Speaker fees

Here is a good question:

This reminds me of something I don’t really understand: why affluent people will pay unbelievable amounts of money to attend a lecture so they can bask in the (one would think) unedifying physical presence of somebody like Tom Friedman, whom they can see for free on television practically every week.

I take this to be a signaling problem.  The quality of the speaker signals the quality of the event, and most of all the quality of the other attendees.  Wealthy people and successful people don’t want to go to an event full of losers, why should they?  So the organizers seek quality speakers, so as to attract quality participants.  Such valuable signals have to be scarce by their nature, and that means that the best known speakers earn high rents from their physical presence, whether or not they are edifying.

On related matters, Greg Mankiw posts on live performance.