Says Robert H. Frank:
If you’re one of several similarly qualified candidates who all want the same investment banking job, it’s strongly in your interest to look good when you show up for your interview. But looking good is an inherently relative concept. It means looking better than the other candidates.
If they show up wearing $500 suits, you’ll be more likely to make a favorable first impression, and more likely to get a callback, if you show up in a $2,000 suit than if you show up in one costing only $200.
… job applicants are no more likely to get the positions they seek if they all spend $2,000 on interview suits than if they all had spent only $300. But that’s no reason to regret having bought the more expensive suit.”
Now I understand that this is the very first and obviously trivial example of a wasteful “arms race” in his book The Darwin Economy. It’s a paradigmatic case, the simplest possible model to start the discussion with. However, if I were writing this book, I’d analyze this case more thoroughly, anyway, in order to show the limitations of the model.
What employers look for is a minimum standard in appearance, hygiene, and grooming among the applicants. This standard varies tremendously in different types of work. A person who is expected to entertain a sophisticated international clientele is supposed to look really good.
A person who is paid $80K for a demanding computer programming job which does not involve dealing with customers needs only to look presentable. Being disheveled and untidy is a decent sign that he won’t handle the pressure.
If I am interviewing for a dishwashing position at a restaurant, I probably don’t need a suit at all.
And if I want to be hired by a logging company to be a lumberjack, I had better not arrive in any suit! I’d get my chainsaw, don my overalls, and demonstrate my skills.
Looking at the quality and manner of dress is rational and useful to the entrepreneur. But an entrepreneur who looks only at the dress is going to be highly disadvantaged relative to a competitor who looks deeper and probes below the surface for actual skills.
If dishwashers get around $10 / hour, then if the restaurant owner were so impressed with an applicant’s suit that he gave him $40 / hour, then he’d obviously make a big mistake he’d quickly come to regret.
Now Frank assumes that the candidates are “similarly qualified.” The only thing that would set them apart is their clothing. Another assumption is that clothing is only useful for making a “first impression.” Even given these, being well-dressed indicates to the employer that the candidate wants the job a great deal, if he’s invested so much into something so peripheral to the job requirements as an expensive suit. And this means that he’s more likely to work extra hard to justify his salary.
Further, if he makes a good first impression on the manager, he may similarly impress his customers.
Further, beauty is an end in itself. A handsome guy competing against a deformed hunchback will probably win. It may be unfair, but why should the people around the office have to endure the sight of an ugly freak? Good-looking people may inspire each other.
If we stay strictly within the confines of the model, then perhaps the race for better suits is a waste. But calling it a real-world market failure is really stretching the language.