The Superstar Phenomenon
We’ve looked at how factors like education, compensating differentials and ability, effort and chance create wage differences, but these factors alone cannot explain the huge wage difference between someone like Brad Pitt and someone who works as a hairdresser.
The ‘Superstar Phenomenon’ explains how a celebrity like a singer or an athlete can earn exceptionally high incomes. Of course ability, effort and chance play a large part – Justin Timberlake or Lionel Messi would not be as successful as they are without talent, ambition and a bit of luck – but the key to their exorbitant wages is that they work in markets that are accessible to millions, and where the customer is always willing to pay to enjoy their product.
The ‘Superstar Phenomenon’ explains how a celebrity like a singer or an athlete can earn exceptionally high incomes. Of course ability, effort and chance play a large part – Justin Timberlake or Lionel Messi would not be as successful as they are without talent, ambition and a bit of luck – but the key to their exorbitant wages is that they work in markets that are accessible to millions, and where the customer is always willing to pay to enjoy their product.
For example, if someone’s favourite singer is Justin Timberlake they’ll be willing to pay more for his CD, rather than pay less for a CD by another artist that they won’t enjoy. Similarly a football fan will pay for expensive football tickets to see Lionel Messi play, rather than pay less to see a second division team simply because the tickets are cheaper. On the other hand, a hairdresser, no matter how talented, can only supply their service to so many people in one day.
Therefore, actors, musicians and sports superstars can earn these massive incomes because their markets are not limited.
They can produce a product/service which can be broadcasted to an almost unlimited market, whereas people who work as builders cannot earn nearly as much no matter how talented they are, because they can only supply their service to a limited market.
Therefore, actors, musicians and sports superstars can earn these massive incomes because their markets are not limited.
They can produce a product/service which can be broadcasted to an almost unlimited market, whereas people who work as builders cannot earn nearly as much no matter how talented they are, because they can only supply their service to a limited market.