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The Matthew Effect

They say an image is worth a thousand words so let me begin with this graph:
Perhaps my favorite saying of all time is "The only place success comes before work is in the dictionary"[1]. Few will argue that success is an increasing function of work, and I couldn't agree more. This said, the point I'm trying to make in this post is that, contrary to conventional wisdom, success is not proportional to work, as pictured in the above graph.

A couple years ago I read The Winner-Take-All Society by Robert Frank and Philip Cook. Despite having a bad content-to-length ratio in my humble opinion, the book got me thinking and sowed the idea of the graph. In a nutshell, its thesis is that due to mass culture and globalization, millions now have a small interest in the winner's performance, creating markets in which small differences in performance give rise to enormous differences in reward.

Perhaps this phenomenon explains in part the class frictions we witnessed lately (e.g. Occupy Wall Street). Looking at the graph, for an already successful person, a small increase in work produces a significant amount of positive outcome, while this is not necessarily true for someone struggling. The former might be tempted to tell the latter "just work more", overestimating the benefits that work would produce. Obviously the haves and the have nots will disagree on the degree of meritocracy of our society, because it is very much for one and very little for the other.

My friend Laurence expressed my thoughts even more clearly: "It's as if there was two attracting stable points (i.e. equilibria), and people were unlikely to go from one or the other, except perhaps following some exogenous factors (e.g. luck)".

The concept stayed on the back of my mind and I was surprised not to see it popping up more often in discussions (perhaps I was just looking at the wrong places), until I learned about The Matthew Effect a few days ago. The Matthew effect is a phenomenon coined by sociologist Robert K. Merton where "the rich get richer and the poor get poorer". The name comes from the Gospel of Matthew 25:29:

For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken even that which he hath.

The Matthew effect is not only true for wealth. Health is another example; it is easier for a fit person to get very fit than for a unfit person to get fit. Notice how the increase in the spread of the wealth level in the US is simultaneous to the spread in the health level, where people shown on television are fitter and fitter while the country faces an obesity epidemics.

- Alex, Jan. 9th 2013

1. Often attributed to Mark Twain or Vince Lombardi