Signaling Rules: Today Hollywood, Tomorrow the World
By Bryan Caplan
My dear friend and colleague Tyler Cowen thinks the signaling model of education is, roughly speaking, empirically irrelevant. He’s repeatedly urged me to stop barking up what he sees as a very wrong tree. I was pleasantly surprised, then, to see that when he analyzes the role of nepotism in Hollywood, he takes my “diamonds in the rough” problem seriously:
a talent selection system with many different levels of filters and
many, many applicants and also few winners. The first level could be
something as simple as “does anyone even look at your photo shoot or ask
you for an audition?” Let’s also say that nepotism gets you past the
first filter, or maybe a bit more, but not past the final filters. They
won’t let you star in a movie just because you’re Goldie Hawn’s
daughter (by that time most of her clout is gone). Nonetheless
relatives of famous actors, actresses, etc. still will end up
considerably overrepresented on the screen.
There is also someone known who can vouch for you, albeit not always with
perfect credibility: “Believe me, if you give my brother this role, he won’t
ruin the movie promo efforts with a cocaine addiction.” And so on.
You will be remembered more easily: imagine a director saying “hey for this
bit part, why don’t we get what’s-his-name, you know the brother of
[xxxx].” It is then easier to work your way up.
All perceptive and plausible, Tyler. But if you admit that true worker productivity is very costly to observe in Hollywood, if you see a long list of fallible filters in play, why are you so closed to the possibility that the same kinds of problems and the same kinds of imperfect solutions permeate the rest of the labor market? Finding diamonds in the rough may be especially difficult in Hollywood, but don’t good job openings throughout the economy routinely attract hundreds of resumes?
The parallel is clear: If you apply for a good role in Hollywood, your head shot ends up in the trash unless you know a Hollywood insider; if you apply for a good job outside of Hollywood, your resume ends up in the trash unless you have a college degree.