Dress codes in the office

I have always wondered why corporate offices require a dress code for employees, even when the employees never see the outside world. Tyler Cowen blogs about corporate dress and makes a couple of interesting points, but it doesn’t really address my particular curiosity. He’s inspired by a reader who points out not many people are as comfortable in business attire as they are in casual clothes. If a worker is most productive when they are most comfortable then why would you force them to wear a suit?

A common explanation of smart clothing is signaling to overcome adverse selection. People choose to bear the cost of wearing uncomfortable but smart clothes to show how dedicated they are to their job and to gaining a promotion. However, this seems like an argument against dress codes: if people can choose what to wear then it’s easier for the eager employees to signal their dedication to The Company through their choice of clothing. As Tyler mentions, it may even be worthwhile for companies to impose a maximum dress code in order to eliminate the signaling costs that allowing suits imposes upon employees.

Ultimately, I think the reason for dress codes is shrouded in the mists of corporate managerial lore, of which I know nothing. I can’t think of a good reason for it in standard micro theory, and since Tyler Cowen can’t either I’m in good company there. If anybody has a good explanation for this convention I’d love to hear it.

  • Matt Nolan

    I think the adverse selection argument still works as long as how much an individual wants the job is highly correlated with how good they will be in the job. After all, wearing the suit is a costly signal, if we have a separating equilibrium then only those who value the job at a sufficiently high rate will wear a suit to the interview.

    As a result, how strict the dress code is should depend on:
    1) How the cost increases as the dress code tightens
    2) How correlated an individuals value of the job and their job performance actually are

    Ultimately, the interviewing process is imperfect. We have a definite information asymmetry between employers and employees, and often the suit doesn’t play a particularly good role is signaling the quality of employees.

    In the case of a pooling equilibrium we could prisoners dillema. If the employer takes people more seriously when they wear suits, then an individuals best response may be to wear a suit no matter what other people are doing. Then we end up with lots of people wearing suits, but the employers receives no information.

    So in either type of eqm, we rely on this damn rule of thumb from employers, that an employee in a suit is going to be better than one not in a suit. Could it be that the workplace need for suits simply evolved during some bygone era, and is now ingrained as some type of social norm? I think so.

  • CPW

    I vote social norm. I suspect there is probably a strong correlation between office dress codes and amount of contact with customers. But my next guess would be that there is a relationship between how hierarchical the workplace is and how formal the dress is.

    Suits aren’t that much of a signal anyhow. You can wear the same suit everyday, many people would actually consider it less costly that the alternative. And plenty of people like to dress formally.

    But see also counter-signaling ala Steve Jobs:


  • rauparaha

    I agree with you about interviewing, Matt. I was thinking more of the situation of current employees who work indoors and don’t meet clients but are still required to adhere to a dress code. It’s certainly true that suits are a poor signal but they still seem to be required in interviews as you point out.

    I quite like the idea of the hierarchy: are you suggesting that more senior employees would have more or less freedom to flout the dress code? I can see how TC’s ‘counter-signalling’ could work with a hierarchical structure to allow senior employees more freedom to dress casually. It’s a bit feudal but it seems plausible. I wonder if that’s actually the case; I don’t see many very senior employees of companies outside of public engagements.

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  • CPW

    I was thinking more that the more hierarchical the office, the more need for strict dress codes and other petty rules to reinforce relative status. Which could involve senior people dressing down, but is more likely to involve them dressing even sharper.