Behavioral Economics for Leaders

CHAPTER 1The Taller You Are, The Higher Your Salary?

Salary depends on many factors, such as education, prior professional experience, and the assumption of management responsibilities. Your height should be irrelevant, but the crazy thing is, it seems to matter.

When you look at the executive and supervisory boards of major German public companies, what you see is primarily relatively tall men. Frank Appel of Deutsche Post is 6′6″. At approximately 6′2″, Michael Diekmann from Allianz is also above average. Most of the American presidents since World War II were taller than the average American male. Generals in the military usually are pretty tall as well. Even Napoleon, allegedly of small stature, is said to have been taller than his average soldier.

So it seems successful men are taller than average. It's known from labor market research that taller men also earn substantially more money on average than shorter men do. But while height may actually be an advantage on the battlefield, the question is: Why should taller men earn more anywhere else? The height of a manager, IT expert, or entrepreneur should be irrelevant to his salary. The data tells a different story. Studies from the United States and the United Kingdom show that men who are 4 inches taller than average earn about 10% more salary a year. Extrapolated to an entire working life, that difference in income easily adds up to six and seven digits!

Andrew Postlewaite from the University of Pennsylvania and his colleagues ...