Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

Deciphering Dynastic Privilege

In the post “Why Elitism Flourishes?” an attempt was undertaken to decode the elitist dominance in life. It sought to understand the barriers of entry of an outsider into an industry. In the analysis, connections determined the entry into the network. Implied is merit degenerating into an auxiliary element and not the critical element.  Meritocracy often seems more of a rhetoric with the organizations and as an extension, the society, rather discouraging old boy network seemingly encourage the same. Often, membership of such a club is a sign of growth and prosperity, rebelliousness indicates an exit from the career path. Numerous instances abound of the same. It would be interesting to decipher the flourishing of the clubs.

 

The recent instances from Bollywood seem to confirm to a substantial degree the power of elitism and the barriers of entry in breaking through the elitism. The recent talk about unapologetic defence of privileged entry and progress in the entertainment industry has rekindled the debate. In the context of such discussions, it would be interesting to handle the discussions around the role of nepotism and the returns the nepotism is likely to fetch in the circumstances.

 

To be fair at the outset, to accuse every dynast would be erroneous. Many dynasts have performed quite well and have built upon the legacies of their parents and grandparents. Many have undergone hard work and the success has not been easy. There are few who started their career on the floor despite their parents or grandparents being at the apex, proved their merit and assumed the family legacy with glory. However, the same cannot be said of everyone.

 

To each, there exists a desire of seeing their family legacy gaining greater heights through every passing generation. The current generation would want to see their mantle being taken over by the next generation within their family. The desire is not certainly wrong. It is human nature. Being homophile is an intrinsic characteristic of a human. Yet, a question arises whether such desires should trump merit or other selection criteria ceteris paribus. This is where the problems start creeping in. It brings to the fore the role of extreme homophily.

 

In some domains, nepotism hardly carries any weight. In sports, it would be very difficult for children to step into the shoes of their parents. Rarely are the cases where the children have performed in similar degree as their parents. It is possible that the children of the famous sportsmen and women might get a look in at the expense of others. But it is likely to be short-lived. In case of non-performance, the children are hardly likely to make any progress. It is even more difficult in individual sports like tennis or badminton. There are a number of sportsmen who have goaded their children to participate and compete at the highest level. Yet the success records have been patchy. At times, having a celebrity parent in sports might be a penalty. The children would be scrutinized very closely and compared at each step to their parents. Often the pressure builds up on the child affecting its performance. There would be occasions when people might accuse selectors of favouring children of some celebrity sportsmen over others making the kids even more vulnerable. Thus in fields like sports, nepotism or homophily might get an entry but hardly a passport for success. This applies in some other fields like music, painting, dance and some other performing arts. Again in these cases, kids definitely have a first mover advantage given their network but that advantage hardly translates into a sustained success in the absence of high degree of merit and acumen.

 

In fields like business, medicine, engineering among others, the dynasts have an advantage in terms of access to networks. While success might elude them, they have strong advantage in leveraging the family learnings that ingrain through the network they inhabit. They grow up in an environment where the business or other relevant skills are discussed and observed at all times inculcating in them certain skills difficult to be obtained by others outside that privileged network. In the context, the privilege becomes a key determinant of entry into the field. However, having gone into the field, it is their passion and hard work that will ensure their success. In fact, the legacy of one generation and the resultant goodwill might help the immediate generation but is hardly long lasting in the absence of any effort by the next generation.

 

In politics, it is often the lowest opportunity cost to pass the mantle to the next generation. As the older leaders retire or pass away, to the others, it would be relatively easier to have the kids into heading the political parties. This more often than not is about minimising the battles for succession. If the children are named head of the parties, the various claimants for succession might mellow down and accept the same. It is not that children are best equipped to handle the family legacy, but the courtier’s desire to keep the fellow rival courtiers from usurping power that underpins the political succession flow from a parent to the children or siblings or other relatives.

 

In entertainment, where the barriers of entry is relatively higher and looks matter, it is relatively easier to get the break in the industry. Given the amount of public relations exercise that the film industry undertakes, the task of bringing their kids into the industry is relatively easier. There could be a few films or serials or other TV shows that allow the freedom for the children to pick up ropes and evolve on the learning curve. This might not be a luxury to other performing artists or sportsmen but the very nature of the entertainment industry in its different facets makes it possible.

 

In the media industry, where access matters and drives the things, dynastic privileges count for lot. The access provided by the parents can be of great help thus giving the children a major advantage. Once the children gains the access to the corridors, they would be in a position to result in upward mobility. Journalism is all about insider information and access and anyone who manages the same will flourish. This is where somebody with already existing connections will have an edge over the rest. To an outsider, it would be lot effort to gain the confidence of the sources and build on the things. Furthermore, the old boy’s network will ensure that the outsiders would not get a chance. In fact as in entertainment, media and other glamour industries, it is not surprising to find parents and the network go miles to destroy an outsider threatening their monopoly or somebody who could jeopardize their children’s career.

 

Thus the privilege of a dynast is subject to the industries that they seek to operate. In some occupations, it is almost but impossible to break through on their parent’s success. In some other occupations, it is relatively easier for the children to gain access and break open the barriers entry riding on their parent’s legacy. Dynastic privilege cannot be a substitute for talent. In fact, a country or a society’s ability to develop rests on the ability of the lower echelons to move up in the pyramid very fast. The pyramid, the greasier it is, the more innovative or prosperous the society would be. The stickier the dynasty is in the different layers of the pyramid, the less developed or less innovative the society would be. The parental individual payoffs rest on the success of the children discounting merit and other considerations. The societal payoffs on the other hand revolve around the fructification of merit as a consideration in upward mobility. The conflict is the root of the problems in occupational succession.

 

 


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