No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Broker beauty and boon: A study of physical attractiveness and its effect on real estate brokers' income and productivity
Abstract
This study examines beauty and its effect on real estate agents’ wages. We develop a model of beauty and real estate agent wages, performing empirical tests of the theory. We apply Two-Stage Least Squares (2SLS) methodology to a combined data set that includes multiple listing service data and a unique survey designed to measure individual agents’ beauty or attractiveness; the analysis takes two forms: transaction-level analysis and agent-level analysis. Results suggest that beauty augments more attractive agents’ wages and that more attractive agents use beauty to supplement classic production-related characteristics such as effort, intelligence and organizational skills.
... Research suggests that facial attractiveness is related to higher levels of income-an objective indicator of career success-after controlling for other characteristics (e.g., Biddle & Hamermesh, 1998;Robins, Homer, & French, 2011;Scholz & Sicinski, 2015). For example, the attractiveness of selling agents is related to the higher dollar value of real estate transactions after controlling for characteristics of the real estate (Salter, Mixon, & King, 2012). National Football League quarterbacks who have higher facial symmetry have higher salaries, even after controlling for their performance (Berri, Simmons, Van Gilder, & O'Neill, 2011). ...
... We expect to find higher levels of lookism climate in work settings where interaction outside of the organization is central to employees' job requirements. Research suggests that attractive workers achieve higher pay or tips in samples of employees whose work necessitates contact with external clients or customers, such as lawyers (Biddle & Hamermesh, 1998), restaurant servers (Parrett, 2015), and real estate agents (Salter et al., 2012), among others. Further, scholars have theorized that attractiveness should be more strongly related to earnings and other indicators of career success for individuals in professions that require social contact outside of their organizations because the value customers and clients place on physical attractiveness will increase employers' beliefs that attractiveness and productivity are related (Biddle & Hamermesh, 1998;Hamermesh & Biddle, 1994). ...
Research suggests that physically attractive employees receive myriad workplace and career advantages compared to less attractive employees. Despite calls for more attention to the role of organizational context in understanding this phenomenon, a theoretically grounded conceptualization of an employer's value for physically attractive employees and a method of measuring this aspect of the work environment is currently absent from the literature. In this study, we introduce the construct lookism climate, which reflects perceptions that a given work environment implicitly or explicitly values employee physical attractiveness. We develop and validate a measure of lookism climate using eight samples comprising 1,857 full-time employed adults in the United States and South Korea. We establish the psychometric properties and nomological network of the Lookism Climate Scale (LCS), including its factor structure, convergent, discriminant, and criterion validity, and measurement equivalence. We provide evidence that the LCS can be used as an assessment of an individual's perceptions of workplace climate as well as employees’ shared conceptualization of climate. We also offer narrative examples of employee experiences with lookism climate. The introduction of the construct lookism climate and the LCS provides a pathway for future researchers to develop a deeper understanding of how organizational context contributes to the “beauty premium” in the workplace.
... In addition to homophily, more attractive agents might have advantages over less attractive agents. Salter, Mixon, and King (2012) find that physically attractive real estate agents have higher wages and are more productive than less attractive agents. However, it is not clear whether it is better to emphasize attractiveness or similarity when dealing with customers. ...
... Abundant research shows that attractive people have an advantage over less attractive individuals (e.g., Bower and Landreth, 2001;Cialdini, 2009). In the context of real estate, Salter, Mixon, and King (2012) find that physically attractive real estate agents have higher wages and productivity than less attractive agents. Ravina (2011) examined unsecured personal loans to see if qualitative borrower characteristics influence the decision to loan money, as well as the characteristics of the resulting loan. ...
We investigate whether customers' overall impression of online property listings can be influenced by the real estate agent, and whether this influence depends on the customer's demographic characteristics. A sample of 1,594 potential homebuyers took an online audio/visual tour of a typically priced home in their area. Subjects were shown one of eight conditions in which we varied agent gender (male/female), agent attractiveness (attractive / less attractive), and pathos (used/not used). The results show that segments of customers are drawn to different real estate agents, but contrary to our expectations, customers were not necessarily drawn to similar agents or more attractive ones.
... The selling process of a property concerns the interactions among buyers, sellers and agents. For example, in this process, the scientific literature investigates the principal-agent problem (Bian, Contat, Waller, et al., 2021), real estate brokerage firms (Locke, 2020) broker involvement (Xie, 2019) and the impact of physical broker beauty on its wage (Salter, Mixon & King, 2012), personality traits like gender (Pham, Turnbull & Waller, 2021), and agent remarks (Nowak, Price & Smith, 2021) which, when incorporated in hedonic models, lead to a substantial improvement of price predictions (Nowak & Smith, 2017). The presentation (e.g. using virtual reality, photographs or open houses) and appearance of a property itself also impact the behaviour of market participants in the selling process, which in turn impacts elements like property prices, time on the market (Anderson, Freybote & Manis, 2022;Yu, Ma, Pant, et al., 2020;Allen, Cadena, Rutherford, et al., 2015;Benefield, Cain & Johnson, 2011) and the decision to view a property (Luchtenberg, Seiler & Sun, 2019) and thus is closely connected to the interactions among involved parties 1 . ...
In real estate pictures, home staging, which is the temporary display of high-end furniture, is meant to positively impact the sales process for the involved parties: the broker, the seller and also the buyer. In this article we focus on the impact of home staging on the price aspect in this process. In our experimental design to isolate the effect of furniture on valuation, we show pictures with furniture to one group and those without furniture to the other group. The main task for both groups of students is to estimate the market value of an empty apartment. Additionally, they must state their preferences for furniture in an apartment. On aggregate, we do not find significant differences in market value estimates between the two conditions, which is in line with the recent literature. At subsets based on individually indicated preferences for furniture, we find two main differences: those in the group with lower indicated preferences for furniture do not adjust their value estimates in a second estimation task, where the presence of furniture is changed, while those in the second group adjust their value estimates in the second estimate, where the adjustments are significant with a magnitude of approximately 11% based on their preferred condition. We conclude that if a client indicates a high preference for furniture, then the presented furniture affects his or her perception of the property. Additionally, we monitor the dwell time, which is significantly longer for the furnished condition and is an indication of information reception.
... Most raw numerical counts suggest that women produce less than men: female real estate agents list fewer homes (Seagraves and Gallimore, 2013); female lawyers bill fewer hours (Azmat and Ferrer, 2017); female physicians see fewer patients (Bloor et al., 2008); female academics write fewer papers (Ceci et al., 2014). When evaluated by narrowly defined quality measures, however, women often outperform: houses listed by female real estate agents sell for higher prices (Salter et al., 2012;Seagraves and Gallimore, 2013); female lawyers make fewer ethical violations (Hatamyar and Simmons, 2004); patients treated by female physicians are less likely to die or be readmitted to hospital (Tsugawa et al., 2017). ...
Female authors are underrepresented in top economics journals. In this paper, I investigate whether higher writing standards contribute to the problem. I find: (i) female-authored papers are 1–6 percent better written than equivalent papers by men; (ii) the gap widens during peer review; (iii) women improve their writing as they publish more papers (but men do not); (iv) female-authored papers take longer under review. Using a subjective expected utility framework, I argue that higher writing standards for women are consistent with these stylised facts. A counterfactual analysis suggests senior female economists may, as a result, write at least five percent more clearly than they otherwise would. As a final exercise, I show tentative evidence that women adapt to biased treatment in ways that may disguise it as voluntary choice.
... primarily working as listing or selling agent). Salter et al. (2012) examine how the physical attractiveness of the real estate agent affects sales price and include listing and selling agent sex indicators in the pricing model; they find male agents are associated with lower selling prices. ...
This paper uses a search model with Nash bargaining to identify various channels through which agent gender affects selling price and selling time in the resale market for houses. The theory is used in conjunction with the empirical model to infer agent bargaining power when dealing with the same or opposite sex agents on the other side of the transaction. The results reveal that sellers set higher listing prices when working with male agents, a pattern consistent with sellers’ ex ante beliefs that male agents enjoy greater expected bargaining power. Ex post agent bargaining power varies by sex and their role in the transaction. Female agents assisting buyers have stronger bargaining power when facing male listing agents than when facing female agents in rising or falling markets. The ex post bargaining power of male selling agents assisting buyers appears to be generally weaker than that of female listing agents.
... of the square footage variables and is consistent with other research (seeSalter et al. (2012),Waller and Jubran (2012), Seagraves and Gallimore(2013)Allen et al. (2015), among others). Both the national decline in home values and the subsequent rebound over the last decade are visible in these results. ...
This paper adopts a hedonic pricing model to study the impact of vulnerability to inundation from sea level rise on home prices in Savannah, Georgia. We find that homes most at risk from sea level rise are associated with an approximate 3.1 percent price discount. The results are consistent with prior studies, which uses data from different locations in U.S. coastal areas. We also find that the discount is more significant in our later sample period, indicating that house buyers may be becoming more aware of the climate risk. This paper contributes to the understanding of house pricing factors in the study area regarding the sea level rise effects.
... For example research shows that physically attractive people may getter better grades in school (Langlois et al., 2000;Elovitz et al., 2009); may be more likely to be recruited following (Johnston, 2010;Roberts, 2012;Toledano, 2013;Verhulst et. al., 2010) and may even tend to get higher salaries for the same job done (Bennett, 2010;Salter et al., 2012;Toledano, 2013;Frevert and Walker, 2014). The influence of attractiveness in tourism and hospitality has been researched by various scholars. ...
This study aims to explore the influence of employee attractiveness on service recovery paradox by using Eye Tracker and Facial Recognition Software. Based on two service recovery scenarios an experiment was carried out with the participation of 20 subjects in Turkey. In the experiment participants' pre-and post-satisfaction levels before the service failure and after the service recovery attempt have been measured. The participants were also asked to respond to Likert type questions to explain how they felt about the service encounter they were exposed to in the scenarios. The analysis of data showed that although attractiveness reduced the negative of the responses, increased interest in the attractive service employee. However, the results showed that in both scenarios (with attractive and less attractive service employee photos) the service recovery paradox did not occur.
... For example research shows that physically attractive people may getter better grades in school (Langlois et al., 2000;Elovitz et al., 2009); may be more likely to be recruited following (Johnston, 2010;Roberts, 2012;Toledano, 2013;Verhulst et. al., 2010) and may even tend to get higher salaries for the same job done (Bennett, 2010;Salter et al., 2012;Toledano, 2013;Frevert and Walker, 2014). The influence of attractiveness in tourism and hospitality has been researched by various scholars. ...
This study aims to explore the influence of employee attractiveness on service recovery paradox by using Eye Tracker and Facial Recognition Software. Based on two service recovery scenarios an experiment was carried out with the participation of 20 subjects in Turkey. In the experiment participants' pre-and post-satisfaction levels before the service failure and after the service recovery attempt have been measured. The participants were also asked to respond to Likert type questions to explain to explain how they felt about the service encounter they were exposed to in the scenarios. The analysis of data showed that although attractiveness reduced the negative of the responses, increased interest in the attractive service employee. However, the results showed that in both scenarios (with attractive and less attractive service employee photos) the service recovery paradox did not occur.
... Using three samples of large household surveys from the United States and Canada, they found that highly attractive individuals, i.e., those in the top third of the sample distribution for physical attractiveness, received a premium of approximately 5% in earnings over their less attractive counterparts. Since then, scholars have replicated the existence of the beauty premium in a diverse array of jobs (e.g., Converse et al., 2016;Judge et al., 2009), within specific occupationsincluding attorneys (Biddle & Hamermesh, 1998), restaurant servers (Parrett, 2015), and real estate agents (Salter, Mixon, & King, 2012) and in North American (e.g., Hamermesh & Biddle, 1994;Scholz & Sicinski, 2015), European (e.g., Pfeifer, 2012), and Asian (Hamermesh, Meng, & Zhang, 2002) ...
... Physical attractiveness which is primarily determined by a person's facial attractiveness (Olson and Marschuetz, 2005) has a significant influence on the person's ability to persuade others, even when the person is not deliberately trying to do so (Rossiter and Praxmarer, 2009). For example, physically attractive people receive better grades in school (Elovitz and Salvia, 1982;Jackson et al., 1995;Langlois et al, 2000;Judge et al., 2009); are more likely to be hired as a result of job interviews (Saranow, 2004;Ramachandran, 2005;Engemann and Owyang, 2005;Hurley-Hanson and Giannatonio, 2006;Tews et al., 2009;Verhulst, et al., 2010;Johnston, 2010;Roberts, 2012;Toledano, 2013); tend to be paid more when they get the job (Hamermesh and Biddle, 1994;Cawley, 2004;Hamermesh and Parker, 2005;Bennett, 2010;Salter et al., 2012;Toledano, 2013;Frevert and Walker, 2014); and are much more likely to win political elections compared with their less attractive counterparts (Hamermesh and Biddle, 1994;Rosar et al., 2008;Cialdini, 2009). ...
This study aims to explore how hotel customers in Turkey respond to service failures when the service personnel they interact with are attractive or not. Based on 239 scenario-based surveys, it is established that customers are positively influenced by the attractiveness of service personnel. The findings point out that there are marked differences in terms of the type of service failure experience and hotel customers’ gender, income, and the level of education. The study has important theoretical and practical implications.
... Hamermesh found that beauty pays, with more attractive people receiving larger economic benefits such as higher wages and easier access to loans. Subsequent research found that beauty impacted political chances (Berggren et al., 2010, Lutz, 2010, teaching evaluations (Ponzo andScoppa, 2013, Sussmuth, 2006), earnings as a prostitute (Arunachalam and Shah, 2012), professional golfing success (Ahn and Lee, 2014), the chance of being a criminal (Mocan and Tekin, 2010), being a celebrity (Gergaud et al., 2012) and wages of real estate agents (Salter et al., 2012). ...
Discrimination based on appearance has serious economic consequences. Women with blonde hair are often considered beautiful, but dumb, which is a potentially harmful stereotype since many employers seek intelligent workers. Using the NLSY79, a large nationally representative survey tracking young baby boomers, this research analyzes the IQ of white women and men according to hair color. Blonde women have a higher mean IQ than women with brown, red and black hair. Blondes are more likely classified as geniuses and less likely to have extremely low IQ than women with other hair colors, suggesting the dumb blonde stereotype is a myth.
This chapter explores the aesthetic tourism market in relation to well-being and quality of life. Following an overview of the aesthetics tourism market and the reasons for engaging in aesthetics tourism activities by tourists, the chapter attempts to explain some of the main motivations why people may engage in aesthetics tourism procedures and surgeries. The main motivations of tourists are explained with reference to the needs hierarchy, intrinsic and extrinsic motivation, self-determination, and prospect theories. The chapter also shows the potential relationships between the self-concept, certain personality characteristics, and the involvement in aesthetic aesthetics tourism procedures and surgeries.
Between 2000 and 2007, the gender gap in earnings in the US real estate sector increased, especially in local markets where house prices appreciated relatively more. Firm frictions and the presence of small children in the household do not explain the widening of the gender gap, while sorting on entry and gender identity in relative income do. First, the industry attracted relatively more females with no prior experience, especially in booming local housing markets. Second, labor supply increased relatively more for experienced males with at least some college education who earn less than their spouses.
Purpose
Pulchronomics studies the economics of beauty. The purpose of this paper is to research CEO pulchronomics by examining whether a beauty premium exists in CEO compensation and whether this beauty premium is justified by differences in CEO performance.
Design/methodology/approach
The authors calculate a facial attractiveness scores (FAS) based on facial symmetry, facial structure and the golden ratio. The authors then perform OLS regressions to examine the effect of CEO beauty on CEO compensation and firm performances.
Findings
The authors find that base salaries for attractive CEOs are higher than those for unattractive CEOs, but incentive pays for attractive CEOs are not different from those for unattractive CEOs. The latter is likely due to the fact that attractive CEOs do not outperform unattractive CEOs in operations, innovation, corporate social responsibility and financial reporting quality.
Originality/value
Since the CEO beauty premium is not supported by the superior performance of attractive CEOs, this paper provides new evidence of appearance discrimination in CEO compensation.
The relative bargaining power of the buyer and seller is a key feature of real estate pricing models. Classic real estate studies have sought to address bargaining effects in hedonic regression models. Prior research proposes a procedure to estimate bargaining effects in hedonic regression models that depends critically on a substitution to eliminate omitted variables bias. This study shows that the proposed solution that is often cited in the real estate economics literature does not solve the omitted variables problem given that both models are merely different parameterizations of the same model, and thus produces biased estimates of bargaining power when certain property characteristics are omitted. A classic hedonic regression model of real estate prices using Corsican apartment data supports our contention, even when the assumption of bargaining power symmetry is relaxed.
While the existence of a beauty premium is documented for many labour markets, there has been no study on the association of attractiveness with fringe benefits. This is a significant limitation of the extant literature, since fringe benefits are increasingly acknowledged as an integral part of the employees’ compensation, and a main indicator of job quality. Using the Canadian General Social Survey of 2016, the present paper examines how a self-rated measure of attractiveness associates with both labour earnings and fringe benefits. Employing a rich set of controls, no evidence for a beauty premium is found for men, while there is some evidence for a beauty penalty for women. However, attractiveness is found to positively predict the number of fringe benefits of both men and women. Therefore, at equal level of earnings, more attractive individuals appear able to secure higher quality jobs, as measured by the number of fringe benefits. The results, hence, suggest that the effects of attractiveness on labour market outcomes cannot be fully captured by a separate examination of earnings and the hiring process.
Hedonic price models are commonly used in the study of markets for various goods, most notably those for wine, art, and jewelry. These models were developed to estimate implicit prices of product attributes within a given product class, where in the case of some goods, such as wine, substantial product differentiation exists. To address this issue, recent research on wine prices employs local polynomial regression clustering (LPRC) for estimating regression models under class uncertainty. This study demonstrates that a superior empirical approach – estimation of a mixture model – is applicable to a hedonic model of wine prices, provided only that the dependent variable in the model is rescaled. The present study also catalogues several of the advantages over LPRC modeling of estimating mixture models.
The current study examines the political economy of collegiate dating markets by employing institution-level data from the national colleges and universities included in U.S. News & World Report's B est Colleges 2012. This is a more comprehensive sample than has been used in previous studies and includes 250 colleges and universities across all regions of the United States. We also make use of female student attractiveness ratings from collegeprowler.com to assess the relationship between the extent of competition among for dates, as captured in the percentage of the student body accounted for by females, and the attractiveness of the female students involved in that competition. Results from OLS. two-stage least squares, ordered probit and simultaneous probit mcdels all converge on the outcome wherein female student attractiveness increases as dating competition becomes more intense. Two of these models also suggest that the percent of a college's student body accounted for by female students does not depend on attractiveness.
The authors investigated accuracy of judging intelligence from facial photos of strangers across the lifespan, facial qualities contributing to accuracy, and developmental paths producing correlations between facial qualities and IQ scores. Judgments were more accurate than chance in childhood and puberty, marginally more accurate in middle adulthood, but not more accurate than chance in adolescence or late adulthood. Reliance on the valid cue of facial attractiveness could explain judges’ accuracy. Multiple developmental paths contributed to relationships between facial attractiveness and IQ: biological, environmental, influences of intelligence on attractiveness, influences of attractiveness on intelligence. The findings provide a caveat to evolutionary psychologists’ assumption that relationships between attractiveness and intelligence or other traits reflect an influence of “good genes” on both, as well as to social and developmental psychologists’ assumption that such relationships reflect self-fulfilling prophecy effects. Each of these mechanisms failed to explain some observed correlations.
Adjusted for many other determinants, beauty affects earnings; but does it lead directly to the differences in productivity that we believe generate earnings differences? We take a large sample of student instructional ratings for a group of university teachers and acquire six independent measures of their beauty, and a number of other descriptors of them and their classes. Instructors who are viewed as better looking receive higher instructional ratings, with the impact of a move from the 10th to the 90th percentile of beauty being substantial. This impact exists within university departments and even within particular courses, and is larger for male than for female instructors. Disentangling whether this outcome represents productivity or discrimination is, as with the issue generally, probably impossible.
This study is primarily an analysis of tradeoff between selling time and price, both on a nominal and real basis. Sellers are seen as desiring to maximize their discounted real selling price and trading off the nominal selling price with expected selling time. The time a property remains on the market is important, not only because of its reflection on price, but also because of its possible reflection on the issue of submarket equilibrium-an assumption in most urban price studies. The empirical results of this study shed light on how similar studies can easily misinterpret the implications of time on the market on price and how further work may be improved. Copyright American Real Estate and Urban Economics Association.
Earlier research has found that specialization by real estate agents creates economies of scope for real estate firms. So far, however, no research has addressed this issue at the agent level. The question this research seeks to answer is whether specialization in one side of the real estate transaction increases agent income. The most important finding is that specialization has an asymmetric impact on earnings. Specializing in listings positively enhances agent income. In contrast, specialization on the selling side has an adverse affect on agent income. The implications of these findings for the consumer and real estate industry are also examined.
The authors examine the impact of looks on earnings using interviewers' ratings of respondents' physical appearance. Plain people earn less than average-looking people, who earn less than the good-looking. The plainness penalty is 5 to 10 percent, slightly larger than the beauty premium. Effects for men are at least as great as for women. Unattractive women have lower labor-force participation rates and marry men with less human capital. Better-looking people sort into occupations where beauty may be more productive but the impact of individuals' looks is mostly independent of occupation, suggesting the existence of pure employer discrimination. Copyright 1994 by American Economic Association.
Corruption in the public sector erodes tax compliance and leads to higher tax evasion. Moreover, corrupt public officials abuse their public power to extort bribes from the private agents. In both types of interaction with the public sector, the private agents are bound to face uncertainty with respect to their disposable incomes. To analyse effects of this uncertainty, a stochastic dynamic growth model with the public sector is examined. It is shown that deterministic excessive red tape and corruption deteriorate the growth potential through income redistribution and public sector inefficiencies. Most importantly, it is demonstrated that the increase in corruption via higher uncertainty exerts adverse effects on capital accumulation, thus leading to lower growth rates.
A house is made up of many characteristics, all of which may affect its value. Hedonic regression analysis is typically used to estimate the marginal contribution of these individual characteristics. This study provides a review of recent studies that have used hedonic modeling to estimate house prices. The findings indicate that slanted versus flat roof, sprinkler system, garden bath, separate shower stall, double oven and gated community positively affect selling price while not having attic space, living in an earthquake zone, proximity to a hog farm, proximity to a landfill, proximity to high voltage lines, corporate-owned properties, percentage of Blacks or Hispanics in an area and properties that require flood insurance negatively affect selling price.
Meta-analysis was used to test hypotheses about the relationship between physical attractiveness and intellectual competence. In support of status generalization theory and implicit personality theory, attractive people were perceived as more competent than less attractive people. Attractiveness effects were stronger for males than for females, and stronger when explicit information about competence was absent than when it was present, in keeping with status generalization theory. In partial support of status generalization theory and expectancy theory, attractiveness was related to actual competence in children, but not in adults. Direct measures of competence were influenced strongly more by attractiveness than were indirect measures, as predicted by status generalization theory. Implications for theory, organizational policy, and future research are discussed.
Meta-analysis was used to examine findings in 2 related areas: experimental research on the physical attractiveness stereotype and correlational studies of characteristics associated with physical attractiveness. The experimental literature found that physically attractive people were perceived as more sociable, dominant, sexually warm, mentally healthy, intelligent, and socially skilled than physically unattractive people. Yet, the correlational literature indicated generally trivial relationships between physical attractiveness and measures of personality and mental ability, although good-looking people were less lonely, less socially anxious, more popular, more socially skilled, and more sexually experienced than unattractive people. Self-ratings of physical attractiveness were positively correlated with a wider range of attributes than was actual physical attractiveness. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
This paper examines the impact of brokers on buyers' and sellers' search behavior and on the transaction prices in real estate markets. It is shown that the seller and the buyer search less intensively if the house is listed with a broker. The seller gets a higher price when he employs a broker, but the increase in price is smaller than the commission fee. More specifically, the portion of the commission covered by the increase in price is directly related to the bargaining powers of the buyer and the seller. In the special case where the price is determined according to the Nash bargaining solution, the increase in price is shown to be half of the commission fee. It is also shown that an increase in the commission rate increases the equilibrium price but decreases the equilibrium search intensities.
When a house is placed on the market, the seller must choose the initial offer price. Setting the price too high or too low affects the marketability of the property. While there is near universal agreement that the seller faces a trade-off between selling at a higher price and selling in less time, there is less agreement about how to measure this trade-off. This paper offers a framework for analysis and shows that an increase in the list price increases expected time-on-the-market (TOM). Because house buyers must solve a type of signal extraction problem, the effect of a higher list price is magnified for houses in a market segment having a low predicted variance of the list price. This paper also shows that the list price of houses which are withdrawn before sale has a higher mean and variance, and that the possibility of withdrawal censors information about the time-on-the-market.
Combining labor-market information, appraisals of respondents' beauty, and household expenditures allows us to examine within a unified framework the relative magnitudes of investment and consumption components in one activity, women's spending on beauty-enhancing goods and services. We find that beauty raises women's earnings adjusted for a wide range of controls. Additional spending on clothing and cosmetics has a generally positive marginal impact on a woman's perceived beauty. The relative sizes of these effects demonstrate that such purchases pay back no more than 15% of additional unit of expenditure in the form of higher earnings. Most such spending seems to represent consumption.
Empirical studies demonstrate that individuals perceive physically attractive others to be more intelligent than physically unattractive others. While most researchers dismiss this perception as a “bias” or “stereotype,” we contend that individuals have this perception because beautiful people indeed are more intelligent. The conclusion that beautiful people are more intelligent follows from four assumptions. (1) Men who are more intelligent are more likely to attain higher status than men who are less intelligent. (2) Higher-status men are more likely to mate with more beautiful women than lower-status men. (3) Intelligence is heritable. (4) Beauty is heritable. If all four assumptions are empirically true, then the conclusion that beautiful people are more intelligent is logically true, making it a proven theorem. We present empirical evidence for each of the four assumptions. While we concentrate on the relationship between beauty and intelligence in this paper, our evolutionary psychological explanation can account for a correlation between physical attractiveness and any other heritable trait that helps men attain higher status (such as aggression and social skills).
This paper presents a parameter covariance matrix estimator which is consistent even when the disturbances of a linear regression model are heteroskedastic. This estimator does not depend on a formal model of the structure of the heteroskedasticity. By comparing the elements of the new estimator to those of the usual covariance estimator, one obtains a direct test for heteroskedasticity, since in the absence of heteroskedasticity, the two estimators will be approximately equal, but will generally diverge otherwise. The test has an appealing least squares interpretation.
Increasing returns from specialized human capital is a powerful force creating a division of labor in the allocation of time and investments in human capital between married men and married women. Moreover, since child care and housework are more effort intensive than leisure and other household activities, married women spend less effort on each hour of market work than married men working the same number of hours. Hence, married women have lower hourly earnings than married men with the same market human capital, and they economize on the effort expended on market work by seeking less demanding jobs. The responsibility of married women for child care and housework has major implications for earnings and occupational differences between men and women.
The authors propose models with an ascriptive characteristic generating earnings differentials and causing sectoral sorting, allowing them to distinguish among sources producing such differentials. They use longitudinal data on a large sample of graduates from one law school and measure beauty by rating matriculation photographs. Better-looking attorneys who graduated in the 1970s earned more than others after five years of practice, an effect that grew with experience. Attorneys in the private sector are better-looking than those in the public sector, differences that rise with age. These results support theories of dynamic sorting and customer behavior. Copyright 1998 by University of Chicago Press.
This paper provides substantial evidence that real estate brokerage firms choosing to franchise are more cost-efficient than firms that remain independent. It uses 1995 cost data obtained from a nationwide survey of real estate brokerages to analyze the differences in firm efficiency across firm type-franchised and independent. We estimate a single stochastic cost frontier using Bayesian statistics and measure firm efficiency relative to that frontier conditional on firm type. The results indicate that real estate brokerages are relatively efficient, implying a competitive market, but franchised brokerages are substantially more efficient than their independent counterparts. Copyright American Real Estate and Urban Economics Association.
This paper analyzes a search-and-bargaining model in which the asking price influences the rate at which potential customers arrive to inspect the seller's house, and the buyer's valuation of the asset is not learned until after the seller makes his initial offer (the asking price). The optimal asking and reservation prices are characterized, and the existence of a subgame-perfect equilibrium asking-price-reservation-price strategy is established. Comparative-statics analysis illustrates how seller and buyer discount rates and the buyer's outside opportunity affect the optimal reservation and asking prices. Copyright American Real Estate and Urban Economics Association.
We consider the role that seller motivation plays in determining selling time, list price and sale price. A new survey of home sellers suggests that sellers are heterogeneous in their motivation to sell. Our findings are that a seller who, at the time of listing, has a planned date to move sells more quickly than one who does not. Also, the shorter the planned time until a move at the time of listing, the shorter the actual duration of marketing time. We find that seller motivation affects sale price, but not the list-price markup. Our results suggest that theoretical models of the housing search process should be recast to allow for heterogeneous sellers. Copyright American Real Estate and Urban Economics Association.
Using data collected from specially-designed questionnaires, the duration of search by a house buyer is estimated. Duration is measured in two ways: in terms of time and in terms of the number of houses seen. To explain this data, several features must be added to a simple model when search models are applied to a housing market. Many of the statistically significant variables, such as prior information and the quality of information provided by a newspaper or a real estate agent, deal with the provision of information. The type of agency that employs the agent and the characteristics of the buyer have little effect. Copyright American Real Estate and Urban Economics Association.
The seller of a real estate property and his broker have two primary goals: to sell the properly for as high a price as possible and as quickly as possible. While these are separate objectives, they are closely related through the listing price of the seller. The listing price affects how long it takes to find a buyer (i.e., Time On the Market = TOM), and TOM influences the price that results from the bargaining between the seller and the buyer. This leaves the seller and his agent with an important question: What is the optimal price to be asked for the property? The objective of this research is to provide a theoretical and empirical analysis of the impact of listing price on TOM and the transaction price. Copyright American Real Estate and Urban Economics Association.
The marketing of unique durable goods such as housing presents a good example for the application of search theory. An optimal stopping rule strategy is employed to model sellers' behavior. The primary hypothesis is that the greater the atypicality of a house, the greater the expected variance of offers. Because a maximizing seller will wish to entertain more offers the greater is the variance, the marketing time of atypical houses will be relatively longer than that of standard houses. Using a sample of resale houses, the empirical study uses a failure time model to confirm the hypothesis. Extensions are mentioned, including discussions of the role of the list price and the limitations of the standard hedonic regression approach when applied to housing. Copyright American Real Estate and Urban Economics Association.
This paper is concerned with the factors that determine the market share of listings and the market share of sales for brokerage firms. Models are developed and tested in a SMSA that conveniently corresponds exactly to a particular Multiple Listing Service area. Indices of firm specialization and market concentration were computed in addition to more conventional characterizations of the market and the data used in the study.
The regression results reveal a small degree of consistency in the impacts of the explanatory variables over the two years of the study and over the listing and sales markets. The number of salespeople is the most consistently significant variable. Indeed, market share per salesperson appears to be a non-monotonic function of the number of salespeople. The presence of a franchise and the quantity of display advertising are occasionally significant. Classified advertising, Yellow Pages advertising, and open houses all do not significantly affect market share per salesperson.
Franchise affiliation has become common in the real estate brokerage industry. Department of Commerce estimates show that in 1981 about 30% of all real estate brokerage establishments were franchise affiliated. This paper develops and estimates a model of brokerage firm sales, using sample data collected in 1982 for three North Carolina cities. Controlling for the size and experience of the brokerage staff and the experience of the broker, the paper finds that franchise affiliation contributes to firm sales. Affiliation with a national franchise appears to be worth about $930,000 in additional sales to the average firm. Copyright American Real Estate and Urban Economics Association.
In an earlier paper (Durbin & Watson, 1950) the authors investigated the problem of testing the error terms of a regression model for serial correlation. Test criteria were put forward, their moments calculated, and bounds to their distribution functions were obtained. In the present paper these bounds are tabulated and their use in practice is described. For cases in which the bounds do not settle the question of significance an approximate method is suggested. Expressions are given for the mean and variance of a test statistic for one- and two-way classifications and polynomial trends, leading to approximate tests for these cases. The procedures described should be capable of application by the practical worker without reference to the earlier paper (hereinafter referred to as Part I).
This study considers the role that seller motivation plays in determining sales price and selling time. We find that sale prices are directly related to the estimated value of the property and to the amount of over-pricing, which is directly related to the seller's level of motivation. Further, a seller who has a planned date to move will over-price less (set lower list prices relative to market value) and sell more quickly than a seller with no definite move date. A seller who is willing to move later will over-price more and sell more slowly than a seller who wants to move sooner.
This study examines how individual agents affect house selling prices and time on the market while controlling for brokerage firm-specific effects as well as supply and demand conditions that vary by neighborhood. Firm size effects disappear once firm specialization and agent characteristics are taken into account but geographic concentration by firms leads to higher selling prices. For individual agents, neither sex nor selling own listings affects price or selling time, but there are gains from partnering transactions across firms. Agents who specialize in listing properties obtain higher prices for their sellers while those who specialize in selling obtain lower prices for their buyers. Houses nearer to other transactions of an agent sell for higher prices. Finally, greater scale of listing and selling activity by an agent tends to lower selling price or lengthen the time on the market. Copyright Springer Science+Business Media, LLC 2007
Previous research (Rutherford et al. 2005 ; Levitt and Syverson 2005 ) identify and quantify agency problems in the brokerage of single-family houses. Real estate agents are found to receive a premium when selling their own houses in comparison to similar client-owned houses. Given the homogeneity of the condominium market in comparison to the single-family house market, we use a large sample of condominium transactions to examine if agency problems exist in the condominium market. Controlling for sample selection and endogeneity bias of the data, we find evidence for a similar price premium for agent-owned condominiums. In contrast to the results for single-family houses in the same geographic market, we find that agent-owned condominiums must stay on the market longer to receive a higher price. Copyright Springer Science+Business Media, LLC 2007
This study investigates whether or not non-traditional marketing has an effect on the prices paid for residential real estate. Non-traditionally broker-marketed properties are defined as those properties that are sold with the aid of a real estate broker, but not marketed through a Multiple Listing Service (MLS). An analysis of properties that sold in this fashion offers further insight into the intermediation role of the real estate broker, as well as an opportunity to further investigate the efficiency of residential real estate markets. Specifically, we can assess whether MLS participation generates higher prices by determining whether like-kind properties price equivalently despite differences in their mode of marketing. The results show a significant and positive impact by non-traditionally broker-marketed properties on property price suggesting, for this sample, a premium of over 6% compared to like-kind properties marketed through the MLS. This premium may be a result of brokers intermediating a better matching of buyers and sellers. The observed premium also suggests a degree of market inefficiency. Copyright Springer Science + Business Media, Inc. 2005
This article has two objectives. One is to offer a theoretical model to study how the difference in commission structures affects the performance of agents at full-commission firms (e.g., RE/MAX agents) relative to other agents. The other is to provide an empirical test of the relative performance of full-commission agents. We predict that in equilibrium the selling price and the expected time it takes to sell a listing through a full-commission agent are the same as they are with a traditional agent. Our theoretical predictions are supported by our empirical results. Copyright 2001 by Kluwer Academic Publishers
Real estate brokers in the housing market are typically required to enter their listings into the Multiple Listing Service (MLS) system within a short period of time. Some houses sell immediately after being listed with a broker but before entering the MLS system. Given the role of the broker in the transaction process and the possible incentive to urge the seller to accept suboptimal offers, are these houses mispriced? This paper examines the price of houses that sell quickly. A thorough analysis reveals no significant differences between the equilibrium price function for houses that sell quickly when compared with those exhibiting a normal marketing time. In addition, we provide evidence that owners of vacant housing will set lower reservation prices to reflect comparatively higher holding costs vis-à-vis those occupied by owners. The results provide additional evidence that the MLS and real estate broker and mortgage markets are, as an interrelated system, efficient enough to protect buyers and sellers from abnormal pricing.
- Johnson KH