Thursday, October 02, 2008

Are you a Biller or a Player?

Excellent article by Arnold Kling and Nick Schulz. "Winner take most" markets, the upper-upper and upper-lower income gaps, and more.

Inequality and the Sergey Brin effect

...A final trend that promotes income inequality is that more Americans may be engaging in a kind of gambling behavior in their choice of occupation. They are increasingly choosing to play in winners-take-most tournaments, such as the contest to build the leading Internet search engine. For every Sergey Brin, there were thousands of software engineers who played in the search-engine contest and lost.

As best-selling writer and investor Nassim Nicholas Taleb points out in The Black Swan, safe occupations are those where the worker is paid a fixed amount per unit of time. An accountant or a nurse is not going to become extremely rich or extremely poor; they could be called “billers,” because they bill for their time. On the other hand, a professional singer or a software entrepreneur is playing in a winners-take-most tournament. The difference in talent between an international pop star and an unknown lounge singer may actually be quite small. However, the nature of these fields is that the difference in rewards can be enormous. People who choose these sorts of occupations could be called “players.”

1 comment:

Anonymous said...

I'm working on the hedge, where I bill enough to meet the basic needs while I gamble enough to make some headway upwards.

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