Friday, August 19, 2011

Nasri and money

Today brings us to a post by Forbes and Samir Nasri. The argument made is that anyone would move to another job at double the pay. Yes, entirely correct. Especially when you don't make footballer money.

The author says that Nasri is just like everyone else. He goes to work for three things: money, money, and money. This is just the same tired right wing thinking that the only utility function involves money and that people (all of them) maximize utility (money making!).

This is just an absurd argument. Yes, there are people that do this, but there are many more that use other variables to maximize their utility.

If you make the average wage and someone offers you double the money for the same job, of course you'd go! If you make more money in a week that most make in 2 years, isn't there a diminishing marginal return to money? How much is too much? How much is enough? Should Nasri be content making only $150K a WEEK? Or would he be twice as happy making $300K a week?

The thinking that people are out to maximize one variable just doesn't work in the real world. That idea is a simplification to make predictions. When I studied the behavior of people on eBay that used posted prices (fixed) versus an auction, many sellers used a fixed price offering to their own detriment. They responded that they think they know what the market is for an item and set it accordingly. Others said they just wanted to clear inventory and were willing to accept something less than market value.

The author sums up his argument as such:

"So, before falling into the cliche, knee-jerk reaction of calling Nasri (and others) a greedy so-and-so, we should perhaps consider the realities of life."

Yes, that poor life a star footballer has. How could he have fed his family on $150K a week? They (footballers), the author argues, have a short career and basically become unemployed after football. Sure, that's probably true of the marginal, every day type of player. They make some money. But they don't make star player money. And unless the star players are incredibly stupid (probably not a bad assumption), they're set for life after 4 years!

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