The Superstar Effect

Cal Newport has a guest post on Tim Ferriss' blog about the Superstar Effect.

When Michael, a student from Paradise Valley, Arizona, applied to Stanford, his G.P.A. put him in the bottom 10% of accepted students. His SAT scores fell similarly short. "Standardized testing isn't my strong point," he told me. Perhaps more surprising, Michael avoided the crushing course load that diminishes the will of so many college hopefuls, instead taking only a single AP course during the dreaded junior year. He kept his extracurricular schedule equally clean — joining no clubs or sports and dedicating his attention to no more than one outside project at any given time.

Michael's rejection of the no pain, no gain ethos surrounding American college admissions is perhaps best summarized by his habit of ending each school day with a 1 – 2 hour hike to the summit of nearby Camelback Mountain. While his peers worked slavishly at their killer schedules, Michael took in the view, using his ritual as a time to "chill out and relax."

Despite this heretical behavior, Michael was still accepted at Stanford. To understand why, I will turn your attention to a little-known economics theory that changes the way we think about impressiveness.

College admissions is an interesting game. I was a finalist for the Flinn scholarship, a generous program that aims to keep talented students in Arizona rather than losing them to Ivy League schools and coastal cities. I did not receive the scholarship, but for being a finalist I was still able to attend college in Arizona for free. Every year the three state universities compete with one another to try and attract Flinn scholars to their schools, so I was selected to help woo potential students at special recruiting events. I was able to see the resumes of the Flinn scholars, and much like applicants to Ivy League schools, it is not unusual for top students to have have more extra curricular activities listed than there are actually time for in a week.

The status competition in college admissions has progressed to the point where you need more than a 4.0 GPA on a scale of 0-4, and 5-10 extracurriculars. It is an arms race. The best way to win an arms race is to change the rules. As someone said in another context, "surprise is an event that occurs in the mind of an enemy commander", or a rival applicant. Michael Silverman achieved tactical surprise.

It is kind of funny that Silverman used a hike up Camelback mountain to relax. It is usually still pretty hot when school gets out in Paradise Valley. Most people who hike Camelback do it at 6 AM, not 3 PM. I suppose it could be relaxing if you were the only one up there.

In a 1981 paper published in the American Economics Review, the economist Sherwin Rosen worked through the mathematics that explains why superstars, like Pavarotti, reap so many more rewards than peers who are only slightly less talented. He called the phenomenon, “The Superstar Effect.”

Though the details of Rosen's formulas are complex, the intuition is simple: Imagine a million opera fans who each have $10 to spend on an opera album. They're trying to decide whether to buy an album by Florez or Pavarotti. Rosen's theory predicts that the bulk of the consumers will purchase the Pavarotti album, thinking, roughly: "although both singers are great, Pavarotti is the best, and if I can only get one album I might as well get the best one available." The result is that the vast majority of the $10 million goes to Pavarotti, even though his talent advantage over Florez is small.

Once identified, The Superstar Effect turned up in a variety of unexpected settings, from the sales of books to CEO salaries. It was found to apply even in settings that have nothing to do with financial transactions. In a particularly compelling example, a researcher named Paul Atwell, publishing in the journal Sociology of Education in 2001,studied the Superstar Effect for high school valedictorians.

Atwell imagined two students both with 700s on their various SAT tests. The first student was the valedictorian and the second student was ranked number five in the class. Rationally speaking, these two students are near identical — the difference in G.P.A. between the number one and number five rank is vanishingly small. But using statistics from Dartmouth College, Atwell showed that the valedictorian has a 75% of acceptance at this Ivy League institution while the near identical fifth-ranked student has only a 25% chance.

In other words, in many fields, it pays disproportionately well to be not just very good, but the best.

The key here is that it is easier to be the best if there isn't much competition. The GPA and extracurriculars competition is pretty well known and stagnant, so the race goes to those with motivated and wealthy parents for the most part. However, if you can find an uncontested field, the bar is lower. Newport says:

Notice that nothing about Michael's rise to stardom required a rare natural talent or overwhelming work load. His projects required, on average, less daily time investment than participating in a varsity sport. Yet, he was the best at what he did among all applicants to Stanford, and the resulting Superstar Effect earned him a disproportionate reward.

That Silverman was the best is something I totally agree with, but I'm not sure that I actually agree that this achievement did not require rare natural talent.  The ridiculous workload for the Ivy-bound is the mark of a mature competition among near equals. Easy work can be the result of either a light field, unusual talent, or both. Carl Lewis only spent 8 hours a week training for the 1984 Olympics. Most Olympians would be aghast, or jealous at that. Silverman probably has an unusual level of whatever it is that allows you to get things done. Given his unremarkable GPA and SAT, it is probably not conscientiousness or drive, but something else that you can find in successful businessmen.

This kind of achievement is actually not unheard of, but it is primarily the domain of Eagle Scouts [who are mostly LDS now]. 10 years ago I would have been pretty down on this kind of thing as opposed to purely academic achievements. Why wouldn't you just want to reward the smartest? Now that I have been out in the world, I can appreciate the business of business, and respect the kind of skills that a top salesman or executive possesses. The kinds of things generically labeled "leadership" activities by university admissions departments really are an important part of keeping the wheels from falling off our society. Oftentimes, those who are best at these things are not the smartest, but rather just smart enough to not get in the way. Being too smart can actually be a detriment.

h/t race/history/evolution notes