My three-year-old's sports day holds the secret to media diversity

Last week was my son’s first school sports day. The weather was wonderful and he ran various obstacle courses and relays. I cheered along every effort and welled up a little when he told me that one day he wants to be “fast like daddy”.

But near the end of the day I ended up with one of those “difficult parenting moments”.  My three-year-old son had picked up the wrong medal at school sports day (one meant for older kids). The medals for children in his class were a slightly different colour. The problem was that even though he only had the wrong medal for a minute before I noticed the mistake it was now his medal and he was not going to give it up!

Now people who follow my blog will know that I love economics and that I am married to a leading economist in China-Africa affairs.

Economists actually have a theory to explain what my son was going through, it is called “endowment theory”. And it could hold the key to how we should shape policy to increase diversity in the media industry.

The theory says that once you own something, even briefly, you place a far greater value on it than something of equal value. In this case even though the older kids’ medals and younger kids’ medals were virtually the same, and of the same value, once my son “owned” the older kids’ medal he valued it more and did not want to swap it.

This theory was demonstrated brilliantly in a seminal experiment where an economics lecturer randomly divided his students into two groups. He gave one group mugs and then he gave the other group chocolate which cost the same amount. He then asked people who wanted to swap with each other.

Because the groups had been picked at random you would expect half the people with chocolates to want to swap and half the people with mugs to swap. But what they found is that hardly anyone in either group wanted to swap.  

Once you give people something they are very reluctant to give it up even if they are assigned it randomly and are then offered something of equal value. This is called  the “endowment effect”.

We see the “endowment effect” all the time, it is the principle behind money back free trials. Sellers have known for years that once you put something in a consumer’s hands they simply do not want to give it up - even if you return their money.

So could we use this “endowment effect” to increase diversity?

Currently diversity officers in large media companies often try and persuade executive producers to make more enlightened diverse hiring decisions. 

What the “endowment effect” tells us is that people are very reluctant to change whatever they initially own. In this case it is very difficult for diversity officers to get executive producers to change their existing teams. Execs have a sense of ownership over their team.

For this reason I think we have effectively got the whole job of the diversity officer backwards. 

What diversity officers should do is when a new programme is initially staffing up they should simply present executive producers with a team for the new programme on paper. Not a list of possible candidates or a few CV’s of candidates from under-represented groups that the exec can consider but an entire team set out on paper (no more no less).

This list should be presented to the exec before anyone has actually been contracted to work and most importantly the executive producer still has the ultimate power to choose who they want on their team so they can substitute anyone they want on the list.

But “endowment theory” teaches us that the likelihood of them taking people off the list once they are on “their team” is far less likely than if they were not on the list in the first place.

Now I know what you are thinking, holding something in reality, like a mug or chocolate, is completely different from just names on a list. The endowment effect is not going to work with just names on a list... is it?

But this is where another fascinating “endowment theory” experiment comes into play.

In another experiment economists approached people who had just bought lottery tickets and offered to buy the tickets for more than double the amount.

That’s right economists offered to buy random numbers on a piece of paper. Not only was the endowment effect so strong that people were unwilling to sell their tickets for double what they had just spent. People would normally ask for three or four times the price they had originally paid for them.

If people really can get attached to random numbers on a piece of paper I think the same should apply to diverse names on a team list.

Again I stress we are not taking any power away from the executive producers. They still have the freedom to pick and choose who they have on their teams, we are just starting the process from a different place.

Finally, for those of you thinking that this is just an interesting economic theory that could never work in the real world there are in fact real life examples of employers using endowment theory to make better employment decisions. Daryl Morey, the general manager of the NBA basketball team the Houston Rockets, actually uses endowment theory to make better decisions of which players to trade, which to keep and how much he should value players.

Now while endowment theory might be able to shape enlightened diversity policies, unfortunately it provides little insights on how to reason with three-year-olds who does not want to swap “their” sports day medal. That was solved by a lot of big hugs from mummy and daddy.