Comparative Advantage

Summary


Everybody has a role which counts as their comparative advantage. This is the role which will maximize your impact 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. However, it’s typically very difficult to know what your comparative advantage is, so often we just have to use our best guess when making career decisions.


Overview


Picking a career in which you have the highest comparative advantage can help you increase your counterfactual impact. To do so, you can first take into account the skills of other people who are trying to do good with their careers. Once you have some idea of this, you can try to play to your comparative advantage by working in a role which allows you to use the strengths and skills you have over others who might take the role.


It’s important to note that using your comparative advantage doesn’t necessarily mean taking the role that you’re best at. Suppose, for instance, that your organization is looking to promote a researcher into a management position. You’re currently a great researcher, but you would be just an average manager. However, your colleagues would all be awful managers, even though they’re equally great researchers. In this case, your comparative advantage probably lies in management, even though you’re better at research. You’ll have more counterfactual impact this way, since whoever else would’ve taken the management role would’ve been much worse than you, but will produce equally good research.


Playing to your comparative advantage might also mean taking a role which others would be a bit better at than you, if by taking that role you enable them to do something they are much better at. If this is confusing, don’t worry; here’s an example to make things more concrete.


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 the highest comparative advantage. Doing so will most efficiently harness the talent that each of them brings to the band.


To make this clearer, Brian wrote down a quick table (using quantification as a decision-making tool is a trick Brian learnt during his PhD in astrophysics). Each number reflects the musical value Brian and Freddy would add to the band as a guitarist or vocalist.


As we can see, Brian is a slightly better singer than Freddie (or at least he thinks he is), but he’s also by far the best guitarist. This means that Brian’s comparative advantage lies in playing the guitar, even though he’s better at singing.This is because If he took vocals and Freddie were on guitar, the band would reach a score of 13. But, the other way around, they reach a score of 19.


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


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 recruited 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.


Unsurprisingly, real life scenarios become much more complicated than this simple example. It’s hard to know exactly how good you’ll be in a certain career, and it’s even harder to know exactly how good everyone else will be (unless you’re coordinating closely, which is extremely rare). 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 about 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