Comparative Advantage

Updated: Nov 2

Summary


Everybody has a role or career which is their comparative advantage. This is the role you are best placed for once you take into account the skills and strengths of both yourself and others who are also working to improve the world with their careers. Playing to your comparative advantage can help you to maximize your counterfactual impact, even if (perhaps surprisingly) it isn’t the role you are best or most qualified for. But because it’s very difficult to know what our comparative advantage is, we often have to use our best guess when making career decisions.


Overview


Imagine the following scenario: Brian and Freddie want to start a rock band. Because it’s just the two of them, they decide that one of them should be a vocalist and the other a guitarist. But who should take each role? To make the best music, Brian and Freddie should each select the role in which they have a comparative advantage. Doing so will most efficiently harness the talent that each of them brings to the band.


To make the decision easier, Brian wrote down a quick table (Brian learned to use quantification as a decision-making tool during his PhD in astrophysics). Each number reflects the musical quality Brian and Freddy would add to the band as a guitarist or vocalist.



As we can see, Freddie is (surprisingly) a slightly better guitarist than Brian, but he’s also by far the best vocalist. So, if Freddie wants to play to his comparative advantage, he should take the vocals – even though he’s actually better at the guitar. The reason is that if he played guitar and Brian were on vocals, the band would only reach a total score of 13 (which Brian estimates would lead to selling only a few thousand records, give or take). But with Freddie on vocals, they reach a score of 20, maximizing their musical output (and commercial success).


Likewise, Brian’s comparative advantage lies in guitar. Even though Brian’s guitar playing isn’t quite as beautiful as Freddie’s, Brian wants to be in the best band possible, and this means taking guitar because it frees Freddie up to sing.


But hold on, if Freddie and Brian took vocals, wouldn’t their band be even better? They’d reach a combined score of 20— one more than if Freddie sings and Brian plays guitar. Perhaps they’d achieve even greater musical feats as an a capella duo…


Unfortunately, this isn’t the case. Because Brian and Freddie want to make rock music, a band of just two vocalists won’t cut it– there’s only space for one vocalist. Once you’ve already got a lead singer, another one adds little to the sound, no matter how good they are. So, the band’s better off with Brian on guitar.


Freddie and Brian’s band went on to recruit two more members and sold a few records...



It’s not hard to see how this line of thinking might translate to career decisions. Obviously, though, instead of deciding which instrument to play, you’re deciding which career path to pursue, or which specific roles to apply for. And instead of trying to produce great music, you’re trying to make the world better.


Suppose, for instance, that your organization is looking to promote a researcher into a management position. You’re currently a great researcher, and you would only be an average manager. However, your colleagues would all be awful managers. In this case, there’s a good chance your comparative advantage lies in management. Supposing your colleagues are all just as good at research as you, you’ll maximize your organization’s output by taking the managerial role, even though you’re not a great manager.


Of course, real life scenarios tend to be much more complicated than this simple example. It’s hard to know exactly how good you’d be in a certain career or role, and it’s even harder to know how good everyone else would be. There will almost always be more people applying for roles than the number of roles available, so things get complicated very quickly.


However, there are still some rules of thumb you can use to gauge what your comparative advantage might be.


For one, you might consider if there are any talent bottlenecks in promising cause areas. If there’s a strong need for a particular profession, and you’re at least moderately competent at it, then there’s a good chance this could be your comparative advantage. Even if you’re better at other types of work, the fact that there is a shortage in this career path implies that even an average worker could have a large counterfactual impact.


But if you don’t have good information about what skills are in demand, then you could consider how rare your skills are in general. If you’re good at something not many others are, and which can be applied to tackling important problems, then you might have a comparative advantage in this skill. And if you have a particular set of skills that are rarely present together (for example, someone who is both technically gifted and a great people manager) then there’s an even greater chance that a career using all these skills will be your comparative advantage (just like Brian May utilized his extremely rare combination of skills in music and astrophysics to write New Horizons).

However, when you aren’t even able to know where different skills are needed most, it might not be helpful to think in terms of comparative advantage. Instead, see our career guide for an overview of the more general considerations you should consider when choosing an impactful career.


Additional Resources