The economic cost of the X Factor

Helen Wright of the Girls Schools Association complains that programmes such as the X Factor are contributing to a “moral abyss”. I fear that they might also have unpleasant economic effects.

What I mean is that the X Factor, along with other things such as the massive pay for top footballers and for celebrities such as Katie Price, tempts young people towards winner-take-all careers and away from careers where pay-offs are more certain and less skewed. This encourages them to over-invest in football and singing skills and the pursuit of celebrity and to under-invest in academic work.

This preference is not necessarily irrational. In simple expected utility terms, a 1% chance of getting £2m a year is equal to a 50% chance of getting £40,000. Add to this the greater disutility of jobs with the latter salaries - plus the fact they won‘t buy you a house -  it’s easy to see why people might prefer the 1% chance.

However, this preference might be exacerbated by three less rational biases:

- Role model effects. Role models matter because they play upon the availability heuristic. If we see someone like us doing something, we believe that there’s a chance we can do it as well. The problem is that if you’re from a poor inner-city, you’ll probably see more pop stars, footballers and reality show micro-celebs like you than you’ll see middle-class professionals. This will bias you towards the former careers and away from the latter.

- Overconfidence. We often over-rate our chances of success. People become pop singers thinking they’ll sell millions, not that they’ll be embittered club singers scuffling for a £100 gig - even though the odds point to the latter.

- Probability misperception. We over-estimate the likelihood of low probabilities (pdf), which is why we buy (pdf) lottery tickets.

What’s more, we know from other work that, especially where “superstar” markets exist, there is at least a possibility of a misallocation of labour; this sort of thing likes behind the decades-old complaints that the City diverts talent away from other occupations such as science or manufacturing.

All of which makes me fear that the X Factor might be contributing to what might be a serious problem, insofar as some young people do neglect their school work in favour of chasing dreams.

Comments

[Tom Addison]

"All of which makes me fear that the X Factor might be contributing to what might be a serious problem, insofar as some young people do neglect their school work in favour of chasing dreams."

I'll have to check with my 13 and 14 year old sisters, but from what I can gather that does seem to be the case (not with them, but with some of their school chums).

Shows like Glee only exacerbate the effects of X-Factor as well, makes people think that the most important thing in life is being able to sing and dance.

[Nick Rowe]

Chris: "In simple expected utility terms, a 1% chance of getting £2m a year is equal to a 50% chance of getting £40,000."

You didn't mean to say that. You meant: "In simple expected *income* terms,...".

[chris]

@ Nick - yes, I did. Thanks. In expected utility terms, my point is stronger, as the utility of being a footballer is greater than that of most £40k jobs.

[Earnest]

@chris - Possibly I'm misunderstanding you, but I don't see how it strengthens your point. Say that a footballer has salary 50 while the other job has salary 1, and that being a footballer (ignoring the money) has utility 10 while the other job has utility 1. These combine to give scores of 60 and 2, making being a footballer only 30 times better.

[Pinkie]

My experience of having three sons playing football at a high standard at a local level is that they had no overestimation of their likelihood of making millions. Similarly my daughter in dance and drama. They all had regular feedback about the extent of their talents, eg through using them competitively.

Perhaps some of their team-mates etc were deluded about their chances, but I never saw it. What I have seen is, however, kids who do not take part in any structured use or development of their skills who believe that somehow they will 'make it'.

It is all rather sad.

[Left Outside]

"All of which makes me fear that the X Factor might be contributing to what might be a serious problem, insofar as some young people do neglect their school work in favour of chasing dreams."

Exactly how do you square this with your "small truths, big errors" fallacy?

There will be small effects with regard to the availability heuristic and role models but does the X-Factor-factor differ significantly from the long-long-long lived tendency of people to want to become rock stars?

Didn't (and don't!) you want to become a rock star? So do I, so do many people. I don't think X Factor is significantly increasing that already large pool.

[chris]

@ LO - this might be a generational thing, but neither I nor my friends wanted to be rock stars, but then the best band of my youth was Kraftwerk. I do now tho - if Seasick Steve can make it in his 60s, there's hope for me.

[Tom Addison]

Ah yes, but a lot of Seastick Steve's success is down to his unqiue, loveable image. Have you got something similar in the pipeline?

[alastair harris]

hmmm, have you ever watched the auditions? The idea that x-factor contestants have devoted any time to learning how to sing is not demonstrated by the evidence.

[Thenewcomer]

What is worse is that practically all these superstars and pop stars peddle some version of "if you believe in it, you can do it"- "follow your dreams" and so on. They all make it sounds as if you want anything hard enough and work for it hard enough you can do it. I think there must be hundreds of pop songs on this idea (right now i can only think of the one by Eminem- but I know there must be more)