Why Sports Superstars Are Liked and Others Might Not Be

Kenneth Rogoff asks why we like highly-paid superstars in entertainment and sports but don’t like superstars in other fields, especially finance and business:

What amazes me is the public's blasé acceptance of the salaries of sports stars, compared with its low regard for superstars of business and finance. Half of all NBA players' annual salaries exceed $2m, more than five times the threshold for the top one per cent of household incomes in the United States. Because long-time superstars such as Kobe Bryant earn upwards of $25m a year, the average annual NBA salary is more than $5m. Indeed, Lin's salary, at $800,000, is the NBA's "minimum wage" for a second-season player. Presumably, Lin will soon be earning much more, and fans will applaud.

Yet many of these same fans would almost surely argue that CEOs of Fortune 500 companies, whose median compensation is around $10m, are ridiculously overpaid. If a star basketball player reacts a split-second faster than his competitors, no one has a problem with his earning more for every game than five factory workers do in a year. But if, say, a financial trader or a corporate executive is paid a fortune for being a shade faster than competitors, the public suspects that he or she is undeserving or, worse, a thief.

Sadly he doesn’t cite any evidence for this; it’s probably self-evident at this point that financiers are less well-liked than entertainment and sports figures as a class, but he cites no data that business executives are widely disliked.

But I’d make a very simple argument as to why people like entertainment and sports figures and don’t like financiers terribly much: the value that sports and entertainment superstars deliver is much more clear than that of financiers, who as Rogoff notes are possibly zero-sum (at best, some might argue). And, as for business executives, it’s not clear what their value is at any given time—after all, American business executives are much more highly paid than their European and Asian counterparts; are American business executives that much better than their international peers? There’s no data on this, but it can be argued. Meanwhile, despite the influence of stuff like Moneyball, it’s nevertheless abundantly clear that players like LeBron James, Dwyane Wade, Kevin Durant, Dwight Howard and Derrick Rose are among the best 10 players in the world—I would near guarantee that all of the preceding players would appear on all of the lists of a poll of the most informed basketball people. Now, if you tried to repeat the exercise of the most informed business people, would there be a consensus of the 10 best business executives in the world? Would someone like Carlos Slim appear on the list, despite the source of his wealth (essentially because of the cartelization of the Mexican economy)? Some nontrivial percentage of business wealth in the world has been derived because the owners of wealth have obtained it in unsavory if not illegal methods. Those business superstars who are perceived to have gotten their wealth fairly are widely admired and celebrated--see Jobs, Steve.

Rogoff tries to sidestep this problem by noting that sports teams often obtain their money by inefficient means—for example, lobbying for public money for arenas—but this is a different question than whether sports players derive their money from unfair means. In other words, his argument doesn’t hang together, from beginning to end.