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Taller People Earn More Because They Are Smarter

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For as long as we can remember, the fact that taller people tend to earn more than shorter has been used as an example of an irrational, discriminatory preference. It doesn’t matter what the subject of conversation—employee pay, selection of CEOs, elections of presidents. It was always assumed that height couldn’t be related to traits that would be rationally chosen. This never really made much sense—if the preference for taller CEOs, for example, were wholly irrational, the smart thing to do would be to start a private equity firm that hired short guys to run companies on the cheap. You’d save oodles on executive compensation costs, at least until other people caught on and started hiring short folks too. Since no one was doing this, it was a safer assumption that height was correlated with something desirable, such as competence, charisma or intelligence.
As it turns out, tall people are more intelligent and also tend to choose professions requiring more intelligence and less physical labor. Chalk it up to another example of the market getting things right.

Height and Earnings
[Greg Mankiw's Blog]



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