The winner-take-all society : why the few at the top get so much more than the rest of us

Selected by Business Week as one of the 10 best business books of the year, this text is "a major contribution to the debate about the causes and consequences of inequality in America."--The New York Times Book Review. Penguin (Non-Classics) Front Cover 1 Title Page 4 Copyright 5 Dedication 6 Contents 7 Preface 8 Acknowledgments 10 1. Winner-Take-All Markets 12 Growing Income Inequality 16 The Misallocation of Talent 18 The Contest for Elite Educational Credentials 22 Contests for Relative Position in Everyday Life 25 Agreements to Limit Wasteful Competition 26 Some Winner-Take-All Markets Are Worse Than Others 27 Winner-Take-All Markets and Norms of Fairness 28 Media and Culture in the Winner-Take-All Society 29 The Challenges Posed by Winner-Take-All Markets 30 Does Greater Equality Necessarily Reduce Growth? 31 2. How Winner-Take-All Markets Arise 34 Wmner-Take-All Markets Defined 34 Mass Markets and Deep-Pocket Markets 37 The Contestants 37 Winner-Take-All Markets 37 Processes for Determining Wm ners 41 Sources of Winner-Take-All Markets 43 3. The Growth of Winner-Take-All Markets 56 Falling Transportation and Tariff Costs 57 Computing and Telecommunications 58 The Growing Role of English 63 Innovation 64 Production Methods 64 The Erosion of Rules That Limit Bidding for the Best 66 The Rise of Independent Contracting 68 Changes in the Level and Distribution of Income 68 The Amplifying Effect of Social Context 69 Countervailing Effects: The Boutique Movement 70 4. Runaway Incomes at the Top 72 Book Publishing 72 Professional Tennis 76 Executive Compensation 78 Business Consulting 83 Motion Pictures and Television 83 Fashion Models 88 College and Professional Team Sports 90 Prices of Luxuries 93 5. Minor-League Superstars 96 Trends in Inequality 97 Jobs That Pay Well 98 Explaining the Growth in Inequality 100 Jobs in Which Success Breeds Success 103 Applying the Winner-Take-All Perspective 105 6. Too Many Contestants? 112 Overcrowding Defined 113 The Overconfidence Problem 114 A Simple Winner-Take-All Economy 117 A More Realistic Economy 120 Winner-Take-All Markets and the Variability of Income 132 Implications for Tax Policy 132 Equity vs. Efficiency: illusory 'frade-off? 133 7. The Problem of Wasteful Investment 136 The Prisoner's Dilemma 137 The Positional Arms Race 138 Athletics 142 Earnings Forecasting 149 Advertising and Promotion 150 The Overworked American 153 Cultivating the Aura of a Winner 155 Some Exceptions 156 8. The Battle for Educational Prestige 158 Determinants of Educational Status 160 Benefits of High Academic Status 162 Trends in Concentration of Top Students 164 Concentration of Top Students 164 On-Campus Recruiting 167 The Educational Tracking Debate 169 Consequences of the Race for Academic Prestige 172 9. Curbing Wasteful Competition 178 Positional Arms Control Agreements in Sports 179 Social Norms as Positional Arms Control Agreements 183 Contracts as Positional Arms Control Agreements 188 Positional Arms Control Agreements in Education 189 Law and Public Policy as Positional Arms Control Agreements 191 Monogamy: The Ultimate Positional Arms Control Agreement 194 On the Horizon 195 10. Media and Culture in the Winner-Take-All Society 200 Cultural Markets Are Winner-Take-All Markets 202 How the Race to Achieve Quick Success Affects Quality 203 What's New? 209 Does the Quality of Culture Matter? 211 11. Old Wine in New Bottles 222 Tax Policy 223 An Ill-Advised Reform 229 Tort Refonn 230 Health Care Finance 231 Educational Finance 232 Information Remedies 236 Antitrust Policy 236 Leisure Policy 238 Media and Culture 239 Looking Ahead 240 Notes 244 Chapter 1. Winner-Take-All Markets 244 Chapter 2. How Winner-Take-All-Markets Arise 244 Chapter 3. The Growth of Winner-Take-All Markets 246 Chapter 4. Runaway Incomes at the Top 246 Chapter 5. Minor-League Superstars 248 Chapter 6. Too Many Contestants? 249 Chapter 7. The Problem of Wasteful Investment 251 Chapter 8. The Battle for Educational Prestige 252 Chapter 9. Curbing Wasteful Competition 253 Chapter 10. Media and Culture in the Winner-Take-All Society 254 Chapter 11. Old Wine in New Bottles 255 Bibliography 258 Index 272 Back Cover 285 ISBN-13:,9780140259957 ISBN-13: 9780140259957 In this book, two distinguished economists draw attention to an important and disturbing new trend that has dramatically transformed our economy in the last two decades: the spread of "winner-take-all" markets, where more and more people compete for ever fewer and bigger prizes. Such markets, where tiny differences in performance translate into huge differences in reward, have long been the hallmark of the performing arts and professional sports, where increasingly sophisticated recording technologies and the global reach of television have enabled millions to listen to and watch only "star" artists and athletes, leaving nothing for the also-rans. In recent years, however, winner-take-all markets have reached into virtually every part of the nation's economic life, spreading into such businesses as fashion, investment banking, and media; into professions like law and medicine; into higher education; and, increasingly, into management itself. While not for a moment denying that consumers have sometimes benefited - nobody has to listen to a second-rate soprano when virtually everyone can afford recordings of first-rate singers - Frank and Cook argue persuasively that, on balance, the result has been disastrous. They show how winner-take-all markets have dramatically widened the gap between rich and poor by concentrating all rewards among just a small handful of winners, and how they have lured some of our most talented individuals into socially unproductive and sometimes even destructive pursuits. Finally, in their relentless stress on winners - the bestselling novel, the blockbuster film, and so on - winner-take-all markets have diluted our culture in ways that many people find deeply disturbing.

In this pathbreaking book, the subject of considerable pre-publication, two distinguished economists draw attention to an important and disturbing new trend that has dramatically transformed our economy in the last two decades: the spread of "winner-take-all" markets, where marginal differences in performance translate into huge differences in reward.

Disney chairman Michael Eisner topped the 1993 Business Week chart of America's highest-paid executives, his $203 million in earnings roughly 10,000 times that of the lowest paid Disney employee. During the last two decades, the top one percent of U.S. earners captured more than 40 percent of the country's total earnings growth, one of the largest shifts any society has endured without a revolution or military defeat. Robert H. Frank and Philip J. Cook argue that behind this shift lies the spread of "winner-take-all markets"markets in which small differences in performance give rise to enormous differences in reward. Long familiar in sports and entertainment, this payoff pattern has increasingly permeated law, finance, fashion, publishing, and other fields. The result: in addition to the growing gap between rich and poor, we see important professions like teaching and engineering in aching need of more talent. This relentless emphasis on coming out on topthe best-selling book, the blockbuster film, the Super Bowl winnerhas molded our discourse in ways that many find deeply troubling. 1. Winner-take-all Markets. -- 2. How Winner-take-all Markets Arise. -- 3. The Growth Of Winner-take-all Markets. -- 4. Runaway Incomes At The Top. -- 5. Minor-league Superstars. -- 6. Too Many Contestants? -- 7. The Problem Of Wasteful Investment. -- 8. The Battle For Educational Prestige. -- 9. Curbing Wasteful Competition. -- 10. Media And Culture In The Winner-take-all Society. -- 11. Old Wine In New Bottles. Robert H. Frank, Philip J. Cook. Originally Published: New York : Free Press, 1995. Includes Bibliographical References (p. 247-260) And Index. Rabo Karabekian, the protagonist of Kurt Vonnegut's novel Bluebeard, is an abstract expressionist painter of modest renown ("a footnote in Art History," as he describes himself).