Beauty, Effort, and Earnings: Empirical Evidence from Livestreaming

Abstract

Beauty premium is a widely documented phenomenon where good-looking people enjoy benefits such as higher earnings. This paper contributes to the understanding of beauty premium by: (i) extending the analysis to the emerging industry of livestreaming, and (ii) emphasizing the role of effort (working hours). Effort plays a particularly important role in livestreaming because people can flexibly choose working hours. We use proprietary data of 500k livestreaming sessions from over 14k streamers from a large livestreaming platform. We estimate how a livestreamer's earnings relate to his or her: (i) effort, (ii) attractiveness (baseline beauty premium), and (iii) interaction between effort and attractiveness (effort-based beauty premium). To address the endogeneity of effort, we construct a novel instrument based on livestreamers' level-ups on the platform – people tend to exert more effort when they are close to level-up thresholds. We find that the effort-based premium dominates the baseline premium. In other words, the ratio of an attractive livestreamer's earnings to a peer's is near 1 when both exert very little effort. The ratio rises quickly as the effort level grows.

Keywords: Beauty premium, earnings, effort, effort-based beauty premium, livestreaming