Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/248900 
Year of Publication: 
2021
Series/Report no.: 
CESifo Working Paper No. 9355
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
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.
Subjects: 
extreme tails
truncated sample
luck
JEL: 
C24
J24
J40
Document Type: 
Working Paper
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