Book Review: The Winner-Take-All Society

If you have ever wondered why bankers or company CEOs get paid so much or why it is that soccer clubs around the world are going bankrupt while some of their slightly above average players earn more in a week than most of us do in a year, then The Winner Take-All Society is the book for you. What you should know straight away is that this book was first published in 1995 and perhaps it is because the authors, economists Robert Frank and Philip Cook got it so right back then, that the publishers decided to bring out an updated edition.

The book essentially breaks into two parts. The first explains how winner-take-all markets come about, it looks at the pace with which they have been growing in a global and technologically-connected world and it looks at how this creates an enormous gap in income between rich and poor. The core reason why winner-take-all markets have grown is that the market for talent is now characterised by high levels of information and labour mobility. So for example, a top CEO can now not only move to another firm in the same industry but can move across industry and geographic boundaries. Each move brings a big pay rise. And if you want a top executive to stay you need to give him/her a pre-emptive rise in salary. Either way executive salaries shoot upwards. The same thing has been happening in movies, music, sport, modelling and in the worlds of ‘unknown celebrities’ such as law, medicine, consulting and yes even academe!

The second part of the book looks at the economic consequences of this income and wealth inequality. For example, the authors argue that winner-take-all markets attract talent far out of proportion to their contribution to national output. Witness how fields like science and engineering have struggled to attract interest while our best and brightest compete to become hedge fund traders. And we don’t need reminding of the societal impact of the excesses of the finance industry. A variety of other consequences are explained ranging from why athletes often pay with their lives to reach the top to why media industries seem be obsessed with finding outputs such as books and movies from celebrities. In short, this is a highly accessible and well-argued read that is a book for our time.

Book Review: Spent

Do we really understand what motivates consumers? Do consumers themselves understand what drives them to behave in the ways that they? Evolutionary psychology is a branch of social science which argues that we have inherent underlying motives which we may or may not be aware of that drives our thinking and actions. Grounded in a Darwinian view of the world, it argues that our minds have evolved via natural and sexual selection in the same manner as our physical bodies and that the results of this evolution are powerful drivers of how we behave.

Spent: Sex, Evolution and the Secrets of Consumerism by Geoffrey Miller, first published in 2009, is an excellent and accessible introduction to this emerging field. Miller is a Professor of Evolutionary Psychology at the University of New Mexico and he has written an engaging, humorous and insightful book on how evolutionary motives drive our consumption behaviour. Evolutionary psychologists generally focus on four core motives, namely, reproduction, survival, kin selection and reciprocation and the primary focus of Miller’s book is the former. He demonstrates how a significant component of consumption is essentially fitness signalling to attract friends or mates in a manner analogous to the peacock’s tail or lion’s mane. In an interesting cost analysis he shows that the basic essentials for life (air, water, rice) are practically free while those that signal fitness (everything from lipstick, a Rolex or an iPod full of songs) command a significant premium. Proponents of sustainability will find this argument particularly compelling as fitness signalling, by definition, has to be wasteful in order to be effective.

The core of the book then moves on to examine the central six personality dimensions of general intelligence, openness, conscientiousness, agreeableness, stability and extraversion and how large swathes of consumption is driven by attempts to display some or other of these traits. At the core of Miller’s argument is that we do not need to consume in order to demonstrate these traits and that we have evolved capacities such as language, humour, creativity and kindness that we can use to display our traits. In short, this book is a potent blend of psychology and marketing and is highly recommended to anyone with an interest in either of these topics. Marketers have only recently begun to recognise the potential of evolutionary psychology but it is likely to have a significant influence in the field in the years ahead.