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Luck and the Cricket Labor Market

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"Luck and the Cricket Labor Market"

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Reader JG sent me this interesting IMF paper “A Lucky Start: If life is like cricket, then chance matters a lot in a successful career”. They start with the following problem:

The labor literature has found that obtaining a good first job yields many long-term career benefits, such as higher lifetime pay and status. If people were assigned first jobs randomly, this would imply a large role for luck in determining long-term career outcomes. But people are not assigned first jobs randomly. Those perceived to have high ability are likely to receive good initial job placements, and, to the extent that these perceptions are correct, are also likely to have successful careers. Because intrinsic ability is hard for the economist to observe, identifying the extent to which luck matters in labor markets is difficult.

However if we look at the special case of the labor market for cricket players, we can get around this. It turns out that having a good debut performance in an international test match has lasting career benefits. And it also turns out that cricketers experience a lot of home field advantage. What’s more, it’s possible to statistically separate out the degree to which one’s performance is attributable to home field advantage rather than other factors (including skill). It turns out that luck matters a lot. Selection committees turn out to be “prone to signal bias for both batsmen and bowlers” but especially for bowlers. What’s more, the opportunities opened up by a good debut performance seem to give cricketers the opportunity to build useful human capital.

The authors, Shekhar Aiyar and Rodney Ramcharan, conclude:

It would be wrong to generalize from this study to all other labor markets, but it does seem that luck plays a major role in shaping a successful debut performance, even though ability and hard work may augment that initial good fortune. Our results are therefore likely to disappoint purists from both camps—those who view success as a function solely of luck or ability. But we should add that the market for test cricketers differs from other labor markets in ways that should reduce the role of luck, not increase it. Consider that for those who select the test team, player performance is easily measurable, and differences in conditions in different countries are well known. In addition, the effort required for meticulous screening is presumably very low compared with the importance of getting the decision right. Nonetheless, selection committees appear to systematically penalize both bowlers and batsmen for the misfortune of debuting abroad—and systematically penalize bowlers more than batsmen. It would therefore seem likely that similar biases are widespread among employers of all kinds, for whom performance metrics are more ambiguous, differences in initial conditions harder to judge, and the decision itself unlikely to be second-guessed by millions of opinionated fans around the globe.

I think the idea of a purist who believes that career success is due solely to luck is strong man view, so I’ll take this as confirming my basic opinion that are society is structured around an idea of meritocracy that’s largely mythical and to a considerable extent impossible. Progressive taxes and more and better public services.

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