The Matthew Effect
A simple way to describe the Matthew Effect is by mentioning that “the rich get richer and the poor get poorer.” If I had to define it though, I would say that the Matthew effect is where something increases at a meaningful rate over time compared to everything else, and this increase creates a large and meaningful discrepancy. The Matthew Effect doesn’t just apply to money though, it can also apply to fame and reading.
My favorite example of the Matthew Effect is about J.K. Rowling. Everyone knows J.K. Rowling for her best-selling books on Harry Potter. Her books about Harry Potter were instant best sellers and were eventually turned into sold-out movies. But here is the interesting thing….
J.K. Rowling wrote a book under a pen name after she became famous for the Harry Potter books. The pen name, or fake name, that she used was Robert Galbraith and the name of the book was called The Cuckoo’s Calling. The book originally sold around 500 to 1,500 copies. Then something interesting happened. Sales of the book skyrocketed. Can you guess why?
The answer is because it was revealed that J.K. Rowling was the real author of the book and Robert Galbraith was her pseudonym. This is a perfect example of the Matthew Effect in which case the famous get more famous or the rich get richer.
Why does the Matthew Effect occur?
I think in its simplest form, there is an aspect of social proof involved and a lot relating to how good one’s skill set is at something or how much they understand and are willing to improve.
Social proof is essentially when a large group of people all end up doing the same thing due to a social influence. Fear of missing out is one social influence that comes to mind. Social proof was involved in my example from above about J.K. Rowling. The famous get more famous because a large amount of people are interested in that person and this leads more and more people to become interested. Therefore, based on my definition of the Matthew Effect above, there is something increasing — attention in this case — over time and this is creating a rather large difference between the person who is getting the most attention and everyone else.
Social proof is involved because human psychology must be involved. There needs to be demand or a certain liking by us humans in order for something to increase at such a large rate. Since humans love stories, it allows J.K. Rowling’s book sales to increase at a large rate. Since they love to gossip, it allows a famous person who the media constantly writes about to encourage more gossip and attention. If humans didn’t like gossip or stories, then there wouldn’t be a such a large increase that leads to a discrepancy. Social proof of course isn’t the only reason for J.K. Rowling’s success.
Another one is due to J.K. Rowling’s creative mind and writing skills. This may be the most important reason for the Matthew Effect. J.K. Rowling’s book, The Cukoo’s Calling, would have never had that much success if she wasn’t such a great writer and creative thinker to begin with because then Harry Potter wouldn’t have been so successful.
The ability to understand and learn compared to others maybe how the rich get richer and the poor get poorer.* A notable reason for this is because the rich tend to have a better understanding of how markets work and how to make money in which circumstances and when. There is some luck involved also because one can inherit a very valuable asset like a piece of real estate or a company. (I’m sure there was some luck involved somewhere if you examine J.K. Rowling’s story and how Harry Potter became such a popular sensation) This valuable real estate or company can throw off large cash flows for a long time if handled correctly and continue to make the owner richer despite there being no influence on his skill. If that person who inherited this valuable asset doesn’t learn the skill of how to manage the asset though, it is likely to be out competed by another company or bad decisions by management will most likely ruin the asset.
*There are probably some or perhaps many people reading this and thinking that politics has a lot to do with this too. I can agree that there can be certain situations where this does come into factor but I am leaving it out of this article. I rarely follow it and like to think that an individual has much more of a deciding factor on his own success than some outside influence.
