Academic journal article Economic Inquiry

Talent And/or Popularity: What Does It Take to Be a Superstar?

Academic journal article Economic Inquiry

Talent And/or Popularity: What Does It Take to Be a Superstar?

Article excerpt

The phenomenon of Superstars, wherein small numbers of people earn enormous amounts of money and dominate the activities in which they engage, seems to be increasingly important in the modern world (Rosen 1981. 845).


This, the opening sentence of Sherwin Rosen's seminal paper "The Economics of Superstars," applies today more than ever. Technological change has increased the scope and the intensity of the so-called winner-takes-all markets in the last decades. The central question addressed in this article is: What does it take to be a superstar? Why do some artists, media stars, professional athletes, or executives earn disproportionately high salaries while others receive comparatively low remuneration? In the literature, there are basically two competing--but not mutually exclusive--theories of superstar formation proposed by Rosen (1981) and Adler (1985). (1) Although Sherwin Rosen explains how small differences in talent translate into large differences in earnings, Moshe Adler argues that superstars might even emerge among equally talented performers due to the positive network externalities of popularity.

Empirical tests of the different driving forces of superstar salaries have proved to be very difficult because an objective measure of a star's talent is often hard to find and even harder to quantify (Krueger 2005). For example, what characterizes the talent of a pop music star? The literature offers different approaches. Hamlen (1991, 1994) uses the physical concept of "voice quality," which measures the frequency of harmonic content that singers use when they sing the word "love" in one of their songs--but is such a "high-quality" voice really a deciding factor for success in pop music? Krueger (2005) measures star quality by the number of millimeters of print columns devoted to each artist in The Rolling Stone Encyclopedia of Rock & Roll. Nevertheless, as he admits, this measure reflects the subjective importance the editors of the Encyclopedia implicitly devote to each artist, which may correlate both with the artist's talent and with his/her popularity. In team settings, the difficulty of accurately measuring star talent is even greater, as individual contributions to team output are mostly unclear. However, the empirical relevance of stars within teams is undoubted. Star CEOs in top management teams, lead singers of rock bands, and star athletes on sports teams are just a few examples of superstars embedded in teams.

This article argues that rank-order tournaments in professional sports allow a more accurate determination of talent than in the arts. Even though each athlete's performance is also affected by random events (luck) or other factors like weak fitness, in individual sports it can typically be assumed that the most talented athlete enjoys the highest probability of winning. As we examine superstars in a team setting, namely in professional soccer, we first estimate a team production function to identify the playing characteristics that significantly influence the probability of a team winning. To do so, we use the detailed statistics of the Opta Sports Data Company, which counts and classifies every touch of the ball during the game by each player. In a second step, we use the individual performance statistics of all variables that have proved to be critical for winning as indicators of the player's talent. We estimate the impact of talent, popularity, and various controls on the player's market value, employing individual panel data from the highest German soccer league. A player's popularity is measured by the annual press publicity he receives in over 20 different newspapers and magazines, purged of the positive influences of on-field performance so that our popularity indicator captures the nonperformance-related celebrity status of a player.

We find empirical evidence that both talent and nonperformance-related popularity increase the market values of soccer stars. …

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