I am sure all of you had the same reaction I did as Tiger Woods slid into taudry tabloid hell: “thanks, Tiger, for creating a teachable moment for development economics!” Our expectation that celebrities will be model citizens, contrary to vast evidence, is based on the Halo Effect. The Halo Effect is the idea that someone that is really, really good at one thing will also be really good at other things. We thought because Tiger was so good at being a golfer, he also must be very good at to have and to hold, forsaking all others, keeping thee only unto her as long as you both shall live…
What Tiger considerately did for our education was to show how the Halo Effect is a myth. This blog has a undying affection for those psychological foibles that cause us to strongly believe in mythical things, and the Halo Effect is a prime example (and the subject of a whole book on its destructive effects in business.) Why would marital fidelity and skillful putting have any correlation?
OK fine and good, but many of you are asking: What the Vegas Cocktail Waitress does this have to do with development? The Halo Effect was discussed in a previous blog, but when assaulting psychological biases, you can never repeat the attack enough. Not to mention that we all remember the psychology literature more easily when illustrated by a guy with 10 mistresses.
So if we observe a country is good at say, technological innovation, we assume that this country is also good at other good things like, say, visionary leadership, freedom from corruption, and a culture of trust. Since the latter three are imprecise to measure (and the measures themselves may be contaminated by the Halo Effect), we lazily assume they are all good. But actually, there are plenty of examples of successful innovators with mediocre leaders, corruption, and distrustful populations. The US assumed world technological leadership in the late 19th century with presidents named Chester Arthur and Rutherford B. Hayes, amidst legendary post-Civil War graft. Innovators include both trusting Danes and suspicious Frenchmen.
The false Halo Effect makes us think we understand development more than we really do, when we think all good things go together in the "good" outcomes. The "Halo Effect" puts heavy weight on some explanations like "visionary leadership" that may be spurious. More subtly, it leaves out the more complicated cases of UNEVEN determinants of success: why is New York City the world’s premier city, when we can’t even manage decent airports (with 3 separate failed tries)?
The idea that EVERYTHING is a necessary condition for development is too facile. The principles of specialization and comparative advantage suggest you DON"T have to be good at everything all the time.
So the true Tiger Woods Effect tells us something else more interesting than the false Halo Effect: that if you are very, very good at hitting a 1.68 inch ball into a 4.25 inch hole, then you can often get away with everything else for a long time. But sometimes not forever.