Relative Deprivation Theory & Local Hierarchies

Posted: February 8th, 2014 | Author: | Filed under: Uncategorized | 1 Comment »

What follows is a brief paper I wrote for my Microeconomics class a couple weeks ago. (I was the nerdy guy that turned in the writing assignment weeks before it was actually due, so I’ve been waiting to publish this post for a bit.)  I thought I would post it here because the topics discussed in the Malcolm Gladwell talk I reviewed were pretty fascinating, and sparked both internal contemplation and a few workplace conversations. Hope you enjoy.



One of the basic tenets of economics is the assumption that people operate in a rational manner, typically in a manner that is in one’s own best interest, given all available information.  In the video we watched, however, Malcolm Gladwell argues that this rational decision making can be interrupted, especially when there is an opportunity to attach/align oneself with what he calls an “elite institution”.

Having previously read both “Blink” and “The Tipping Point”, and integrated the learning received from each of those books into my professional life, I was very intrigued to see what Mr. Gladwell had in store for this lecture. Comparing the graduation rates of students among top universities, as well as lesser known institutions, he makes the case that achieving one’s goal (graduating with a four-year degree in this case) is not reflective of one’s universal aptitude, but rather one’s position within the local hierarchy. As shown by the case of students with similar Math SAT scores, those who attended schools where they were among the top ⅓ of their class graduated at a far higher rate than those who attended “better” institutions where their scores placed them in the bottom ⅓.

My initial thinking was that perhaps the fault laid with the admissions office, that possibly the higher institutions had gotten too lax in their requirements, and students who had been accepted were actually not sufficiently competent to handle the rigorous coursework once classes began.  This idea dissipated, however, as Gladwell went on to give the example of post-doctoral productivity among economists. Given these multiple supporting data sets, I am confident in the trend as analyzed, and highly interested in the applications this could have in other areas.

For example, earlier in my career I was in a managerial role where I was allowed to hand-pick my staff, building the team up over a number of years.  I had observed a trend whereby the newest team members typically out-performed their peers.  This trend held true for a number of years and several additions to the team.  Thinking now of Gladwell’s argument, I wonder if it is possible that employees who were previously among the “Top ⅓” had their performance impacted by bringing on newer staff at a higher aptitude, even though the existing employee’s skill set would not have been diminished.  In this case, it would seem illogical to strive to build a team of top performers, as it would inevitably push very competent team members down the hierarchy and reduce their productivity. (Of course, this could also speak in favor of specialization and diversification among the workgroup, so that such direct comparisons could not be made, and top performers could continue to excel by moving in directions where they were uniquely suited ahead of their colleagues.)

Bringing it back to Gladwell’s assertion that elite institutions can cloud our more rational thought processes, however, I am not entirely convinced.  While the data sets provided do demonstrate the power of relational deprivation within the academic setting, they do not build a strong enough case for elite institutions as an interruptive force. As we learned from Gary Becker, rationality is not the same for everyone; it is constrained by many factors, including access to information. I do not think that many Americans would have said the graduation rate trends described by Gladwell were what they expected. Rather, I’d think that most students and families would presume that, all other factors held constant, the difference in how likely they were to graduate didn’t vary that much between institutions, and that any marginal difference would be out-weighed by the prestige provided those who attended a top university. In the absence of empirical studies such as those cited in this video, the students and families involved did perhaps make the most rational choice.

Enhanced by Zemanta

One Comment on “Relative Deprivation Theory & Local Hierarchies”

  1. 1 RyanGPhx said at 11:56 pm on February 8th, 2014:

    New on RelevantWit: Relative Deprivation Theory & Local Hierarchies