superstar

The stochastic superstar economy

PNRJ critique of neoclassical economics, current events, futurism, inequality , , , , , , , , , , , ,

May 17 JDN 246178

Why do I make less money than, say, Mr. Beast (who now has a game show, apparently)?

The proximal answer to this question is obvious: He has a lot more people viewing his content, so he can sell ads that make him enormous amounts of money.

But that still leaves a deeper, more ultimate question unanswered:

Why are so many people interested in that?

Mr. Beast’s first truly viral YouTube videos was literally just him counting, one by one, from 1 to 100,000. He edited the footage to speed it up slightly so that the 40-hour ordeal would fit within a 24-hour video.

This is something that literally anyone could do that literally no one benefits from.

I also can’t imagine it was particularly entertaining to watch! Like, maybe he made it a little more entertaining than you might at first imagine (I don’t know; I have no desire to watch the actual video), but I still can’t imagine it would rate among even the top 100 most interesting things to do with 24 hours—or even the top 100 most interesting things that I could do right now from the comfort of my own home.

Right now you might be thinking I’m bitter about this, but if I am bitter, it is at our economic system as a whole; I harbor no ill will toward Mr. Beast in particular, who is actually something of a philanthropist. What I really am is utterly confused.

I don’t understand why anyone—let alone millions of people—would choose to watch that video. (Though it’s a bit easier to understand if you recognize that most viewers surely did not watch the entire thing.) I don’t understand how a man can make a highly successful career doing stupid stunts on video.

And I’m also quite certain that if I, right now, tried to do some similarly stupid stunt and post it on YouTube, it would get maybe a few dozen hits and nothing more would come of it.

Maybe Mr. Beast has something I don’t: A charm, a charisma, a salesmanship. Maybe he is spectacularly persistent in a way that I really can’t be (one certainly must be that to count to 100,000!). He likely is utterly unfazed by rejection, while I am severely oversensitive to it. So I’m not making the claim that there is nothing about Mr. Beast’s individual characteristics or talents that contributed to his success.

But I think it’s pretty clear at this point that the most important reason for Mr. Beast’s success is in fact no reason at all; his video is just the one that happened to go viral at that particular moment, and he managed to leverage that publicity into making yet more viral videos until he could become a multi-millionaire for doing stupid stunts in front of a webcam.

He is what I propose we call a stochastic superstar.

His success is not driven by talent, or intellect, or expertise; it is driven by luck. A million others have tried to imitate his exact methods and failed, not because they were any worse at it—but because he did it first.

This phenomenon is not entirely new; it certainly can be traced back at least as far as any form of mass media; radio and TV stars were often famous for no other reason that they were famous.

But I think it’s pretty clear that the Internet, and social media in particular, have made it much easier to become a stochastic superstar. Arcane, mysterious algorithms promote some content over other content in ways that hardly anyone—or perhaps literally no one, if LLMs are now involved—fully understands, and thousands of people doing basically the same thing get zero compensation for it, while one becomes rich and famous for no apparent reason.

This is not a healthy way to run an economy.

Yes, it certainly results in creating a lot of content, some of which is genuinely valuable. (Mr. Beast would not be high on my list of that either.) The Internet is an unfathomably grand and diverse place, and if you know where to look you can learn about almost anything in the world; or, you know, you can be fed complete misinformation and come away with fundamental misconceptions. Or you can just watch cat videos, which I’ll admit add some joy to the world, but probably not nearly enough to justify the amount of effort and time spent creating and viewing them.

It’s bad enough that glorifying superstars glorifies risk; but at least superstar athletes are objectively in peak physical condition and are the best players at the games they play. (I still don’t really get why people invest so much in these games, but whatever.) But it isn’t even clear that viral YouTubers are producing the best video content; they are just somehow producing the most successful video content in a way that seems basically orthogonal to actual quality or value for society.

I think this should lead us to a very important question:

Are there other systems we could use to compensate people for content?

What if ad revenue was divided evenly between all contributors to a platform, rather than just those with the highest view rates? Or what if there was some benefit to getting higher views, but there was some sort of mechanism to reduce the income inequality generated this way, like paying higher rates for views when you have fewer total views (e.g. $0.01 per view for the first 1000, $0.009 for the next 10,000, $0.008 for the next 100,000, etc.)? (Are there perverse incentives here, too? Surely. But are they worse than what we have right now?)

What if we didn’t run ads at all, but instead people paid microtransactions to subscribe to content? Patreon already sort of does this (and my Patreon is also an utter failure), but I think the transactions still aren’t micro enough. I want people to pay $0.05 to read an article—because that’s all the ad revenue they would give by reading that article anyway. Nobody should have to pay $5 to read what advertisers only pay $0.05 for. I want you to be able to see the title of a blog post and a brief snippet, and think, “Sure, I’ll pay a nickel to read that.” I don’t want you to have to decide whether you’re willing to commit to subscribing for an entire month for $5.

I would like to believe, at least, that people would be more willing to pay $0.05 to read good journalism and serious intellectual content, rather than a random guy counting to 100,000 for no reason. But even if that’s not true, at least we wouldn’t be so constantly inundated by ads!

Or what if social media platforms were maintained as public infrastructure, not yielding profits to any corporation, and instead of running ads, their hosting costs (which really are not all that high; I pay for my own hosting on this blog, for instance) were covered by tax revenue? Or what if you simply paid a subscription to use the social media site, and it was no longer used to harvest your data and target ads to you?

With an alternative system like one of the above, stochastic superstars would still be able to get famous randomly, and there are benefits (and drawbacks) that come directly from being famous; but maybe at least there would be fewer multi-millionaire YouTuber superstars and more ordinary people who are better able to make ends meet by contributing content.

But who am I kidding? This system works great for the billionaires who run it (who makes the real money off YouTube? Not Mr. Beast—Sundar Pichai.), and our government has shown very little interest in doing anything that would reduce their wealth and power. So, we can expect this, and everything else, to continue to get worse in exactly the way that cyberpunk fiction explicitly warned us it would, and our government continuing to do absolutely nothing about it!

This is fine.

Glorifying superstars glorifies excessive risk

PNRJ core principles, financial advice, inequality , , , , , , , ,

Apr 26 JDN 2458964

Suppose you were offered the choice of the following two gambles; which one would you take?

Gamble A: 99.9% chance of $0; 0.1% chance of $100 million

Gamble B: 10% chance of $50,000; 80% chance of $100,000; 10% chance of $1 million

I think it’s pretty clear that you should choose gamble B.

If you were risk-neutral, the expected payoffs would be $100,000 for gamble A and $185,000 for gamble B. So clearly gamble B is the better deal.

But you’re probably risk-averse. If you have logarithmic utility with a baseline and current wealth of $10,000, the difference is even larger:

0.001*ln(10001) = 0.009

0.1*ln(6) + 0.8*ln(11) + 0.1*ln(101) = 2.56

Yet suppose this is a gamble that a lot of people get to take. And furthermore suppose that what you read about in the news every day is always the people who are the very richest. Then you will read, over and over again, about people who took gamble A and got lucky enough to get the $100 million. You’d probably start to wonder if maybe you should be taking gamble A instead.

This is more or less the world we live in. A handful of billionaires own staggering amounts of wealth, and we are constantly hearing about them. Even aside from the fact that most of them inherited a large portion of it and all of them had plenty of advantages that most of us will never have, it’s still not clear that they were actually smart about taking the paths they did—it could simply be that they got spectacularly lucky.

Or perhaps there’s an even clearer example: Professional athletes. The vast majority of athletes make basically no money at sports. Even most paid athletes are in minor leagues and make only a modest living.

There’s certainly nothing wrong with being an amateur who plays sports for fun. But if you were to invest a large proportion of your time training in sports in the hopes of becoming a professional athlete, you would most likely find yourself gravely disappointed, as your chances of actually getting into the major leagues and becoming a multi-millionaire are exceedingly small. Yet you can probably name at least a few major league athletes who are multi-millionaires—perhaps dozens, if you’re a serious fan—and I doubt you can name anywhere near as many minor league players or players who never made it into paid leagues in the first place.

When we spend all of our time focused on the superstars, what we are effectively assessing is the maximum possible income available on a given career track. And it’s true; the maximum for professional athletes and especially entrepreneurs is extremely high. But the maximum isn’t what you should care about; you should really be concerned about the average or even the median.

And it turns out that the same professions that offer staggeringly high incomes at the very top also tend to be professions with extremely high risk attached. The average income for an athlete is very small; the median is almost certainly zero. Entrepreneurs do better; their average and median income aren’t too much worse than most jobs. But this moderate average comes with a great deal of risk; yes, you could become a billionaire—but far more likely, you could become bankrupt.

This is a deeply perverse result: The careers that our culture most glorifies, the ones that we inspire people to dream about, are precisely those that are the most likely to result in financial ruin.

Realizing this changes your perspective on a lot of things. For instance, there is a common lament that teachers aren’t paid the way professional athletes are. I for one am extremely grateful that this is the case. If teachers were paid like athletes, yes, 0.1% would be millionaires, but only 4.9% would make a decent living, and the remaining 95% would be utterly broke. Indeed, this is precisely what might happen if MOOCs really take off, and a handful of superstar teachers are able to produce all the content while the vast majority of teaching mostly amounts to showing someone else’s slideshows. Teachers are much better off in a world where they almost all make a decent living even though none of them ever get spectacularly rich. (Are many teachers still underpaid? Sure. How do I know this? Because there are teacher shortages. A chronic shortage of something is a surefire sign that its price is too low.) And clearly the idea that we could make all teachers millionaires is just ludicrous: Do you want to pay $1 million a year for your child’s education?

Is there a way that we could change this perverse pattern? Could we somehow make it feel more inspiring to choose a career that isn’t so risky? Well, I doubt we’ll ever get children to dream of being accountants or middle managers. But there are a wide range of careers that are fulfilling and meaningful while still making a decent living—like, well, teaching. Even working in creative arts can be like this: While very few authors are millionaires, the median income for an author is quite respectable. (On the other hand there’s some survivor bias here: We don’t count you as an author if you can’t get published at all.) Software engineers are generally quite satisfied with their jobs, and they manage to get quite high incomes with low risk. I think the real answer here is to spend less time glorifying obscene hoards of wealth and more time celebrating lives that are rich and meaningful.

I don’t know if Jeff Bezos is truly happy. But I do know that you and I are more likely to be happy if instead of trying to emulate him, we focus on making our own lives meaningful.