Friday, March 6, 2009
Techer Salaries vs Professional Athletes Salaries
In today's world it is widely accepted that sports players are overpaid while teachers are underpaid. Until taking this economincs class and a couple others, I would have just assumed the reason sports players make so much is because the demand for their service is so strong. In fact, this is completely not the case. Teachers are demanded more in society than sports players, but the supply of teachers is a lot larger than the supply of pro athletes. The reason athletes make so much relative to teachers is because athletes have a very inelastic supply compared to teachers. I think it's interesting to look at this concept from an economic perspective. It helps explain why pro athletes make seven figures, while teahers have trouble hitting six. On a graph a professional athletes supply curve is almost completely vertical. A teacher's supply curve is much less steep, as their supply is much greater than that of a professional athletes. The demand curve for teachers would be shifted out to the right of the demand curve for professional athletes.
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I think one of the reasons that pro athletes get paid as much as they do is not so much that they have a smaller supply curve, it's more because the level of competition restricts the number of athletes that actually gets to turn pro. I'm sure lots of people would want to be professional athletes at the salaries that they make, but the fact is, most people are just not good enough. So by restricting the number of pro athletes, the salaries that they get is much higher than the equilibrium salary where everyone that wants to turn pro gets to do so.
ReplyDeleteI would like that say that athletes also have a much, much higher residual value in the mind of people who are paying them compared to teachers. Teachers are important and underpaid, however, I can say numerous teachers who I have been taught by were simply horrible! I learned nothing in the class and just did what I had to do to receive the grade that I wanted, and these teachers still teaching. This would never happen to a professional athlete, if their marginal benefit is not equal or exceeding their marginal cost, this individual will be cut, traded, or unemployed by their sport and will be looking for a new career. So, atleast athletes have to produce to maintain their salaries.
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