Soccernomics: Making Soccer Ball Production More Efficient

Soccernomics: Making Soccer Ball Production More Efficient

[MUSIC] Soccer balls are hexagons and
pentagons stitched together. So every soccer ball is 20 hexagons and 12 pentagons that are stitched together. [MUSIC] 70% of the world’s hand-stitched
soccer balls come from this city, which is 40% of the overall
soccer ball market. The roughly 135 firms that we found
operating in the city at the time made soccer balls in the exact same way. And this meant to us that if we
could come up with a way for them to improve their production process,
then that could be potentially an idea that would
diffuse throughout the marketplace. We chose 35 companies to give this
new technology out to for free. [MUSIC] What we noticed was after 15 months, that most of the firms in our
sample had not adopted our dye. It seemed to us that the workers were
kind of misinforming the owners about the potential benefit of
the new cutting pattern. But then the question is why would
want it, why would they do that? So it was a very classic
problem in economics, known as the principal agent problem,
in which the principal, which is the owner of the factory, kind of really benefited
from this new cutting pattern. The typical cutter would make one and
a half rupees per pentagon cut. In the absence of compensating the workers
by potentially increasing the amount they get paid per pentagon, or
changing them to a fixed wage. The workers don’t gain in
that increase in profits. We chose a subset of these firms to
basically give a fixed payment to the cutters and the printers if
they used a new cutting pattern. We saw big increases in adoption. One of the messages that comes from
this is that in order to get kind of truthful revelation of your workers in
terms of what new technologies should we think about adopting. You may need to make sure that they share in the benefits of those technologies. [MUSIC]

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