The economics of prize-giving

Louis Menand writes in the New Yorker about literary prizes:

The Nobel Prize in Literature was the first of the major modern cultural prizes. It was soon followed by the Prix Goncourt (first awarded in 1903) and the Pulitzer Prizes (conceived in 1904, first awarded in 1917). The Academy of Motion Picture Arts and Sciences started handing out its prizes in 1929; the Emmys began in 1949, the Grammys in 1959. Since the nineteen-seventies, English says, there has been an explosion of new cultural prizes and awards. There are now more movie awards given out every year—about nine thousand—than there are new movies, and the number of literary prizes is climbing much faster than the number of books published. . . .

[James] English [author of “The Economy of Prestige”] interprets the rise of the prize as part of the “struggle for power to produce value, which means power to confer value on that which does not intrinsically possess it.” In an information, or “symbolic,” economy, in other words, the goods themselves are physically worthless: they are mere print on a page or code on a disk. What makes them valuable is the recognition that they are valuable. This recognition is not automatic and intuitive; it has to be constructed.

That’s all fine, but I wonder if there’s something else going on, analogous to grade inflation: awards benefit the award-giver and the award-receiver. For example, the statistics department at Columbia instituted a graduate teaching award a few years ago. This is a win-win situation: the student who gets the award is happy about the recognition and can put it on his or her resume, but also it’s good for the department–it can motivate all, or at least several, of our teaching assistants to try harder (to the extent that the award is transparently and fairly administered), and it can help our best graduate students get top jobs, which in turn is good for the department also. Similarly, awards within an academic discipline can motivate and recognize good work and also provide publicity and book sales for the field as a whole. And, unlike the Oscars, Nobel Prizes, etc., these little awards can be cheap to administer.

So, as with grade inflation, the immediate motivation of all parties is to increase the number of awards. But it can get out of control! For example, here is Princeton University Press’s list of its books from 2005 that received awards. It’s a looong list, including an amazing 13 different political science books that received a total of 18 awards. This many awards all in one place devalues all of them a bit, I think. (Not that I’m too proud to claim what awards I receive, of course…)

The real question?

Thus maybe the real question is not, Why so many awards?, but rather, Why is the number of awards increasing? If giving awards has always been such a great idea, why haven’t there always been so many awards? I don’t know, just as I don’t know why there isn’t more grade inflation, or why there aren’t more campaign contributions.

P.S.

See here for other comments on this topic by Mark Thoma (link from New Economist. Thoma talks about awards as a signal to consumers, whereas I’m thinking more about the motivation of the organizations that give the awards.

Thoma’s comments are interesting although I don’t really know what he gets out of saying “A good is valuable because it yields utility.” Isn’t that just circular reasoning? Or is this just a truism that economists like to say, just as statisticians have our own cliches (“correlation is not causation,” “statisitcal significance is not the same as practical significance,” and so forth)?

3 thoughts on “The economics of prize-giving

  1. It seems as if the increase in awards, assuming we're not talking about awards per capita, might be driven by two factors: increase in population and growth in media. For example, if your graduate department has 6 TAs, there is probably not much motivation for a teaching award. However, if there are a couple of dozen or more, now there is motivation.

    Growth in media. When there were three TV channels, there couldn't be too many televised awards shows, for the obvious reason that there just weren't enough media outlets. So the three networks fought for the Oscars/Grammys/Emmys/Tonys. Now, there is Fox, UPN, WB, etc. There is a ready outlet for a new awards show whenever someone comes up with the idea. And this is not even to mention the awards shows in specialized markets, such as the BET Comedy Awards, the Latin Grammys, etc.

  2. The increase could be because of the better communications: it's a bit daft to have your society's annual award ceremony, where you give out gongs to the great and the good, only to find that it would take the winner of the Golden Quincunx three weeks to get there by ship. There might be an indirect effect of coomunication as well, as it means that it is easier to set up viable societies that can hand out pointless awards.

    But of course the real question is: how many awards are there is statistics?

    Bob

  3. Thoma is battling the notion that cultural products are no different than anything else. Any product people want is valuable (the truism!). Classical musicians (myself included) typically decry (myself not included) this conclusion. But whether this is good or bad, it is how the world works now. Cultural products compete with each other for consumers’ time and attention. Declaring all this obvious, Thoma moves on to look at the purpose of awards. Here are a few of my additions, many times restating ideas of Thoma and others (note that “book” can usually be replaced by any other cultural product here).

    Constructing your own personal demand for art is somewhat easy to consider, since you can view the entire work before purchasing it. Books and movies are a little more difficult to assess, however. Until you’ve read a book, you can’t quite know whether or not you want it.

    This is where awards come in. A book with many awards tells consumers that it’s a good book, and they’ll probably like it. [Side question: Anyone know of an empirical study examining the number of awards vs. number of books sold? Examining the effect of awards on movie ticket sales should be easy since all the data is readily available]

    So, perhaps unfortunately, “artistic excellence” is not “intuitive.” You can’t judge a book by it’s cover!!! (sorry for that one…) And we do require a “middleman” to help consumers asses the quality of art, and usually they print these middlemen on the back covers!

    Now note that James English “interprets the rise of the prize as part of the “struggle for power to produce value, which means power to confer value on that which does not intrinsically possess it.” This isn’t correct. Although consumers don’t know beforehand, a book is either good or bad, intrinsically. No infinite number of prizes can save a poor work of art. Once enough consumers find out that a book is bogus, they’ll let everyone else know.

    I just got Tufte’s Visual Display only after hearing so much praise for it (which signals quality just like awards do). Luckily the praise was well deserved in this case, and I just ordered his other books.

    In a sense, ‘value’ is created (theoretically at least…) in the short run by increasing the number of awards for a particular book. However, if everyone who reads the book turns out hating it, this will decrease the value of awards, because people won’t trust them as much.

    So, finally, here is my guess at an answer to the question ‘Why more awards now than before?’:

    I agree with Dana. The enormous growth in media/cultural outlets has created intense competition for consumers’ time. Thus awards a needed to distinguish the good from the bad. Before consumers had so many choices, it wasn’t necessary because consumers could individually asses the value of every television show…movie…etc. on their own. So as choices increase, the number of awards should increase.

    Contrary to Thoma’s conclusion, I don’t think there is an incentive to give out more awards that do not accurately signal a good product. Anyone who does this will have serious reputation problems. Just imagine what would happen to Columbia if they started endorsing horrible students and sending them out across the country! It would help those first few students, but seriously damage Columbia’s reputation.

    Subsequently, all the new awards must be truthful. As far as the marginal effects of another award go…. who knows? But it seems that the more (truthful) awards out there, the better. Why? Because another truthful award further reduces the information asymmetry (ack economic-speak), and if the award is simply a certificate and a few people-hours of work, then it may not be that costly. So we should expect awards to continue to grow as long as the (standard economic conclusion approaching!) marginal benefits of an award are greater than the marginal cost, and as long cast benefits are high and costs are low, we will continue to see many new awards! Also consider, as the number of truthful awards approaches infinity, we end up with a quantitative measure of cultural value!

    Awards, praise, reviews, endorsements, and any other ‘quality assurance’ seal all serve the same purpose, whether for art, movies, books, companies, computers, restaurants, etc.: To provide information about a product which is difficult to individually assess before purchasing. (Economic-Speak: Correct a market failure due to imperfect information.)

    Finally I want to ask one more time if knows of any good empirical studies (I was too lazy to search tonight) regarding this topic. I imagine a study examining the number of 5-star reviews and sales rankings would be very interesting.

    On a side note, I don’t believe “the goods themselves are physically worthless” all the time. Consider the different bindings of Tolkien’s Lord of the Rings—the hardback 50th anniversary edition is far more expensive (read: valuable) than the paperbacks, precisely because of the physical craftsmanship. Also consider book collectors: the physical condition of a book practically determines the entire value of a book!

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