I think we can all agree that a teacher provides more good in the world than a professional athlete. And we know that professional athletes are paid much more than teachers. The easy answer to this conundrum is that athletes help their teams, in other words, companies, make millions of dollars. Teachers don’t.
Jessica Landisman Williams included the following sentence in a LinkedIn comment in one of my posts. “A former neighbor and professor of theology stated that we as a society pay people salaries that reflect our perceived value of their work.” This got me thinking.
I quickly replied with … “Although true, I think we have to be careful about inherent value vs. relative value. It’s probably fair to say a teacher has higher inherent value than a professional athlete, but the athlete has higher relative value than the teacher. This probably deserves a blog.”
Here’s the blog.
Let’s dig deeper and use this conundrum to understand two main types of value: inherent and relative. Inherent value is the overall value of solving a problem absent alternatives. My favorite example of this is air to breathe. Air has almost infinite inherent value. Relative value is the value relative to the alternatives. Air has zero relative value because we all have free air around us to breathe.
I would argue that teachers have higher inherent value than athletes. The value a teacher brings to the world is higher than the value of watching sporting events. Which would you pay more for, a quality teacher to educate your kids or a ticket to your favorite sporting event? You are welcome to disagree because it doesn’t matter to our conundrum.
The solution to the conundrum comes about because of relative value. First, many kids grow up wanting to be teachers, probably because it’s one of the only careers they observe in their early years. (Nobody grows up wanting to be a pricing expert.) There are a lot of teachers, or at least there used to be. Think about the law of supply and demand.
Yet, there are many athletes who would love to play at the professional level. Why doesn’t supply and demand work here? It’s because of relative value. There is a big difference between winning and losing. A small performance edge could be what helps a team win. Hence, every team is trying to find the very best athletes. The relative value of a small difference can be worth millions of dollars to the team.
What about the relative value of a small difference between teachers? There is none or almost none. First, who is to say one teacher is better than another. If there was a way to prove ability, the better teachers would probably make a little more. Second, a teacher only teaches a few dozen kids. Unless they are all the kids of billionaires, the vast majority can’t afford to pay the few hundred thousand dollars per child to get teachers at parity with athletes.
To summarize, many of us believe teachers have more inherent value than professional athletes, but their relative value in the market doesn’t compare. What do you think?
