Let’s play a game. I will name two forms of football and you tell me which you think offers better incentives to players. On the one hand is soccer, the world famous sport which receives huge funding from sponsorship, merchandise and ticket sales. This allows large investment in the sport and the ability to pay good (sometimes even exorbitant) wages. On the other hand is Gaelic Football, played only by Irish people mainly in Ireland. Unlike soccer, it is an amateur sport and none of its players get paid. All athletes must also have full time jobs, meaning they can only train in the evenings after work.
This should be obvious. Soccer can provide a livelihood at basic and huge wealth at best. Skill is rewarded and teams fight with each other to entice the best players with generous salaries. Gaelic football does everything it can to suppress market forces, even forbidding the transfer of players from teams. It’s obvious that people respond to incentives, so the best players will naturally be drawn to where their skill is best rewarded. It’s crazy to think that people will put in the necessary investment of time and effort without proper economic incentive, that was revealed as nonsense with the collapse of the Soviet Union and a dozen other examples first year students learn in their first economics lecture. Both forms of football are broadly similar, so there are no large barriers stopping people from switching sport (soccer is probably one of the easiest sports to pick up). Surely Gaelic football is just another traditional feature that was good in its day, but couldn’t withstand the tide of market forces. Right?
Contrary to what you would expect, Gaelic Football not only survives, but it thrives, while soccer in Ireland is embarrassingly small. Every village in Ireland (and many places too small to be even called a village) has its own Gaelic football club (and a hurling club too, a similar traditional Irish sport that is also amateur). Enormous numbers of young people take up the sport every year far outpacing all other sports. On the other hand there are few soccer clubs outside the cities and even most schools don’t even have a team. Every summer, more than 80,000 people cram into Croke Park for the All-Ireland Football Final, which is more than the Super Bowl, basketball or baseball games and rivals even top English soccer matches (despite the massive population differences). The whole All-Ireland Football Championship has an average attendance of 19,000. In contrast the FAI Cup (the top soccer championship) Final had an attendance of 17,000 while the League of Ireland has an average attendance of 1,800 for its games.
How does this happen? How are people so blind to incentives? Why would someone willing ignore a career that rewards their skill and choose one with literally no economic reward. The belief that people respond to economic incentives is one of the key economic teachings hammered into the heads of economic students. Asking an economist to imagine a world where people didn’t respond to incentives is like asking a theologian to imagine a world without God, both shudder at the thought and insist it would be a chaotic world where their jobs would be meaningless.
So much of economic theory is based on the idea that people respond to incentives, the key ones being profit and wages. Many economists will tell you that the reason capitalism is successful and we all have such high living standards is because it is able to incentivise people, whereas other forms like socialism, give people no reason to produce, so they don’t. There is even a whole industry of pop economics books built around taking ordinary situations and examining what economic incentives apply. Most economic debate revolve around this, many people claim that if the rich are taxed too high, they won’t innovate or use their skills which will harm society. If wages are too high (through unions or a minimum wage) then businesses will have less incentive to hire people. The key belief is that to get people to work and be productive, you have to use money to incentivise them.
But if you think about it, this doesn’t make sense. The simple fact is that most people’s income is unrelated to their productivity. Most people are paid a fixed salary based on how many hours they work, not how much they produce. Their wage is set in advance and they receive it regardless of how much or little effort they put in. In the vast majority of jobs, it is not possible to measure an individual’s productivity or even monitor if they are doing their job. Furthermore, most jobs pay a wage based on the tasks of the employee, even though it is obvious that not everyone will do the task equally well. There is only the weakest relation between what workers give in productivity and what they receive in wages.
Think about the typical worker in a school, pub, hotel, office, shop etc. They get a fixed hourly salary regardless of how much work they do, so why do they work at all? Their wage is the same where the shop as busy as it is when empty, when they have clients and when they have none, when they smile at the customers and when they don’t. An office worker who spends all day browsing the internet gets the same wage as one whose nose is against the grindstone. So why don’t they just simply do the minimum to avoid being fired?
All of this is even leaving aside people who volunteer and work for little or no economic reward. To use another personal example, although my degree and work experience is in economics and finance, I’ve recently moved from Ireland to Slovakia to work as an Esperanto volunteer which certainly doesn’t make sense from an economic point of view (and maybe some other ones too).
Part of what got me thinking about this is the launch of YouTube Red, the introduction of voluntary charges for YouTube. Part of the justification is that some of the fee will go to content creators which will motivate them to create more content. However, an obvious problem is that YouTube already has an enormous number of people who spend thousands of hours over months and years creating content for little reward. Most even do it for free and few receive more than a pittance. Take this blog as another example. In the three and a half years I have been blogging, I have written more than 300 posts, all of which take several hours, usually half a day and sometimes even several days. But why? Where is my incentive? I don’t get a cent from it, it doesn’t advance my career (if anything employers would be less likely to hire an Atheist who wants to raise taxes). Why do I put so much work into something without any tangible reward?
For most of my life I have been (usually condescendingly) told that while left wing politics sound good on paper, in reality they all fail because they don’t give people an incentive to work. With a metaphorical pat on the head, I would be told that people won’t work hard unless they are rewarded. Paying everyone the same wage (from socialism or high taxes) removes the incentive and turns us all into lazy dossers. But how is capitalism any different? Where is the incentive if even Capitalism doesn’t pay based on productivity?
So if people don’t have an incentive to work hard and get paid the same regardless, why does anyone bother? Why doesn’t everyone just do the bare minimum while the boss is looking and then doss off the rest of the time? Some people probably do, but most people work hard, harder than they need to. Part of it is human nature, working is part of our identity, it’s what we do. People would work even if they didn’t need to or didn’t even get paid, the fact is, it gives their lives meaning and/or helps others would be enough. People want to do a good job.
Let’s end where we began, why are Gaelic Footballers so determined despite not receiving any reward? Gaelic football is about more than money, at heart, it’s about pride. It’s about being proud of your hometown, your home county and making them proud of you. People play for their local club, with the people they grew up with, on their home soil. It’s about who you are and where you come from. Not only are the players not paid, but there is no support for paying them, even among players, as people feel this would cheapen the sport and replace its spirit with money. The economic incentive of a fat bonus pales in comparison with the pride and passion of representing your home.