Love & Loans: The Effect of Beauty and Personal Characteristics in Credit Markets

70 Pages Posted: 6 Mar 2008 Last revised: 9 Feb 2013

Date Written: November 22, 2012

Abstract

I find that beauty, race, age, and personal characteristics affect lenders' decisions, once credit and employment history, homeownership, and other hard financial information are taken into account. Beautiful applicants have 1.59% higher probability of getting loans, pay 60bps less, but have similar default rates than average looking borrowers who get worse terms. Blacks are less likely to get loans, pay higher rates than similar Whites, but default more. The findings are consistent with taste-based discrimination/misperception against the ugly, and with statistical discrimination against Blacks, although lenders specialization in borrowers from the same ethnicity and racial prejudice also play a role.

Keywords: Beauty, Credit Markets, Discrimination

JEL Classification: G20, D10, J71

Suggested Citation

Ravina, Enrichetta, Love & Loans: The Effect of Beauty and Personal Characteristics in Credit Markets (November 22, 2012). Available at SSRN: https://ssrn.com/abstract=1101647 or http://dx.doi.org/10.2139/ssrn.1101647

Enrichetta Ravina (Contact Author)

Kellogg School of Management ( email )

Evanston, IL 60208
United States
8474676872 (Phone)

HOME PAGE: http://https://sites.google.com/view/eravina/home

Register to save articles to
your library

Register

Paper statistics

Downloads
1,119
rank
6,393
Abstract Views
13,057
PlumX