Category: Sports

Economics of the World Cup

Kottke passes along many links, check here and here.  Sort through it yourself.  This is not my cup of tea but some of you will love the material.  I’m still trying to figure out who will win this NBA Finals with massive mismatches.  When in doubt go with the team with the single best player, and that has to be Dwyane.  The betting markets though had Dallas at about 59 percent.

Did the Soviets run a chess cartel?

Steve Levitt told us that sumo wrestlers cheat.  Are you surprised that Soviet grandmasters did the same?  They were expected to take certain deliberate draws against other, or sometimes even throw a game, so as to ensure that a given tournament would be won by a Soviet and not by a foreigner.  Bobby Fischer had alleged this for years, now economists Charles Moule and John Nye offer some evidence.

Here is my previous post on the work of John Nye.

Measuring sports performance

Yesterday I learned the following:

1. Team payroll and team wins are not strongly correlated in the major U.S. sports.

2. Labor disputes and lock-outs do not have a long-run negative effect on attendance and receipts.

3. Problems of competitive balance come from the distribution of playing talent, and sports leagues do not much remedy the problem by salary caps and the like.

4. In the NBA, team wins attract crowds more than does star power.

5. The great NBA players do less to make their teammates better than is often supposed; in fact many great players make their teammates worse.

6. In statistical terms, the better players do not play much better, if at all, during the NBA playoffs.  (TC: But for sure they try harder, especially on defense.)

7. NBA decision-makers do not seem to understand the value of players.  In particular they tend to overvalue scoring.

All of that is from the new The Wages of Wins: Taking Measure of the Many Myths in Modern Sport, by David Berri, Martin Schmidt, and Stacey Brook.  Here is the book’s home page.  Here is the book’s blog.  Here are my early season NBA predictions.

Addendum: Here is Malcolm Gladwell’s review.

Do football coaches maximize returns?

David Romer says no:

…the behavior of National Football League teams on fourth downs departs from the behavior that would maximize their chances of winning in a way that is highly systematic, clear-cut, and statistically significant.  This is true even though the decisions are comparatively simple, the possibilities for learning and imitation are unusually large, the compensation for the coaches who make the decisions is extremely high, and the market for their services is intensely competitive…The departures from win maximization are toward "conservative" behavior…

In other words, too many punts and field goal attempts.  But why?

…the natural possibility is that the actors care not just about winning and losing, but about the probability of winning during the game, and that they are risk-averse over this probability.  That is, they may value decreases in the chances of winning from failed gambles and increases from successful gambles asymmetrically.

If you take a gamble and it fails, and you have lost for good, it hurts so so bad.  Coaches value "being in the game until the end" for its own sake.  They are unwilling to give up all sources of hope, even when the associated gamble would maximize their returns.

What does this say about how we run our lives?

That is from the just-arrived April 2006 Journal of Political Economy (I’m sorry Alex, but the JPE is better and more interesting than the QJE, all things considered).  Here is an earlier version of the paper.  Here is my earlier post on the NFL draft.

Department of Uh-Oh, a continuing series

Reading web sites raises my estimate of the benefits of being already married:

Half of all women make their minds up within 30 seconds of meeting a man
about whether he is potential boyfriend material, according to a study
on speed-dating.

The women were on average far quicker at making a decision than the
[emphasis added] during some 500 speed dates at an event organised as part of
Edinburgh Science Festival.

The scientists behind the research said this showed just how
important chat-up lines were in dating. They found that those who were
"highly skilled in seduction" used chat-up lines that encouraged their
dates to talk about themselves in "an unusual, quirky way".

The top-rated male’s best line was [TC: yikes, and what kind of British abomination is this?] "If you were on Stars In Their
Eyes, who would you be?", while the top-rated female asked bizarrely:
"What’s your favourite pizza topping?"

Failed Casanovas were those who offered up hackneyed comments like "Do
you come here often?", or clumsy attempts to impress, such as "I have a
PhD in computing".

Here is the link, and yes sadly I prefer my pizza plain.  Perhaps some of you must now, over longer periods of time, simply blog your potential conquests into submission.  By the way, the researchers also suggest that "travel" is the best topic of conversation for spurring a connection and future dates.

George Mason in NCAA and Economics

This new piece is by Alex and Pete Boettke.  They give away all of GMU’s secrets, or at least a few.  Excerpt:

What’s remarkable is that GMU’s freewheeling basketball team and its
free-market academic teams owe their successes to very similar,
market-beating strategies. GMU has excelled on the court and in the classroom by daring to be different.

Read the sidebar for a discussion of faculty, including yours truly:

GMU remains an underdog in both basketball and economics. But Coach
Larranaga has a plan to succeed in the long term and so do GMU’s
professors. Click here to read about how GMU is seeking out different new kinds of undiscovered geniuses.

They are too modest only about themselves.

Yet more economics of curling

Curling is the funniest sport I have seen.  Best is how the duo scrubs the ice with brushes in front of the moving stone, while Anette Norberg barks out pagan Swedish curses, in an attempt to steer the thing after it has left her hand.  The economics of curling?  I needed only to watch it.  If the sport falls on hard times, it could sell itself as a Monty Python skit, albeit in an obscure Swiss German dialect.  Is it the only Olympic sport where you can wear earrings while playing?  Here is a curling video — be baffled, be very baffled.  The division of labor is limited by the extent of the market, as they say.

Can more bonuses improve the NBA?

Rick Barry has an idea:

If every player had money on the line in every game based upon a victory, you’d see some unbelievable competition. Sports and team concept would change dramatically.

Of course "per-victory" contracts are possible now, but most incentive clauses are based on individual performance or a victory or playoff threshold.  Why? 

1. Star players might injure themselves too frequently if they try hard every game.  Their value to the league involves an external benefit which they do not internalize when deciding how much injury to risk.  Plus an owner wants them to conserve their energy for the playoffs or for critical opponents.

2. Most fans don’t know the difference between a good game and a bad one.  They want only to see the stars, and maybe a few slam dunks.  So why impose more pecuniary risk on the players?

3. Players already try hard on offense.  Making them play tough defense would deaden the game.  This doesn’t explain why a single team doesn’t use per-victory bonuses, but it does suggest there will be no league pressure to do so.

4. Per-victory compensation will lead the players to blame each other too much for particular losses.  Team morale and thus team productivity will decline.

5. Incentives of fame and approbation already impose this incentive structure, and in a more powerful way than money could do.

6. When bargaining over a contract, a player would reveal negative information about his self-estimated talent level by accepting high-powered incentives.  If you cut a deal with big bonuses, the team must think your low-effort state of output is pretty crummy.

I put weight on all of these, but on #6 least.  Of course this relates to the general question of why firms don’t use more high-powered incentives.  Could the lesson be that fewer business variables matter than you might think?  (A related question is why don’t more firms use idea futures.) 

Would Rick Barry’s idea improve the NBA?  Comments are open…