Friday, September 2, 2016

The Happy Reality That Sports Stars Get Paid Much More Than School Teachers

Here’s a Don Boudreaux letter to a first-time correspondent:
Ms. Katie Montgomery
Ms. Montgomery:
I regret that you’re offended by my claim that “Only by thinking at the margin can we correctly understand why the wages of life-saving first-responders are lower than are the wages of NFL players and of Hollywood starlets and why this fact is a good thing for society.”  You allege that “Real people know it’s wrong and dangerous that men playing games get paid so much more than men and women who save lives and educate our children.”
I agree that most people are troubled that the likes of Tom Brady and Jennifer Lawrence earn far higher pay than does any firefighter or school teacher.  But this reality reflects not people’s correct understanding of a failing economy but people’s incorrect understanding of a successful economy.  It reflects also a failure of economists to better teach basic economics to the general public.  So let me ask: would you prefer to live in a world in which the number of people who can skillfully fight fires and teach children is large but the number of people who can skillfully play sports and act is very tiny, or in a world in which the number of people who can skillfully fight fires and teach children is very tiny but the number of people who can skillfully play sports and act is large?
I’m sure that you’d much prefer to live in a world in which skills at fighting fires and teaching children are more abundant than are skills at playing sports and acting.  Precisely because saving lives and teaching children are indeed far more important on the whole than is entertainment, we are extraordinarily fortunate that the numbers of our fellow human beings who possess the skills and willingness to save lives and to teach children are much greater than are the numbers who can skillfully play sports and act.
The lower pay of fire fighters and school teachers simply reflects the happy reality that we’re blessed with a much larger supply of superb first-responders and educators than we are of superb jocks and thespians.  Were it the other way around, then while we’d be better entertained with more top-flight sporting events and movies, all but the richest amongst us would suffer significantly greater risks of being unable to educate our children and of dying in house fires and from other mishaps.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

The above originally appeared at Cafe Hayek. 

RW note: This could change in the future for school teachers if technology develops to such a degree that great teachers can teach vast numbers of students via new technology all at the same time. If such advanced technology teaching, where superior teachers can reach vast numbers of students simultaneously, those superior teachers will earn superstar salaries,

At such time. perhaps, young students would only require something akin to monitors and babysitters to ensure that a program is up and running properly on a laptop computer---and no monitor for older students.

This is probably not that far away. Great work is being done in this direction now by Gary North and Tom Woods for example.

Markets change as circumstances change--including the changing circumstances caused by the advancement of technologies.

This is what ultimately needs to be understood: Markets operate to deliver the most efficient product given the environment.  

Up until recently, teaching was pretty much a one-to a small group affair. Sports, where via television the large masses can watch the greats, has been operating on a  different formula for some time. The greats get paid large salaries because they perform for huge masses. 

With on-demand courses via the internet, something along these lines is developing in education. instead of  "one-to a small group" it will be "great teachers to many."

And the cost of employing these great teachers will likely bemuch  less on a per student basis than the current "one-to a small group" model.


  1. I agree with your use of the law of supply and demand but you could not have chosen two worse examples than fire fighters and school teachers. These professions are valued so low that they use government to force people to pay them and school teachers actually force people to use their services with truancy laws. In fact the use of these examples hurts your case since the law of supply and demand undistorted by politics might result in much lower numbers maybe even as low as those employed in the entertainment industry.

  2. I realize that the point was that people that do important stuff should be paid the better than someone that does entertaining stuff, but I can't help notice how the original author makes it sound as though fire fighters and teacher are in an equivalent boat financially. Teachers and Fire Fighters are worlds apart in terms of compensation. A firefighter makes close to 2x what a teacher does and has a retirement plan that is closer to that of a mid market company CEO than a school teacher. My good friend retired as a 25 year fire fighter at the old age of 49 with a retirement package according to his financial advisor, worth about $5.5million. He will make a six figure income for the rest of his life that increases by 3% every year. He also left with a drop payment close to $1million in deferred comp. Comparatively, teachers where I live top out around $86k and can retire at 58 with a pension paying them about $46k annually and a drop payment of $250k. Not anywhere close to a cop or firefighter but far more than the average taxpayer paying their wages.

  3. Athletes and actors are in great supply. Just few that are good enough that millions of people pay to see. But also how society values things. People use government to force other people to pay for firefighters and teachers while they spend their own money on entertainment. Firefighters and teachers are often very good at extracting taxpayer wealth for themselves. Not in all cases, but many are.

    Another aspect is the final customer knowing your name. Another advantage of actors and athletes. An engineer could make a wonderful product that millions buy but when the public doesn't know his name he has little leverage for compensation. People don't buy the products because of his name. The corporation often thinks they can find someone else who will do the same for less. It doesn't matter if they won't or don't they usually have the perception they can and the public doesn't realize the difference until several product cycles later.

  4. RW - Your note that the future will bring teacher superstars is by far the most exciting part of this post. North and Woods are right on the money. Bring on THE WRATH OF KHAN!!!!

  5. RW: There are already superstar teachers pulling down 7-figure paychecks. Just not in the US. It's happening right now in several countries where the culture values education much more highly than here: