Why 20% of sports stars earn 80% of the money
Complaints about the rich owning a disproportionate amount of money or top actors being paid too much are pervasive. However, many studies show it is completely natural.
The Pareto Principle is a well-known phenomenon defined as follows – 80% of the consequences come from 20% of the causes.
It was first derived when economist Vilfredo Pareto noted that the imbalance of land ownership in Italy fit this pattern – 20% of the population owned 80% of the land.
He contacted fellow economists from other countries, who reported a similar distribution.
The Pareto Principle has since been noted in many areas – including business, management, productivity, and manufacturing.
Adrian Gore – Discovery CEO – previously noted that many people have an incorrect assumption that human activities should follow a normal distribution.
This is because it appeals to our sense of symmetry and the fact that most biological markers follow a normal distribution – where most individuals fall within a ‘normal’ range.
Examples include that over two-thirds of all individuals have an IQ of between 85 and 115 – a single distribution from the median – and that half of the American male population is within two inches of the 5’9 average height.
While this sort of normal distribution is prevalent when it comes to inherent traits, when it comes to human activities, we will often align with the Pareto Principle instead. A great example of this is professional sports.
Research by Weibing Deng at Hua-Zhong Normal University in China and colleagues found that in almost all professional sports her team tested, 20% of the players enjoy 80% of the prize money and success.
Since every sports field has its own scoring system – making empirical comparison challenging – the research needed to rescale the markers of success to something uniform using the calculation Rs = S/Smax, where:
- Rs denotes the rescaled value.
- S denotes the value of the considered – such as scores or prize money – for the sportsperson or team in question.
- Smax is the maximum value of S in the sample – in other words, the best team or player in the ranking system.
For example, if the player in question had earned $1 million, and the highest earner in the competition had earned $2 million, the Rs value would be 0.5 – showing that the player in question had achieved 50% of the success of the highest earner.
Based on this, Deng’s research covered many different sports – several of which are indicated in the table below.
| Distribution of success in professional sports competitions | |||
|---|---|---|---|
| Sports Competition | Total number of participants | Size Cutoff | Ratio |
| ATP Prize Money (Men’s Tennis) | 1636 | 13% | 79% |
| WTA Prize Money (Women’s Tennis) | 1388 | 12% | 81% |
| PGA Score (Men’s Golf) | 1323 | 18% | 82% |
| ITTF Men Prize Money (Table Tennis) | 1717 | 17% | 83% |
| ITTF Women Prize Money (Table Tennis) | 1288 | 18% | 82% |
| FIFA Men (International Football) | 209 | 19% | 77% |
| WPBSA Total Score (Snooker) | 97 | 27% | 83% |
| FIBA Men (International Basketball) | 79 | 20% | 81% |
| FIBA Women (International Basketball) | 72 | 21% | 83% |
| FIH Men (Field Hockey) | 73 | 26% | 78% |
| FIH Women (Field Hockey) | 68 | 27% | 81% |
What this means
What makes these findings so fascinating is that they have happened completely organically. These sports bodies did not work together to strive towards achieving the Pareto Principle.
Instead, it shows that a smaller elite group will naturally emerge and vastly outperform their peers in a system where human nature and individualism are encouraged.
Economists, politicians, and philosophers can debate whether this should be encouraged or if it should be artificially stifled for the sake of social equality.
What cannot be argued, however, is that the Pareto Principle is real and natural.
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