Raphael De Niro has received a full page NY Times story about his recent success as a real estate broker. This is a classic example of "product differentiation". Small differences in perceived "quality" can snowball into large differences in ex-post economic returns (i.e incomes). I have blogged before about social networks and the inside track they provide for "connected" people within a big city. Since economists are empiricists and since it is difficult to track "who knows who and who is related to whom" --- economists have had trouble creating a "facebook" type network to establish cause and effect relationships in determining how powerful friends and family affect your future.
"Plenty of rival brokers attribute Mr. De Niro’s success to his last name, saying many of his sales began with referrals that his father or Elliman’s top management had handed him. But connections alone cannot explain multiple eight-figure deals when similar properties sit idle for months."
"Developers including Steve Witkoff, who converted the Cipriani building at 55 Wall Street, and Richard Born, who built the Richard Meier towers on Manhattan’s West Side, count on him for his habits of arriving five minutes early to appointments, returning their calls faster than anyone else and playing down his pedigree.
“Anybody can be out there selling a home when times are good,” said Gerard Longo, another major developer, for whom Mr. De Niro has sold at least $80 million in condominiums over the past two years. “He has clearly become a go-to guy in tough times.” "
So, arriving early to appointments and being polite on the phone are worth millions in NYC?
Without knowing the facts, it seems to me that Raphael De Niro has benefited from becoming a "focal point" -- rich buyers and sellers believe that he can connect them in beneficial trades and this creates a self-fulfilling prophesy.
In this age, when we worry about superstar pay --- this youngster is earning a fortune. But, this begs the question; what is his "quality"? What unique services is he providing to merit his 3% on 8 figure sales? He is classy, he knows his dad, he smokes, he has hair. Is that quality? The market says "yes" and I find that to be interesting.