What can international cricket teach us about the role of luck in labour markets?
This is the unlikely title of a new paper from the IMF. The answer is: plenty.
The authors looked at the test careers of all players who debuted between 1950 and 1985. And they found that “luck early in one’s career…can have long run consequences.”
They established this in two steps. First, they showed that players who make their debuts in a home test do significantly better than those who debut overseas. Batsmen average 33% more in their debut series if it is at home rather than away, whilst bowlers average 18% less.
Then they showed that players’ career averages are strongly correlated with their debut averages.
Of course, you’d expect this, simply because innate ability drives both. A great player is likely to do well in both his first few games and throughout his career; Don Bradman and Graham Gooch were exceptions here. However, even when using the location of a player’s debut as an instrument, the correlation remains strong.
The conclusion here is simple. Brute luck - and whether one debuts home or away is surely largely a matter of luck - strongly influences a player’s career. A player who debuts at home is more likely to do well initially and then go on to good things, whilst a player who debuts abroad might get off to a bad start and never turn his career around.
There are two reasons for this. One is that getting off to a good start gets a player a run of games, and this builds his experience. The other is that the selectors fail to recognize the importance of the home effect upon a debutant’s performance, and so are overly likely to drop a player who debuted abroad but persist with one who debuted at home, even if they have identical ability; it is a universal and eternal truth that test selectors are stupid.
The story here, though, is not about cricket. It’s about labour market performance generally. An individual who gets lucky with his first job - either because it’s a good match for him, or because it happens to be in a boom, or because he flukes into a graduate traineeship at a top firm - could well go on to have a great career, whilst someone who starts off with less luck will struggle. I suspect that this difference is amplified by people’s tendency to mistake individual ability for situational factors.
Herein, though, lies a curious thing. In the standard political narratives, we hear very little about the role of luck. The poor are either unskilled or workshy, whilst the successful are talented and hard-working. But in truth, there’s a hefty element of randomness as well.
Could it be that the failure to appreciate this generates a bias against redistributive taxation?