Attention economics, redux: why supermodels are like toxic assets

Paul Raven @ 19-07-2010

Remember me linking to that article that compared the inflationary bubble in the cult of celebrity to the sub-prime mortgage crisis? Well, here’s a similar (and slightly more serious) piece that explains how supermodels are similar to toxic assets [via MetaFilter]:

Coco [Rocha] is what economists would call a winner in a “winner-take all market,” prevalent in culture industries like art and music, where a handful of people reap very lucrative and visible rewards while the bulk of contestants barely scrape by meager livings before they fade into more stable and far less glamorous careers. The presence of such spectacular winners like Coco Rocha raises a great sociological question: how, among the thousands of wannabe models worldwide, is any one 14 year-old able to rise from the pack? What makes Coco Rocha more valuable than the thousands of similar contestants? How, in other words, do winners happen?

The secrets to Coco’s success, and the dozens of girls that have come before and will surely come after her, have much less to do with Coco the person (or the body) than with the social context of an unstable market. There is very little intrinsic value in Coco’s physique that would set her apart from any number of other similarly-built teens—when dealing with symbolic goods like “beauty” and “fashionability,” we would be hard pressed to identify objective measures of worth inherent in the good itself. Rather, social processes are at work in the fashion modeling market to bequeath cultural value onto Coco. The social world of fashion markets reveals how market actors think collectively to make decisions in the face of uncertainty. And this social side of markets, it turns out, is key to understanding how investors could trade securities backed with “toxic” subprime mortgage assets leading us into the 2009 financial crisis.

Well worth a read; it’s interesting to see someone looking at a market in terms of its social construction rather than as a bunch of mathematical abstractions and assumptions. One of the things that has frustrated my research into economics is the way it always seems to be portrayed as a coldly rational science, without any attempt to understand or deconstruct the emergent social consensus that drives it. This is almost ertainly due to me looking in the wrong places, so if anyone has any suggestions for good sources of social and/or behavioural economic literature that won’t baffle an inquisitive layman, please pipe up in the comments.