HEALTH ECONOMICS DETERMINANTS OF HEALTH

Health Econ. 13: 885–899 (2004)

Published online 24 February 2004 in Wiley InterScience (www.interscience.wiley.com). DOI:10.1002/hec.881

The wage e¡ects of obesity: a longitudinal study

Charles L. Baum II* and William F. Ford
Economics and Finance Department, Middle Tennessee State University, USA

Summary
We use National Longitudinal Survey of Youth (NLSY) data to examine the effects of obesity on wages by gender.
Sample means indicate that both men and women experience a persistent obesity wage penalty over the first two
decades of their careers. We then control for a standard set of socioeconomic and familial variables but find that
standard covariates do not explain why obese workers experience persistent wage penalties. This suggests that other
variables – including job discrimination, health-related factors and/or obese workers’ behavior patterns – may be the
channels through which obesity adversely affects wages. The study closes with a discussion of the public policy
implications suggested by these findings. Copyright # 2004 John Wiley & Sons, Ltd.

Keywords obesity; wages; discrimination; body mass index

However, economists have given relatively little

Introduction
An increasing number of Americans are over-
weight and obese, with currently about one in
three overweight and one in five obese [1].a As a
result, Americans are now more likely to be obese
than to smoke cigarettes or use illegal drugs [2].
Public health officials in the United States have
become increasingly alarmed about the growing
incidence of obesity in part because recent research
indicates that societal costs of obesity exceed those
of cigarette smoking and alcoholism [3].b One such
cost is the medical expense that obesity imposes:
Sturm estimates that obesity increases inpatient
and outpatient spending by 36 percent. Further,
obese individuals are shown to experience social
penalties in their interpersonal activities and in the
‘marriage market’ [4,5]. Obesity may also have
consequences on economic outcomes such as
earnings and employment. For example, obese
workers may earn lower wages or be less likely to
find employment due to employer discrimination.
systematic attention to the effects of obesity on
labor market outcomes.
We seek to fill a gap in the literature by
examining the effect of obesity on wages by gender
using National Longitudinal Study of Youth
(NSLY) data. Our raw data suggests that obese
NLSY respondents persistently earn lower wages
than their non-obese peers. To determine whether
obesity causes lower wages, we estimate various
wage model specifications, including fixed-effects
models to control for potential unobserved hetero-
geneity bias. After controlling for a standard set of
individual characteristics, we find that an obesity
wage penalty persists for both males and females,
though this penalty is larger for females. We also
examine various channels through which obesity
may affect wages. To do this, we test whether obese
workers earn lower wages because (i) they are
limited by health constraints, (ii) they are more
economically myopic, (iii) they are more costly for
employers who provide health care, or (iv) they are
discriminated against by customers.

*Correspondence to: Economics and Finance Department, Middle Tennessee State University, Box 27, Murfreesboro, TN 37132,
USA. E-mail: cbaum@mtsu.edu

Received 28 August 2002

Copyright # 2004 John Wiley & Sons, Ltd. Accepted 25 September 2003
886
The next section of the paper addresses the
conceptual rationales for why obesity might
adversely impact workers’ wages. Literature Re-
view section sets out the empirical methodology.
The scope and limitations of the NLSY data set
are discussed in Empirical Methodology section,
and the results are presented in Data section. The
final section of the paper presents conclusions of
the study and some areas of future research
interest.
Conceptual issues
Simply demonstrating that obese workers earn less
than their non-obese co-workers begs the question
of exactly how obesity adversely affects their career
earnings. Since Americans typically gain weight as
they age, it is possible, for example, that the
observed obesity wage penalty may simply be
masking employer discrimination against older
workers in the labor market. Discrimination
against women and members of minority groups
may also account for some of the apparent obesity
wage penalty since, for example, blacks are more
likely to be obese. The same is true of differences in
work experience, educational achievement, and
familiar environment factors. Its follows, there-
fore, that any attempt to identify the underlying
causes of obesity earnings penalties must include
controls for those standard socioeconomic vari-
ables. Applying such controls may then help focus
the search for other possible explanations, includ-
ing a variety of behavioral factors.
Two basic types of behavioral factors warrant
attention – those internal to the workers and
external forces impacting them in their work
environments. First, consider factors internal to
the worker. Obese workers may earn lower wages
because they are less productive due to health
problems. That is, obesity may limit the kind or
amount of work they can perform. Alternatively,
obese workers may suffer a wage penalty because
they place a higher premium on present con-
sumption. Economically myopic workers, who
have higher marginal rates of time preference,
may be less concerned about the possible long-
term health effects of obesity and, consequently,
may be more likely to be obese. Further, such
myopic workers may also be less likely to engage
in training, resulting in a flatter career earnings
profile.
Copyright # 2004 John Wiley & Sons, Ltd.
C. L. Baum II and W. F. Ford
A number of external behavioral forces in the
obese worker’s environment may also help to
explain the observed earnings penalty. Employers
may discriminate in hiring, promoting, compen-
sating, or firing such workers. Further, employers
who provide health insurance may penalize obese
workers with lower wages because they fear that
these workers’ health care will be more expensive.
If so, then obesity wage penalties would be
concentrated among workers with employer-pro-
vided health insurance. Another possible form of
external discrimination against obese workers is
customer discrimination. Obese workers in occu-
pations involving direct public contact may
experience a wage penalty though their interaction
with customers. This would occur if customers
were averse to interacting with those who are
obese.
Literature review
The economics literature has given relatively little
attention to the effects of obesity on wages [5]. In
fact, only four studies in the literature have used
multivariate regression analysis to examine the
effects of obesity on wages in the United States.c
Though they essentially use the same data, their
results differ markedly. Register and Williams [7]
use cross-sectional data from the 1982 NLSY to
examine the effect of obesity on wages (in wage
level models) by gender. Their results indicate that
obesity reduces females’ wages by 12 percent but
has no significant effects for males. Loh [8] also
uses 1982 NLSY data, but he finds that obesity
does not significantly affect wage level for males or
females. When examining wage changes (between
1982 and 1985), however, Loh finds that obesity
does have a statistically significant negative effect
for males (of about 5.5 percent) but not for
females.
Pagan and Davila [9] also estimate cross-section
wage level models using 1989 NLSY data. They
find that obesity reduces female wages, with some
variation across occupations, but not those of
males. They argue that males’ greater occupational
mobility offsets potential wage penalties due to
obesity. Similarly, Averett and Korenman [5] use
1988 NLSY data to examine the effects of obesity
on wages. Their results are mixed: wage level
models indicate that women and, to a lesser extent,
men both suffer obesity wage penalties, but their
Health Econ. 13: 885–899 (2004)
The Wage E¡ects of Obesity
sibling-differenced fixed-effects models indicate no
significant obesity wage penalties. In particular, in
their wage level models, obese women suffer a 10–
24 percent wage penalty and men suffer an obesity
wage penalty of about 8 percent.
The forgoing literature has some shortcomings,
and these shortcomings probably account for their
contrasting results. First, the literature uses small
and unrepresentative samples. For example, the
Loh [8] and Register and Williams [7] studies only
include respondents from the 1982 NLSY wave
who were then unusually young – between the
ages of 17 and 24. As our analysis shows below,
these respondents were less likely to be obese
because they were still quite young. (Actually, our
descriptive statistics show that in 1982 obese
NLSY youth earned no less than those who were
not obese). Further, in 1982 the careers of NLSY
youth had just begun, their wages were highly
variable, and many were still in school. Second,
the estimates found in the literature fail to control
sufficiently for unobserved heterogeneity. Only
Averett and Korenman [5] attempt to control for
unobserved heterogeneity. However, their sibling-
differenced fixed effects wage models produce
few statistically significant results because of
small sample sizes. Unobserved heterogeneity
could bias the results if the same unmeasured
traits that determine obesity simultaneously affect
wages. An additional shortcoming is that the
literature fails to identify the channels through
which obesity affects wages.d Thus, though these
studies identify the overall effect of obesity on
wages, they can only speculate on the reasons for
this effect.
We build upon the existing literature by using
longitudinal NLSY data from the 1981 through
1998 waves, which includes older respondents
who were more likely to be obese and were
further along in their careers. This strategy also
results in a much larger sample. Second, we
attempt to control for potential unobserved
heterogeneity bias by including a large number of
exogenous background characteristics, by compar-
ing individual-specific wage changes over time, and
by comparing wages between siblings and wage
changes over time between siblings. Additionally,
we not only identify the effect of obesity on wages,
we also attempt to identify specific mechanisms
through which obesity affects wages. This is
important in order to determine whether obesity
wage penalties are due to discrimination or other
factors.
Copyright # 2004 John Wiley & Sons, Ltd.
887
Empirical methodology
We use four approaches to determine the effect of
obesity on wages.e First, we assume that the effect
of obesity on wages can be estimated from the
following ‘wage level’ model:
lnðWit Þ ¼ bXit þ eit ð1Þ
where W is the wage rate, X is a vector of
explanatory variables that includes variables mea-
suring obesity, and e is the error term for
observation i in time t. We initially assume e is a
mean-zero, constant-variance random variable
that is uncorrelated with the explanatory variables
in X. Correspondingly, we use ordinary least
squares (OLS) regression to estimate the effect of
obesity on log wages.
However, there may be unobserved factors that
affect wages and that are correlated with the
explanatory variables in X. Such correlation would
exist, for example, if unobserved variables such as
ability and motivation are correlated with both
obesity and wages. This would be true if those with
low motivation and/or low ability were more likely
to be obese and earn lower wages. If variables such
as ability and motivation are unobserved, then
they will be captured by the error term, and the
obesity variable and the error term will be
correlated. If these factors are not controlled for,
then OLS estimates will be biased. Therefore,
we add a supplemental set of covariates to our
wage models, as discussed below in the data
section, to control more extensively for individual
background characteristics that might affect
wages.
In our second approach, we assume that the
wage model contains an individual fixed compo-
nent, ni , which represents individual-specific un-
observed heterogeneity. Thus, the wage equation
becomes
lnðWit Þ ¼ bXit þ vi þ eit ð2Þ
where W, X, and e are as defined above, and
ni is an individual-specific factor representing
unobserved characteristics. If correlation between
X and ni exists and if the individual heterogeneity
component (ni ) is unobserved to the researcher,
then estimates will be biased. The fixed-effects
technique uses cases where respondents provide
at least two wage observations, taking the differ-
ence between wage observations from the same
Health Econ. 13: 885–899 (2004)
888
respondent across time:
lnðWit Þ
lnðWit
1 Þ ¼ bðXit
Xit
1 Þ þ ðnit
nit
1 Þ
þ ðeit
eit
1 Þ ð3Þ
for observation i in time t and t
1. If we assume
that the individual-specific unobserved heteroge-
neity is fixed over time, then nit ¼ nit
1 and the
unobserved variables drop out.
Our third approach allows the unobserved
heterogeneity to change over time but assumes
that such heterogeneity at time t is family-specific.
That is, the wage model contains a component, nft,
which represents family-specific unobserved het-
erogeneity at time t. Thus, the wage equation
becomes
lnðWit Þ ¼ b Xit þ nft þ eit ð4Þ
As before, if correlation between X and nft exists
and if the family heterogeneity component (nft ) is
unmeasurable to the researcher, then estimates will
be biased. To control for this source of bias, the
fixed-effects technique uses cases where the re-
spondent has a sibling, and it takes the difference
between wage observations between siblings from
the same family at time t:
lnðWit Þ
lnðWjt Þ ¼ bðXit
Xjt Þ þ ðnift
njft Þ
þ ðeit
ejt Þ ð5Þ
for siblings i and j in time t.
Our fourth and final approach controls for both
individual-specific heterogeneity and family-speci-
fic heterogeneity. In this approach, the wage model
contains an individual-specific component, ni , that
is intertemporally fixed, as well as a family fixed
component, nft , which may be variable over time.
Thus, the wage equation becomes:
lnðWit Þ ¼ bXi þ nit
nft þ eit ð6Þ
To control for these sources of bias, the fixed-
effects technique examines individual changes over
time and compares these changes with changes for
a sibling over the same period:
½lnðWit Þ
lnðWit
1 Þ
½lnðWjt Þ
lnðWjt
1 Þ
¼ ½bðXit
Xit
1 Þ þ ðnit
nit
1 Þ þ ðnift
nift
1 Þ
þ ðejt
eit
1 Þ
½bðXjt
Xjt
1 Þ þ ðnjt
njt
1 Þ
þ ðnift
nift
1 Þ þ ðejt
ejt
1 Þ ð7Þ
for siblings i and j in time t.
We use these various types of fixed-effects
estimators to control for fixed unobserved vari-
ables rather than using a predicted value of obesity
Copyright # 2004 John Wiley & Sons, Ltd.
C. L. Baum II and W. F. Ford
(from a first-stage model) because the latter
instrumental variable technique relies on assumed
exclusion restrictions and on the assumption
that the excluded variables are uncorrelated with
the unobserved fixed effects.f Our fixed-effects
estimators will simultaneously control for sample
selection bias assuming any unobserved factors
that determine employment are fixed.g Further,
the unobserved variables may vary over time
(as may family-specific unobserved heterogeneity
at time t between siblings) without inducing bias
if the remaining error differences are unco-
rrelated with the differenced covariates. However,
if the unobserved variables vary over time
(or family-specific unobserved heterogeneity at
time t differs between siblings) and the error
differences are correlated with the differenced
covariates, then the fixed effects estimates will be
biased as well.
Data
We use National Longitudinal Survey of Youth
(NLSY) data to examine the effects of obesity on
wages by gender. From 1979 through 1994, the
NLSY annually interviewed a cohort of 12 686
respondents (6283 of whom are female) who were
between the ages of 14 and 21 in 1979. After the
1994 survey, the NLSY began interviewing bien-
nially, and these respondents have since been re-
interviewed on that basis. In each survey, the
NLSY collects information on each respondent’s
employment status, wages, and personal charac-
teristics.h In addition, questions about weight were
asked in the 1981, 1982, 1985, 1986, 1987, 1989,
1990, 1992, 1993, 1994, 1996, and 1998 surveys.i
We use four strategies to identify the effect of
obesity on wages. In each approach, we exclude
person-year observations in which the respondent
is less than 18 years old. We also exclude
respondents in years during which their education
has yet to be completed. Additionally, respondents
who were in the armed forces or self-employed are
excluded. In all four approaches, respondents
potentially provide multiple observations. There-
fore, we control for correlation among observa-
tions that come from the same respondent.j
Otherwise, such correlation would lead to under-
estimated standard errors and overestimated sig-
nificance levels because observations from the
same respondent are not independent from one
another.
Health Econ. 13: 885–899 (2004)
The Wage E¡ects of Obesity 889

Our first approach uses person-year observa-
tions to estimate a wage model where the
dependant variable is the log real wage (in levels).
Each year in which a respondent meets the criteria
listed above is included as a separate observation.
This approach results in 51 500 person-year
observations that provide the requisite wage and
weight information, 26 611 of whom are male and
24 889 of whom are female. The average real wage
is $7.33, based on the CPI base year period of
1982–1984.
Our second approach uses a fixed effects
specification where each observation is a compar-
ison of two wage observations. Specifically, we
compare wages between each survey year that
provides weight data. This strategy not only
provides some observations from relatively long
comparison periods during which wages and
weight have the potential to change substantially
(between, say, the 1981 and 1998 surveys), but it
also provides observations that compare wages
over briefer comparison periods to identify more
frequent wage and weight changes (between, say,
the 1996 and 1998 surveys). This strategy produces
226 620 wage comparisons (123 064 males and
103 556 females), with the average interval between
wage observations being 10.3 years.
Our third approach is similar, but the fixed
effects specification becomes a comparison of wage
observations between siblings. That is, we compare
wages between siblings for each survey year that
provides weight data. This strategy produces
12 369 wage comparisons (3906 male pairs and
2695 female pairs).k The fourth approach com-
bines the second and third approaches by compar-
ing an individual’s wages over time with a sibling’s
wage over the same period. This strategy produces
20 470 wage comparisons (6848 male pairs and
greater than 25 (greater than 24) is above normal
(overweight). Obesity for males and females is
defined as a BMI of 30 or more [7,9,18]. The
average BMI over all survey years is 25.36, which,
ironically, is above normal.
Figure 1 shows the average yearly BMI for the
full sample, for males, and for females. In 1981,
the average BMI for the full sample was about
22.5, with males having a slightly higher average
BMI. However, the average BMI increases mono-
tonically as the sample ages. By 1989, the average
BMI for the full sample was 25. After 1990, both
males and females had an average BMI that would
be classified as overweight. By 1998, the BMI
measures averaged between 26 and 27.
Table 1 shows the average wage for 4 BMI
categories (BMI between 0 and 20, between 20 and
25, between 25 and 30, and 30 or more) from the
sample of the person-year observations used in the
analysis. Results show that wages are increasing
with BMI until the BMI reaches 30, at which point
wages fall slightly. The most populous category is
for those with a BMI of 20–25. Wages are highest
for men with BMIs between 25 and 30 ($8.46) and
lowest for men with BMIs below 20 and equal to
30 or more.m Women’s wages are highest in the
20–25 BMI category ($6.82), and those with BMIs
of 25 or more have the lowest wages.
In Figure 2, we plot the average yearly wage for
the full sample, an obese sample, and a non-obese
sample. Results indicate that wages generally
Body Mass Index by Year
30
25
Body Mass Index (BMI)

4553 female pairs).l 20

The NLSY surveys that collect information
about weight identify how much each respondent
weighed in pounds in those surveys. In 1981, 15
respondents (between the ages of 16 and 23)
weighed an average of 145 pounds. However, their 10
average weight increases monotonically with each
successive survey, and in 1998, respondents (then 5
Body Mass Index (BMI)
between the ages of 33 and 40) weighed an average BMI (Males)
of 175 pounds. To measure obesity, we calculate BMI (Females)
each individual’s body mass index (BMI), which is 0
defined as weight in kilograms divided by height in
81

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94

96

98
19

19

19

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19

19

19

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19

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meters squared. For males (females), a BMI of 20–

Year
25 (19–24) is considered normal, a BMI less than
20 (less than 19) is below normal, and a BMI Figure 1. Body mass index by year

Copyright # 2004 John Wiley & Sons, Ltd. Health Econ. 13: 885–899 (2004)
890 C. L. Baum II and W. F. Ford

Table 1. Average real wage by weight (BMI), from 1981 to 1998

Full sample Males Females
BMI Wage Number Wage Number Wage Number
0–20 6.57 5055 6.28 1056 6.65 3999
20–25 7.37 23 695 7.88 12 228 6.82 11 467
25–30 7.72 14 967 8.46 9404 6.48 5563
30 or more (obese) 6.97 7783 7.99 3923 5.94 3860
There are 51 500 person-year observations. Based on the consumer price index with a 1982–1984 year base.

Obesity Wage Differentials Obesity Wage Differential by Gender

10 12
9

8 10

6 8
Wage

5
Wage

4 6

3
Wage
2 4
Wage for Obese
1 Wage for Nonobese Obese Male Wage
Nonobese Male Wage
0 2
Obese Female Wage
81

82

85

86

87

89

90

92

93

94

96

98

Nonobese Female Wage

19

19

19

19

19

19

19

19

19

19

19

19

Year 0
Figure 2. Obesity wage differentials by year
81
82
85
86
87
89
90
92
93
94
96
98
19
19
19
19
19
19
19
19
19
19
19
19
Year
increase over time, and the disparity between the Figure 3. Obesity wage differential by gender and year
obese and non-obese wages increases over time as
well. For example, in 1981 and 1982, the obese and
non-obese wages were virtually identical. How- with age, and BMI tends to increase with age as
ever, between 1985 and 1998, the difference in non- well. Thus, there may appear to be a positive
obese and obese wages increased from 34 cents to correlation between BMI and wages when, in fact,
$1.20. A similar pattern is depicted in Figure 3, this correlation is due to age-related changes. To
which shows average yearly wages for obese and determine the causal effect of weight on wages, we
non-obese workers separately by gender. As use multivariate regression analysis to control for
before, the obesity wage differential increases over other factors that might be correlated with weight
time, but the obesity wage penalty is consistently and wages. Each model that we estimate contains a
larger for women than men. In fact, in 1981 and standard set of explanatory variables that have
1982, obese men earn more than non-obese men. frequently been used in wage models.n
By 1998, however, the obesity wage penalty for Table 2 provides each variable’s sample
men is $1.11 and is more than $1.25 for women. mean and standard deviation measured at the
These simple descriptive statistics suggest that time of the survey. First, we include variables to
wages are lower for those who are obese. However, control for standard socio-economic characteris-
these correlations do not necessarily imply a causal tics. These include controls for race (black and
relationship. For example, wages tend to increase Hispanic dummy variables), age, education,

Copyright # 2004 John Wiley & Sons, Ltd. Health Econ. 13: 885–899 (2004)
The Wage E¡ects of Obesity 891

Table 2. Descriptive statistics of standard variables

Obese Non-obese
Dependant variable
Wage 7.334 (4.765) 6.974 7.398
Log wage 1.849 (0.517) 1.807 1.857

Explanatory variables
Body mass index (BMI=weight/(height2)) 25.362 (5.012) 34.345 23.763
Black (=1 if black) 0.293 (0.455) 0.381 0.277
Hispanic (=1 if Hispanic) 0.175 (0.380) 0.209 0.169
Age (in years) 29.197 (5.198) 31.320 28.819
Education level (years of schooling completed) 12.910 (2.151) 12.626 12.960
Marital status (=1 if married) 0.486 (0.500) 0.515 0.480
Children (=number of children) 0.929 (1.142) 1.196 0.881
Experience (in weeks/52) 8.553 (2.443) 9.703 8.105
South (=1 if lived in south) 0.400 (0.490) 0.440 0.393
Urban (=1 if lived in an urban area) 0.794 (0.404) 0.756 0.801
Local unemployment rate (percent) 0.029 (0.010) 0.028 0.029
Agriculture industry 0.021 (0.143) 0.022 0.021
Mining industry 0.007 (0.082) 0.004 0.007
Construction industry 0.065 (0.247) 0.052 0.068
Manufacturing industry 0.192 (0.394) 0.178 0.195
Transportation/communications industry 0.061 (0.240) 0.059 0.062
Wholesale/retail trade industry 0.195 (0.396) 0.175 0.198
Finance/insurance/real estate industry 0.063 (0.244) 0.047 0.066
Business/repair services industry 0.068 (0.251) 0.065 0.068
Personal services industry 0.034 (0.180) 0.044 0.032
Entertainment/recreational services industry 0.011 (0.105) 0.009 0.011
Professional work industry 0.183 (0.387) 0.208 0.179
Public administration industry 0.055 (0.227) 0.075 0.051
Sample means with standard deviations in parentheses. The sample size contains 51 500 person-year observations, 7783 of which
are obese and 43 717 of which are not.

marital status, and children. We also control for
human capital accumulation with a variable
measuring weeks of work experience and for
residence in the south, residence in an urban area,
and the local unemployment rate. Finally, we
include 12 industry dummy variables to control for
wages differences across industries [19] and 12-year
dummy variables to control for intertemporal
differences.o
Table 2 also gives separate means for the
portion of the full sample that is obese and non-
obese. Obese workers in our sample are more
likely to be married.p These statistics also indicate
that obese workers are more likely to be black or
Hispanic, to be older, to have more children and
work experience, and to live in the south. The
obese also tend to be less educated and less likely
to live in an urban area. Obese and non-obese
workers also differ in their industry of employ-
ment: the obese are most likely to work as
professionals and the non-obese are most likely
to work in wholesale and retail trades.
To limit the potential for unobserved hetero-
geneity bias, we also include a set of supplemental
regressors that controls more extensively for
background characteristics and the worker’s atti-
tudes. Descriptive statistics for the supplemental
background characteristics variables are presented
in Table 3. Table 3 also gives separate means for
obese and non-obese workers.
Results
We examine the effects of obesity on wages
separately for males and females first using wage
level models. The results from these models are
presented in Table 4. Then, we re-examine the
male and female samples using individual differ-
ence models, sibling difference models, and

Copyright # 2004 John Wiley & Sons, Ltd. Health Econ. 13: 885–899 (2004)
892 C. L. Baum II and W. F. Ford

Table 3. Descriptive statistics of supplemental background variables

Full Sample Obese Non-obese
Supplemental background variables
AFQT (residual test score controlling for age) 0.037 (27.246)
4.998 0.933
Native born (=1 if born outside the U.S.) 0.049 (0.215) 0.049 0.049
Foreign language (=1 if foreign language was spoken) 0.209 (0.406) 0.237 0.204
Lived with both parents (at age 14) 0.719 (0.450) 0.698 0.722
Received magazines (at age 14) 0.573 (0.495) 0.501 0.585
Received newspaper (at age 14) 0.769 (0.422) 0.716 0.778
Library card (at age 14) 0.709 (0.454) 0.659 0.717
South (at age 14) 0.378 (0.485) 0.425 0.370
Urban (at age 14) 0.782 (0.413) 0.753 0.787
Mother’s education 10.442 (3.700) 9.897 10.539
Mother’s education missing (=1 if missing) 0.051 (0.220) 0.057 0.050
Mother worked part-time (when worker was 14) 0.209 (0.407) 0.214 0.209
Mother worked full-time (when worker was 14) 0.418 (0.493) 0.383 0.425
Father’s education 9.625 (5.089) 8.714 9.787
Father’s education missing (=1 if missing) 0.140 (0.347) 0.173 0.134
Siblings 3.758 (2.576) 3.891 3.735
Rotter test score (higher scores = less efficacy) 8.731 (2.338) 8.947 8.692
Attitudes about family roles (higher scores = traditional views) 17.346 (3.463) 17.446 17.328
Sample means with standard deviations in parentheses. The sample size contains 51 500 person-year observations, 7783 of which
are obese and 43 717 of which are not.

Table 4. The effect of obesity on wages by gender

Individual Sibling Individual
Individual difference difference sibling
models models models difference models
Males
Model 1 Model 2 Model 3 Model 4 Model 5
Obese
0.034***
0.032***
0.007**
0.008
0.007
(0.007) (0.007) (0.003) (0.017) (0.011)
Standard covariates Yes Yes Yes Yes Yes
Supplemental covariates No Yes Yes Yes Yes
R2 0.375 0.399 0.105 0.204 0.039

Females
Model 1 Model 2 Model 3 Model 4 Model 5
Obese
0.061***
0.058***
0.023***
0.015
0.048***
(0.007) (0.007) (0.004) (0.020) (0.013)
Standard covariates Yes Yes Yes Yes Yes
Supplemental covariates No Yes Yes Yes Yes
R2 0.397 0.413 0.096 0.262 0.046
Standard errors are in parentheses. ***p50.01; **p50.05; *p50.10. There are 26 611 males in the wage level model, 123 064 in the
individual difference models, 3906 in the sibling difference models, and 6848 in the individual sibling difference models. There are
24 889 females in the wage level model, 103 556 in the individual difference models, 2695 in the sibling difference models, and 4553 in
the individual sibling difference models. Covariates are differences in the fixed effects models.

individual difference-sibling difference models. these models are presented in Table 5 for males
These results are also presented in Table 4. Finally, and in Table 6 for females. The results of any other
we explore potential explanations for the effects of covariates not reported are available from the
obesity by gender. The obesity-related results from authors.

Copyright # 2004 John Wiley & Sons, Ltd. Health Econ. 13: 885–899 (2004)
 Table 5. Potential explanations for the obesity wage penalty (males)
The Wage E¡ects of Obesity

Levels models Individual difference Sibling difference Individual sibling difference

(Model 2) Model 6 (Model 3) Model 7 (Model 4) Model 8 (Model 5) Model 9
Obese
0.032***
0.032***
0.007**
0.007**
0.008
0.007
0.007
0.007
(0.007) (0.007) (0.003) (0.003) (0.017) (0.017) (0.011) (0.011)
Health limitations
0.106***
0.028***
0.152***
0.005
(0.014) (0.005) (0.033) (0.018)

Copyright # 2004 John Wiley & Sons, Ltd.

Model 10 Model 11 Model 12 Model 13
Obese 0.035** 0.012* 0.010
0.007
(0.017) (0.007) (0.019) (0.011)
Experience 0.0007*** 0.0009*** 0.0005*** 0.00004
(0.00001) (0.00001) (0.00005) (0.00008)
Obesity*experience
0.0001***
0.00006***
0.0002** 0.0001
(0.00002) (0.00001) (0.00009) (0.0001)
Model 14 Model 15 Model 16 Model 17
Obese
0.058***
0.015***
0.012
0.008
(0.013) (0.003) (0.017) (0.011)
Employer insurance 0.205*** 0.123*** 0.169*** 0.080***
(0.006) (0.002) (0.014) (0.007)
Obesity*employer insurance 0.028* 0.047*** 0.019
0.023
(0.015) (0.006) (0.032) (0.017)
Model 18 Model 19 Model 20 Model 21
Obese
0.028***
0.006**
0.011
0.007
(0.007) (0.003) (0.017) (0.011)
Customer occupation
0.074***
0.051***
0.087*** 0.010
(0.007) (0.003) (0.015) (0.009)
Obesity*occupation
0.018
0.006
0.057* 0.063***
(0.018) (0.008) (0.032) (0.022)
Standard errors are in parentheses. ***p50.01; **p50.05; *p50.10. Number of observations are as in other models.
893

Health Econ. 13: 885–899 (2004)

 894

Table 6. Potential explanations for the obesity wage penalty (females)

Levels models Individual difference Sibling difference Individual sibling difference
(Model 2) Model 6 (Model 3) Model 7 (Model 4) Model 8 (Model 5) Model 9
Obese
0.058***
0.056***
0.023***
0.022***
0.015
0.015
0.048***
0.049***
(0.007) (0.007) (0.004) (0.003) (0.020) (0.020) (0.0013) (0.013)
Health limitations
0.073***
0.018***
0.014 0.014
(0.011) (0.004) (0.035) (0.017)
Model 10 Model 11 Model 12 Model 13

Copyright # 2004 John Wiley & Sons, Ltd.

Obese 0.011 0.009
0.021
0.049***
(0.014) (0.007) (0.021) (0.013)
Experience 0.0007*** 0.0008*** 0.0006*** 0.0002***
(0.00001) (0.00001) (0.00005) (0.00007)
Obesity*experience
0.0001***
0.0001*** 0.0001 0.0004***
(0.00002) (0.00002) (0.00009) (0.0001)
Model 14 Model 15 Model 16 Model 17
Obese
0.026**
0.023***
0.014
0.046***
(0.011) (0.004) (0.020) (0.013)
Employer insurance 0.201*** 0.115*** 0.218*** 0.063***
(0.006) (0.002) (0.016) (0.009)
Obesity*employer insurance
0.048*** 0.027*** 0.053 0.021
(0.014) (0.007) (0.034) (0.019)
Model 18 Model 19 Model 20 Model 21
Obese
0.063***
0.023***
0.016
0.049***
(0.008) (0.004) (0.020) (0.013)
Customer occupation
0.077***
0.033***
0.037** 0.018**
(0.006) (0.002) (0.018) (0.009)
Obesity*occupation 0.017
0.0006 0.005
0.002
(0.015) (0.008) (0.034) (0.021)
Standard errors are in parentheses. ***p50.01; **p50.05; *p50.10. Number of observations are as in other models.

Health Econ. 13: 885–899 (2004)

C. L. Baum II and W. F. Ford
The Wage E¡ects of Obesity
To determine the causal effect of obesity on
wages, we estimate a model including the standard
covariates that are typically included in wage
models. Model 1’s results show that wages are
significantly lower (at the 1 percent level) for those
with BMIs of 30 or more. In particular, wages for
obese males are 3.4 percent lower than for non-
obese males, and this penalty for obese females is
6.1 percent.q Consequently, these results provide
evidence that obese workers receive a wage penalty
with this penalty being almost twice as large for
females.
Because the log wage models potentially suffer
from bias due to unobserved heterogeneity, we
next re-estimate model 1 (as model 2) including the
supplemental set of background variables outlined
above to further control for individual differences.
The results are similar to those reported: BMIs of
30 or more continue to decrease wages signifi-
cantly in model 2. Further, the magnitudes of these
effects are left much the same. For example,
obesity lowers male wages by 3.2 percent and
female wages by 5.8 percent. Since adding an
extensive list of supplemental variables does not
substantively change the results, this provides
support that our estimates are not biased.
As noted before, however, the log wage models
may still suffer from unobserved heterogeneity
bias. To control for intertemporally fixed sources
of heterogeneity bias, we next estimate fixed effects
models that examine individual changes over time.
In model 3, the obesity variable equals 1 if the
respondent becomes obese,
1 if the respondent is
no longer obese, and 0 if there is no change in
obesity. Model 3 provides further evidence that
obesity lowers wages: becoming obese significantly
lowers wages for males and females. However,
these penalties are again larger for females,
reducing their wages by 2.3 percent compared to
0.7 percent for males.
In model 4, we control for potential unobserved
heterogeneity bias by estimating sibling difference
models. The sibling difference models examine
obesity and wage differences between siblings.
Sibling differences in obesity do not have statisti-
cally significant effects. In model 5, we examine
individual-specific obesity and wage differences
over time and compare these differences with a
sibling in ‘individual difference-sibling difference’
models. The individual difference-sibling difference
results are similar to the sibling difference model
(model 4) for males, both being statistically
insignificant. However, for females, obesity sig-
Copyright # 2004 John Wiley & Sons, Ltd.
895
nificantly decreases wages by 4.8 percent in model
5, which again suggests there is an obesity wage
penalty.
It is not clear from these results why models for
males that use siblings (models 4 and 5) differ from
models that do not (models 2 and 3). Perhaps
differences occur due to family-specific unobserved
heterogeneity bias that is eliminated in the sibling
models. Another potential explanation why results
differ when controlling for family-specific unob-
served heterogeneity is that the subsample of
siblings is unrepresentative. However, comparing
sample means from the full sample with those
from the sibling subsample (results not shown)
does not indicate any notable differences. Another
potential explanation is that the sibling models in
fact produce similar coefficients that are simply
estimated imprecisely because siblings constitute a
reduced sample. Note that the sibling coefficient
estimates (models 4 and 5) for males are negative
and are of about the same magnitude as in
individual difference model 3. These models differ
not in their coefficients but in the size of their
standard errors. The standard errors might be
larger in the sibling models because they use
samples that are substantially smaller than the
samples used in the levels models and individual
difference models.
We also re-estimate the models by gender using
various alternative specifications of obesity (results
not shown). For example, in one specification, we
include a continuous measure of BMI instead of
the obesity dummy variable. However, the results
are generally statistically insignificant. We later
found this to be due to a non-linear effect of BMI
on wages. When we re-estimate the models
separately identifying different categories of BMIs
(BMI between 0 and 20, between 20 and 25,
between 25 and 30, and 30 or more), those with
BMIs between 0 and 20 and those with BMIs of 30
or more both experience a wage penalty, with
wages being highest for those with average (or
somewhat above average) BMIs. We also estimate
models identifying the effects of merely being
overweight on wages (results not shown). Results
indicate that being overweight but not obese has
no significant effects on male wages. However, our
models that separately examine females find that
being overweight significantly decreases their
wages.
Next, we look at four possible explanations for
why obese workers might receive lower wages: (i)
obese workers are less productive due to health
Health Econ. 13: 885–899 (2004)
896
limitations, (ii) obese workers are more economic-
ally myopic and consequently less likely to invest
in training, (iii) employers who provide health
insurance are unwilling to pay as much to obese
workers because their health care may be more
expensive, and (iv) customers may discriminate
against obese workers. We estimate models to test
each of these possible explanations, and the results
from these models are presented in Table 5 for
males and Table 6 for females. For comparison
purposes, we re-report the obesity results from
wage level model 2, individual difference model 3,
sibling difference model 4, and individual sibling
difference model 5 in Tables 5 and 6. These
estimates reappear with their original model
numbers.
Our first hypothesis is that obese workers earn
lower wages because they are less productive. One
reason why obese workers might be less productive
is that they are more likely to have health
problems that limit their work. To test the validity
of this hypothesis, we include a ‘health limitations’
dummy variable that equals 1 if the respondent
reports that they have any health problems limit-
ing the kind or amount of work they can do. If the
obesity wage penalty is due to health limitations,
then the obesity coefficient will become statistically
insignificant when we control for health limitations
[10]. However, coefficient results from models 6–9
are virtually unchanged for both males and
females. While health limitations significantly
reduce wages for males in models 6–8 and females
in models 6 and 7, obesity wage penalties remain
the same, indicating that obesity affects wages
independently of health limitations. Alternatively,
it is possible that health limitations among obese
workers affect employment (their ability to work)
rather than wages.
Second, we suspect that obese workers may
suffer wage penalties because they are more
economically myopic. That is, they are less
concerned about the future, placing a higher
premium on present consumption. If respondents
who are more myopic are also more likely to be
obese (less likely to be concerned about the
possible long-term health effects of obesity) and
less likely to engage in training (less likely to invest
in human capital), then obese workers will have a
flatter earnings profile.r This occurs because those
who invest less in training have less future earnings
potential. To test this, we estimate a model that
interacts the obesity variable with the experience
variable. If obese respondents are more myopic
Copyright # 2004 John Wiley & Sons, Ltd.
C. L. Baum II and W. F. Ford
and less likely to engage in training, then this
interaction term will be negative, indicating a
flatter earnings profile [10]. Models 10–13 examine
this hypothesis. These models generally show that
experience has a positive and statistically signifi-
cant effect on wages as expected. Further, in
models 10–12 for males and models 10 and 11
for females, the obesity–experience interaction
term is negative and statistically significant. In
some cases, the obesity dummy variable is not
statistically significant (models 12 and 13 for males
and models 10–12 for females) and in other cases,
the obesity variable actually is significant and
positive (models 10 and 11 for males). This
suggests that obesity wage penalties essentially
disappear when controlling for different rates of
return on experience, and it certainly provides
evidence that obese workers have flatter earnings
profiles. One likely explanation for this is that
obese workers invest less in training. This would
explain why obese workers with no experience do
not suffer a wage penalty (relative to non-obese
workers with no experience) but obese workers
with a substantial amount of experience earn
significantly less than their non-obese and equally
experienced counterparts. However, another ex-
planation is discrimination in training opportu-
nities. The negative obesity-experience interaction
term may reflect that those who are obese do not
have an equal opportunity to train due to
prejudice. This result also suggests that obesity
wage penalties may differ with age. To test this, we
re-estimate the models interacting obesity with age
instead of experience (results not shown). The
results are essentially the same, with older obese
workers receiving a larger wage penalty. Perhaps
age is substantively measuring experience. Con-
versely, this may be due to a change in the impact
of obesity with age.
Third, we hypothesize that employers who
provide health insurance penalize obese workers
in the form of lower wages because they fear it will
be more costly to provide such workers with health
care. To test this hypothesis, we create a dummy
variable that equals 1 if the respondent works for
an employer who provides health insurance. Then,
we estimate models that include both the employ-
er-provided insurance variable and its interaction
with the obesity variable. If there is veracity to this
hypothesis, then the ‘obesity – employer insurance’
interaction term will be negative and significant,
indicating that obese respondents who work for
employers providing health insurance are pena-
Health Econ. 13: 885–899 (2004)
The Wage E¡ects of Obesity
lized to a greater extent than obese respondents
who are responsible for providing their own health
insurance [10]. That is, obesity wage penalties will
be concentrated among workers with employer-
provided health insurance. Models 14–17 show
that wages are higher for both males and females
with employer-provided health insurance. Though
economic theory suggests that wages are decreas-
ing in fringe benefits, it is difficult in practice to
estimate this holding all else constant. For example,
fringe benefits may at least partially proxy for
worker value where valuable workers receive
enhanced fringe benefits (and higher wages). If
so, and if a worker’s value is not completely
controlled, then wages and fringe benefits may
appear to be positively related. The obesity –
employer-provided health insurance interaction
term is negative in the wage level model (model
14) for females, but it is positive and statistically
significant in the wage level model for males and
the individual difference models for males and
females (model 15). The latter two models suggest
the opposite of what we predict: they suggest that
obese respondents with employer-provided health
insurance receive less of a wage penalty than
obese workers without such fringe benefits. This is
a surprising result, but perhaps it indicates that
the type of employer who provides such fringe
benefits is less likely to discriminate against obese
workers. Another explanation is that our test does
not measure what we intend. Regardless, our
models as specified provide little support for this
hypothesis.
Our final hypothesis is that obese workers
may earn less because they are discriminated
against by customers. That is, customers may
prefer not to interact with obese individuals. If so,
then obese workers may suffer a greater wage
penalty in customer-oriented service and sales
occupations. However, obese workers who are
not in contact with customers will not suffer such a
wage penalty. Conversely, if obesity wage penalties
are due to employer discrimination, then such
wage penalties will be the same across occupa-
tions. To test this, we identify each worker’s
occupation and classify each as a customer-related
occupation or not.s Then, we interact the customer
occupation variable with the obesity variable. If
the obesity wage penalty is due to customer
discrimination, then the obesity wage penalty will
be larger in occupations that deal with consumers.
That is, the obesity – customer occupation
interaction term will be negative. If obesity wage
Copyright # 2004 John Wiley & Sons, Ltd.
897
penalties are equivalent across occupations, then
this interaction term will have an insignificant
effect. Models 18–20 indicate that workers in
customer-oriented occupations do earn less but
do not experience a larger obesity wage penalty.
(The one exception is sibling difference model 20
for males, where obese males in customer-oriented
occupations do earn significantly less.) That is,
only one of the obesity–occupation interaction
terms is significantly negative. This suggests that
obesity wage penalties are the same across
occupations. Of course, this may be the result of
us imperfectly identifying those occupations where
interpersonal interactions with customers are
important.
Discussion and conclusions
Where statistically significant, our results suggest
that obese workers suffer a wage penalty in the
range of 0.7–6.3 percent. This result is robust in
the wage level models regardless of what combina-
tion of explanatory variables are included, as well
as in the individual difference models. However,
the sibling difference and individual sibling differ-
ence models do not consistently provide significant
evidence of an obesity wage penalty. The results in
the wage level and individual difference models
may be different than those in the sibling models
because they inadequately control for family-
specific sources of unobserved heterogeneity. Or,
as noted before, differences may be due to the
sibling sample being unrepresentative of the full
sample (though descriptive statistics do not
indicate any notable differences in sample char-
acteristics) or to the reduced sibling sample size
(where the standard errors for the sibling models
are estimated less precisely though their coefficients
are of about the same magnitude as those from
other models).
Our results also provide evidence that obese
females suffer more of a wage penalty than obese
males. Negative obesity coefficients in the female
wage models are always larger in absolute value
and are more likely to be statistically significant.
For example, in wage level model 2, the male
obesity wage penalty is 3.2 percent while the
female obesity wage penalty is 5.8 percent; in
individual difference model 3, the male obesity
wage penalty is 0.7 percent while the female
obesity wage penalty is 2.3 percent.
Health Econ. 13: 885–899 (2004)
898
We also have examined some possible channels
through which obesity affects wages. The wage
level and individual difference models (and the
sibling difference models for males) indicate that
obese workers have flatter earnings profiles. We
suspect that this may be due to myopia, where
those who are less far-sighted are also more likely
to be obese and less likely to engage in training.
However, discrimination in training opportunities
and obesity wage penalties that vary with age
are also potential explanations. Our results pro-
vide virtually no evidence that obesity affects
wages via health limitations or customer discrimi-
nation. Further, our evidence actually hints that
obese workers with employer-provided health
insurance receive less of a wage penalty than their
obese counterparts without such fringe benefits.
Of course, tests of these explanations are only
effective to the extent that they adequately evaluate
the hypotheses for which they are intended.
hese tests are crude, and they may not identify
the effects that we intend. For example, our
tests do not completely control for a worker’s
productivity, and obesity may affect wages via
reduced productivity in ways other than health
limitations.
Additionally, we offer no tests for employer
discrimination. Residual wage differences are often
attributed to employer discrimination, and we
certainly find that obesity wage penalties do not
differ across occupations. Thus, our findings suggest
that such discrimination may be present in our
unexplained residual after controlling for other
plausible explanatory variables. Further research is
needed to search for evidence of systematic
discrimination against obese workers. An expand-
ing catalog of lawsuits alleging that it exists adds
further urgency to pursuing that line of inquiry.
Notes
a. Overweight for males is defined as having a Body
Mass Index (BMI) of 25–30 (24–30 for females) and
obese is defined as having a BMI of 30 or more,
where BMI is calculated as weight in kilograms
divided by height in meters squared.
b. See also Philipson [2].
c. Harper [6] examines the obesity wage penalty with
British data, finding that obesity only lowers the
wages of women. However, Harper’s results are
difficult to interpret because they simultaneously
hold physical appearance constant.
Copyright # 2004 John Wiley & Sons, Ltd.
C. L. Baum II and W. F. Ford
d. Averett and Korenman [5] do examine the hypoth-
esis that obesity affects wages through health
limitations. They also include occupational dummy
variables to control for occupational sergregation.
However, it is not clear whether obsesity wage
penalities differ across occupations because Averett
and Korenman do not interact these variables with
obesity.
e. Our empirical approach, which uses fixed effects
models, is similar to that used by Levine et al. [10]
who examine wage penalties for cigarette smokers.
Conversely, our approach differs from that of
Kaestner [11], Register and Williams [12], Gill and
Michaels [13], and Berger and Leigh [14] who use a
method proposed by Oaxaca [15] and used by many
others (for example, Blau and Ferber [16]).
Following Oaxaca [15], Kaestner [11], Gill and
Michaels [13], and Register and Williams [12]
examine the effect of drug use on wages and Berger
and Leigh [14] examine the effect of alcohol on
wages, using predicted values of potentially en-
dogenous variables. We choose to follow Levine
et al., rather than Oaxaca, because the latter’s
method would require us to find variables that
affect obesity but are orthogonal to wages. It is not
clear what identification variables would be
sufficiently powerful to predict obesity, which is
why Levine et al. choose to use fixed effects
models.
f. The fixed effects estimators are instrumental vari-
able estimators as well – it is the assumed
exogeneity of the differences that lead to the fixed
effects estimators being unbiased and consistent
g. Those who explicitly control for sample selection
bias typically find that the estimates are left
virtually unchanged [6,11].
h. All wages (and other dollar measures) from the
NLSY are adjusted appropriately using the Con-
sumer Price Index from the US Census Bureau with
a 1982–1984 base.
i. See the Center for Human Resource Research’s
NSLY79 1996 Users’ Guide [17] for more details on
the NLSY sample.
j. This is done using the ‘cluster’ command in
STATA. This command relaxes the assumption of
error independence between observations from the
same person, instead defining an error structure
where only errors between observations with
different person ids are independent.
k. The other 5768 pairs contain a male and female (a
brother and sister).
l. The other 9069 pairs contain a male and female (a
brother and sister).
m. Actually, wages are lowest for men with BMIs
between 0 and 20 ($6.28).
n. Note that time-invariant variables are not included
in the individual fixed effects model because no such
change occurs between wage observations; for
Health Econ. 13: 885–899 (2004)
The Wage E¡ects of Obesity
similar reasons, family-constant variables are not
included in the sibling fixed effects models.
o. The industries identified by the dummy variables
include: agriculture; mining; construction; manu-
facturing; transportation and communication;
wholesale and retail trade; finance, insurance, and
real estate; business and repair services; personal
services; entertainment and recreational services;
professional work; and public administration. The
year dummy variables correspond to the 12 NLSY
surveys with weight information.
p. Register and Williams [12] and Harper [6] also
report higher rates of obesity among those who are
married. Conversely, Gortmaker et al. [4] finds that
those who are overweight (in the 95th BMI
percentile) are less likely to be married.
q. Since log wages are the dependent variable, percent
changes can be obtained from eb
1.
r. Similarly, Becker and Murphy [20] argue that those
with higher rates of time preference are more likely
to engage in illegal drug use and to have flatter
earnings profiles.
s. We admit that selecting those occupations where
customer preferences affect productivity is subjec-
tive. Unfortunately, the NLSY does not ask
respondents the extent to which their job involves
interpersonal interactions with customers.
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