the deeper lesson of this study we see a society infatuated with appearances, reliant on superficial impressions, all too willing to make bad decisions – and then blame the person who turned out to be not what he or she seemed.