تجزیه و تحلیل اقتصادی رفتاری از ورود اضافی در صنعت بازارهای نیروی کار

Labor markets in the arts often have excessive supply. While economists have recognized that key reasons for excess entry are behavioral in nature, the issue has never been analyzed systematically or in depth. A behavioral economic approach is used to show how numerous known biases can lead to a larger number of entrants in arts markets than would occur in other markets. In addition, special attention is paid to unusual motivations for supplying labor. In particular, the role of intrinsic reward are broken down along with its implications on labor supply and product quality.

It has long been recognized by economists that labor markets in the arts often receive an excessive number of applicants (Santos, 1976, Towse, 1993, Throsby, 1994, Menger, 1999 and Abbing, 2002). High-entry rates are seen in a number of art markets. Unsolicited novel submissions greatly exceed the opportunity for success, with one estimate indicating that there are 15,000 novel submissions for every one offered a contract (Caves, 2000 and Greco, 1996). In fact, the stack of unsolicited manuscripts is so large for most publishers that it makes little economic sense to give them all consideration Hensher (2006). Towse (2001) estimates the ratio of trained singers to regularly working classical singers to be about 500 to 1. It is also fairly well known among the general public that there are a very large number of aspiring actors, screenwriters, musicians, etc. It has also been recognized by economists that some of the key reasons for excess entry are psychological in nature rather than originating from standard economic theory on labor market dynamics (for example in Towse, 1993 and Abbing, 2002). In fact, this observation goes back as far as to Adam Smith. However, the behavioral causes of excess entry in the arts (as well as in other endeavors) has only received off-hand mention as an aside in material primarily focusing on other topics. Other causes of excess entry have received slightly more attention. For example, Menger (1999) discusses excess entry from a sociological perspective and includes the role of intrinsic reward as well as discussing risk, but risk is discussed primarily as a matter of preferences, not a source of psychological bias. Frey (2003) discusses intrinsic rewards, and in particular the potential for extrinsic reward to “crowd out” intrinsic reward. A high entry rate in itself can be beneficial in many settings. In labor markets, it allows firms to be more selective across applicants, possibly leading to higher quality laborers hired or contracted. So what makes entry “excessive”? If markets clear and laborers are making optimal decisions in choosing to enter labor markets, then entry is generally not excessive, even if there are far more prospective laborers then openings. However, entry here is hypothesized to go beyond the point that is optimal for the laborers making the decision as well as the point that is socially optimal, primarily due to cognitive biases and incomplete information. When entry is caused by behavioral biases for the marginal laborer, the expected value of winning minus entry costs may actually negative but an agent inaccurately assesses the expected value to be positive. Therefore their entry is likely to be “excessive” in the sense that the costs of their entry will be greater than the expected benefits to the artist. Entry is considered excessive here if the marginal entrant results in net negative utility for the individual or a net loss in utility for society. This net loss in utility can occur due to behavioral biases, or it can be due to negative externalities caused by additional entrants. A larger number of entrants can actually lead to a decline in the expected quality of the winning contestant, particularly in the arts (Frank, 2008). This counterintuitive result occurs when there are significant errors in judgment and when the choice to enter is made by heterogeneous agents comparing their cost of entry to their expected benefit from winning. The result occurs because the marginal entrants as the pool size increases are of lower quality. Extremely high numbers of entrants in the arts can lead relationships to become too important in labor markets, leading to increased agency costs and biases in the selection process that ultimately reduce quality (Frank and Carlisle-Frank, 2009). The problem of excess entry has been discussed in other economic contexts such as industrial organization and game theory. For example, Vickrey (1964), Mankiw and Whinston (1986), Suzumura and Kiyona (1987), and Matsumura and Okamura (2006) all show that excess entry of firms occurs in a spatial model of the market. Excess entry has also been seen in game theory models (Anderson and Engers, 2007). The full scope of excess entry in the arts as a behavioral phenomenon has never been analyzed systematically or in depth. This paper attempts to bridge that gap by looking at a number of known biases and other reasons why art labor markets may have an excessive number of entrants. Such an analysis is beneficial for a number of reasons. First, analyzing the causes of excess entry can help to understand the dynamics of the phenomenon which is useful in prediction (for example, what will be the consequence of a change in the distribution of payoffs or technological change). Second, it helps to understand whether there are negative social consequences and how public policy can help to address these (for example, the role of public education on the topic). And third, it can help to identify what other markets are likely to suffer from the same issues. After a brief discussion of the features that make arts labor markets unusual, the remainder of the paper will analyze one by one the causes of excess entry in arts markets and what they imply for market dynamics. Special attention is paid to breaking down and examining the various types of non-pecuniary rewards in the arts and their implications. 1.1. Unusual characteristics of arts markets that encourage excess entry Specific causes of excess entry will be discussed in the next section. While laborers in all markets are subject to cognitive biases, certain characteristics of the labor markets for the arts cause it to be more susceptible to bias and other causes of excess entry. Other labor markets may also be particular susceptible to excess entry if they share these characteristics. These factors include: - Traditional/objective qualifications are of low relevance: Since formal qualifications, education, and experience tend to matter little in the arts ( Towse, 1993), subjectivity in self-evaluation of qualifications by artists is higher and more subject to bias. The lack of a formal career path also leaves the field open to all applicants (although these applicants may not in reality receive full consideration). For example, though it is likely many people would like to work as a CEO of a large corporation and think they could do a good job, they realistically know their lack of formal qualifications would eliminate them from consideration. - Quality highly subjective/multidimensional: Judgments of product quality vary greatly across individuals, increasing the opportunity for bias. This is even true among industry experts, where selecting what the public will like is highly unpredictable ( Caves, 2000). - Presence of low-quality, successful laborers: In addition to quality being subjective, it is possible that some dynamics in the arts lead to artists at times other than those of the highest quality becoming highly successful. Reasons can be complex, but various phenomena in arts markets that can lead to this outcome are described in Adler (1985), De Vany and Walls (2004), Frank and Carlisle-Frank (2009) and Frank (2008). - Winner-take-all markets: Extremely high payoffs to the most successful laborers combined with very low probabilities of achieving this level of success (i.e. winner-take-all markets as described by Frank and Cook, 1995) are common in the arts ( Menger, 1999) and feed into biases in judgment and preferences for lottery-like payoffs. - Information shortfalls: Fields which have a very specific and formal route for qualification (such as becoming a doctor or accountant) tend to have more information readily available on who is seeking to enter the field (once they have past a certain level), earnings, and process for getting a position. The low importance of formal qualifications, the large portion of people seeking to enter the arts who are unpaid, as well as the contingent and ephemeral nature of arts employment contributes to the low level of good information on entry and labor market dynamics ( Menger, 1999). The lack of information among applicants in art labor markets leads to greater possibilities of cognitive bias. - Non-pecuniary reward: The arts are known to have relatively high levels of non-pecuniary reward ( Abbing, 2002, Frey, 2003, Menger, 1999 and Towse, 2001). This implies that the arts also have a relatively low reservation wage. While this has been acknowledged in prior analysis of the topic, this topic receives a new level of scrutiny and analysis here to more closely examine the types of non-pecuniary reward and their implications. - Media attention: Producers of art are inherently of media interest and depend on the media for marketing their product. There will be a natural tendency for the media to focus on the artists that are most successful and that receive the largest payoff. Industries that receive this kind of media attention will tend to have more biased estimates of success probability and expected payoff.

A number of behavioral factors have been highlighted that can lead to excess entry in art labor markets. Many of these factors result from biases in decisionmaking. Most of these biases require information shortages in order to take hold (for example, information on process, competitors, and payoffs). Different types of intrinsic reward have different impacts on labor supply, with those with the least contingency (non-contingent and sometimes binary contingent) having the greatest chance to lead to market failure where there is chronic oversupply. Quality of output can be affected by intrinsic reward but the overall impact on quality is ambiguous. Addressing information shortfalls and debiasing is one public policy step that can mitigate the problem of excess entry. For example, public policy that promoted a research program to study the process, nature and size of competition and payoffs followed by aggressive dissemination of the results to the general public or to settings frequented by prospective artists could reduce the extent of certain myths thereby reducing the amount of bias. Firms may have a vested interest in maintaining a myth that all their artists are of top quality and that great artists do not fall through the cracks (along with such related myths that everything submitted receives full consideration and that connections/luck/etc. do not matter). However, at the same time, the industry and society at large may benefit from eliminating such myths. Therefore, there may be a case for public education that gives people a more realistic perspective of how popular arts markets function. However, such policies would do little to reduce excess entry caused by non-pecuniary rewards since these are not caused by a bias or information shortfall. Many countries heavily subsidize the arts. These policies are likely to exacerbate excess entry, as has been previously recognized. However, if subsidies provide only a subsistence level of income, they may provide opportunities for artists motivated intrinsically by “art for arts sake” to stay in the market, competing with more extrinsically motivated artists and possibly raising the level of product quality. Unlike most other industries where work is produced after becoming an employee of a firm, many artists labor on their products before knowing whether there is demand for it, producing novels, music, paintings, etc. only to find that the excess supply of labor has left little demand for their work. Therefore, excess entry causes wasteful effort on the part of artists that often results in disappointment and could be more productively spent on other endeavors. Excess entry can cause artists of lower quality to crowd the labor market. This is particularly likely when the causes of excess entry are related to artists misestimating their own quality, their competitors’ quality, and the level of competition. Quality is also likely to be reduced by excess entry if intrinsic motivations for artistic endeavors are systematically correlated with quality. The issues raised in this analysis are applicable to labor supply in other markets. In particular, industries that are similar to the arts in certain key characteristics are likely to be subject to excess entry for the same reasons. These key dimensions of similarity include: traditional/objective qualifications are of low relevance, quality is highly subjective/multidimensional, the presence of low-quality successful laborers, winner-take-all markets, information shortfalls, high non-pecuniary rewards, and media attention.