Monday, February 4, 2013

Endogenous acquisition of skills

A striking insight from Jeff Ely in his postThe Best At What They Do . He is looking at who are the best athletes independent of the constraints of a particular sport. If you are 7 foot, you make the grade for being a basketball player but you may not be all that great an athlete for a couple of reasons.
When you look at a competition where one of the inputs of the production function is an exogenously distributed characteristic, players with a high endowment on that dimension have a head start. This has two effects on the distribution of the (partially) acquired characteristics that enter the production function. First, there is the pure statistical effect I alluded to above. If success requires some minimum height then the pool of competitors excludes a large component of the population.

There is a second effect on endogenous acquisition of skills. Competition is less intense and they have less incentive to acquire skills in order to be competitive. So even current NBA players are less talented than they would be if competition was less exclusive.
Another way to look at this is who are the best athletes in sports which have the least restrictions based on exogenous factors? The fewer the barriers to entry, the greater the pool of competitors and therefore the greater the degree of competition on those attributes truly critical to success in that field.

Ely makes this seem a little cleaner than it is. Yes, basketball really does require height but just how critical is height and is there a breakpoint. The average NBA basketball player is 6 feet 7 inches but there is likely something of a normal curve around that average. Apparently, most players are at least 6 foot 3 inches. The shortest player was 5 foot 3 inches. So the breakpoint can be taken as either 5' 3" or 6' 3". I suspect that 6' 3" is the more reasonable breakpoint. At 6' 3", that is a breakpoint that does preclude a huge portion of the population.

What I want to do is try and frame Ely's insight into the issue of life success (health, wealth, and wisdom). Are there any biological attributes which materially enhance or degrade the probability of life success and the extent of life success? There are all sorts of interesting associations such as height and success, IQ and success, etc. but none of them have any real preclusionary function. There are large number of successful short people and large numbers of medium IQ at the top of the success curve.

When you think of what are the components of an individual's success it usually comes down to five elements 1) their values (what do they aim for), 2) their behaviors, 3) their skills and experience, 4) their portfolio of knowledge and, 5) their decision-making capacity.

None of these are in any obvious way biologically limited though there is a weak association between IQ and profession (Modern IQ ranges for various occupations) and between profession and income (May 2011 National Occupational Employment and Wage Estimates)

My inference is that there is close to an open market on life success with the five factors of values, behaviors, knowledge, skills and decision-making being the prime drivers of outcomes.

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