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I think you are ignoring the reason behind it being popular. It's popular exactly because of the money and the lifestyle.
If you cut their salaries in half and they had to work 50% harder to earn the same, derm would become pm&r.
I agree with you, at least in the initial phases of determining its popularity. But now it's a self-fulfilling prophecy. Med students, by character, on average, are narcissistic head-cases that need adulation. They went into med school to get adulation from society at large. In med school, some of the super head-cases now need adulation from their peers as well. So they pursue the most competitive specialties. For no other reason than they're competitive.
This further drives up the competition of said specialties.
Typically this was reserved to specialties that had street cred. Those that your gay uncle or *****ic grandmother would understand as being prestigious...read: brain surgeon. Somewhere along the line some rogue med students starting shifting the focus of what they wanted from medicine and said to hell with public prestige, I'm going to ride the cash vs. freedom curve.
But believe me, this seeking of prestige is the prime mover nowadays. You can get plenty of money in other specialties with just as good of a lifestyle. And the fact that many specialties with absolutely atrocious lifestyles are still very competitive? Well, they want the title.
If I may quote myself, I've described my theory elsewhere:
Here's the truth: the people who get into the most competitive specialties ARE NOT the most intelligent, in my observation. They are just the most pathologically driven to get into the most competitive specialties.
Getting straight A's in med school and knocking Step 1 out of the park is all about hard work, not brains. You can't be an idiot obviously, but I find being really smart can actually be a detriment in med school given that many highly intelligent people see through the mania of compulsively hard work, say "to hell with it," and thus get lower scores.
The guy gunning for neurosurgery isn't a genius. He's a narcissistic workaholic with a little teeny one that needs to prove to the world through his occupation how great he is, in spite of the fact that he doesn't believe it himself. This low self-image is ironically the very fuel needed to get through the excessively long hours required of someone who wants to pursue neurosurgery, so it's very self-selective in that respect. In the end, the process marries psychopathology with the demands of the given specialty very nicely.
These are generalizations, obviously, but they're pretty accurate. Once you get into med school, you'll see. Oh will you see.