Sunday, November 21, 2021

Life Lately: The Matthew Effect

Contemplating my future atop the Sacre-Coeur Basilica in November 2018

On this day three years ago, I was cash-strapped. I was approaching the end of my year in business school with an empty bank account. While I could look forward to a nice signing bonus, that was still many months away. In the interim, we needed to fly back to Nigeria, wait out a few months of funemployment, and spend money on our visas which I could then claim back after starting my new job. I had money – the problem was that it existed in an employment contract, not as cash we could spend.

So, I needed to raise cash. I agonized about it for days as I’ve always found it difficult to borrow money. I negotiated again with my recruiter for my signing bonus to be paid immediately. It didn’t work. My last option was to go to my friends. Three conversations and fifteen minutes later, I had all the cash we needed to cover the next few months until my first paycheck came in.

It still surprises me even now that people were willing to send me so much money with no questions asked. Surely, I could not have raised that kind of money only a few years before. What made it more likely that people would send me such large sums?

This past week, you may have heard of an effect that shows up in many aspects of life and partly* explains why I could raise that money in so little time. And yes, it partly* explains why Davido raised N200M ($500K) within two days of putting out a playful tweet.

November 17 to November 18

Jesus tells the parable of the talents in Matthew 25. The parable itself is interesting but somewhat tangential to the point we need to take away. The key thing is the verse that concludes the parable: For whoever has will be given more, and they will have an abundance. Whoever does not have, even what they have will be taken from them.

The Matthew effect, so named by sociologist Robert K Merton in 1968, describes cumulative advantages. People who are already successful are more likely to be given opportunities that result in even more success. Students who start out with a small comparative advantage get the best teaching and the most attention from teachers, causing them to become even better students. The rich get the cheapest interest rates and the biggest tax breaks, helping them to grow their wealth further.

I think it is important to be aware of this effect for two reasons. First, the Matthew effect isn’t going to go away – humanity is not going to change overnight, so we should do what we can to give ourselves and our loved ones the small advantages that will compound over time into bigger ones. Second and more importantly, the Matthew effect is not very equitable, and we should work to minimize inequity. I’ll give an example to illustrate this second point.

Let us consider how I became a confident reader and got my earliest experiences as a leader. I had a head-start with reading because my mum often read with me at home. This gave me a comparative advantage relative to my classmates and caused my English teacher to designate me class reader for two years. Being class reader built my confidence and helped me become even better at reading; and the visibility helped me become class captain.

The Matthew effect worked out well for me, but what about the other students in the class? What if the teacher had instead given every child a chance to read - say by splitting the class into smaller groups and rotating reading responsibilities around? Sure, it is easier to just have the child who already reads well do the reading. But does that result in the best learning outcomes for the entire class?

Wherever you’re in a position of power with the ability to choose – especially if children are involved, stop and think if you’re being influenced by the Matthew effect.


Have a fab week!

* (I say partly, because there are always other factors at play. My friends trusted my personal integrity. Davido is a likeable and generous celebrity - e.g. he’s giving all the money away to orphanges. And so on…)

PS: I'll bring back notes on what I'm reading and listening to from next week. I'm on holiday this weekend and wanted to keep this short :-)

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