Cumulative Advantage, Or the Market Makes the Man
An April 15 New York Times Magazine Article wonders why media publishers are so spectacularly bad at predicting hits in advance. Why do companies know so little of our preferences for music or movies? Much of it may have to do with "cumulative advantage", the tendency for something that is getting popular to get the attention and, ultimately, the love of more fans. Some economists describe this as the "network effect", the tendency for some goods to get more attractive the more people are using it.
Carrying this logic forward, the authors suggest that although "it’s natural to believe that successful songs, movies, books and artists are somehow 'better' . . . than their unsuccessful counterparts," in the end what a given person finds "best" can have a lot to do with what other people are calling "best" and what people in the recent past have called "best". In short, then, markets not only reflect our preferences but also shape them. This complicates the work of publishers, marketers and economists who may be tempted to assume that people tend to make choices that reflect stable preferences. In some settings, it seems, they really don't.
That the authors put forth recent experimental findings to support this tendency should be satisfying to critical theorists and critics of capitalism, who have articulated complex theories for the ways a market economy manipulates and enslaves us. Those looking for accessible, concrete examples of the effects markets have on people should start with this article.
Carrying this logic forward, the authors suggest that although "it’s natural to believe that successful songs, movies, books and artists are somehow 'better' . . . than their unsuccessful counterparts," in the end what a given person finds "best" can have a lot to do with what other people are calling "best" and what people in the recent past have called "best". In short, then, markets not only reflect our preferences but also shape them. This complicates the work of publishers, marketers and economists who may be tempted to assume that people tend to make choices that reflect stable preferences. In some settings, it seems, they really don't.
That the authors put forth recent experimental findings to support this tendency should be satisfying to critical theorists and critics of capitalism, who have articulated complex theories for the ways a market economy manipulates and enslaves us. Those looking for accessible, concrete examples of the effects markets have on people should start with this article.
Labels: economics, media, nytimes
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posted by Burke Scarbrough at
00:24
1 comments
1 Comments:
Science Friday did a story a few weeks back about a company called
Platinum Blue that does exactly that: predict what songs will become hits. They have a pretty good track record (pun intended).
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