Casual empiricism suggests that celebrities engage in more anti-social and other socially unapproved behavior than non-celebrities. I consider a number of reasons for this stylized fact, including one new theory, in which workers who are less substitutable in production are enabled to engage in greater levels of misbehavior because their employers cannot substitute away from them. Looking empirically at a particular class of celebrities – NBA basketball players – I find that misbehavior on the court is due to several factors, including prominently this substitutability effect, though income effects and youthful immaturity also may be important.
Elsewhere, here is a Kaushik Basu micro piece on the law and economics of sexual harassment. And a more recent piece from the sociology literature. The practice increases quits and separations, with some of the costs borne by harassment victims and not firms; given imperfect transparency, recruitment incentives may not internalize this externality. On other issues, here is a relevant AER article. And this piece applies an insider-outsider model. Here is Posner (1999), perhaps he has changed his mind. Here is work by Elizabeth Walls, from Stanford.
I see negative externalities to sexual harassment across firms and sectors, and so, contra Posner (1999) and Walls, the most just and also efficient outcome is to tolerate one explicit and transparent form of the practice in the sector of formal prostitution and otherwise to keep it away from normal business activity. I believe such a ban boosts womens’ human capital investment, investment in firm-specific skills, aids the optimal production of status, and limits one particular kind of uninsurable risk, with all of those benefits correspondingly higher in an O-Ring or Garett Jones model of productivity.
By Ray C. Fair and Christopher Champa (pdf), here is the abstract:
Injury rates in twelve U.S. men’s collegiate sports are examined in this paper. The twelve sports ranked by overall injury rate are wrestling, football, ice hockey, soccer, basketball, lacrosse, tennis, baseball, indoor track, cross country, outdoor track, and swimming. The first six sports will be called “contact” sports, and the next five will be called “non-contact.” Swimming is treated separately because it has many fewer injuries. Injury rates in the contact sports are considerably higher than they are in the non-contact sports and they are on average more severe. Estimates are presented of the injury savings that would result if the contact sports were changed to have injury rates similar to the rates in the non-contact sports. The estimated savings are 49,600 fewer injuries per year and 5,990 fewer injury years per year. The estimated dollar value of these savings is between about 0.5 and 1.5 billion per year. About half of this is from football. Section 7 speculates on how the contact sports might be changed to have their injury rates be similar to those in the non-contact sports.
Here is NYT coverage of the piece, and an excerpt:
When he goes to Stanford football games, he [Roger Noll] said, one of the things he notices is the television production people on the sideline walking around with parabolic microphones.
“I’ve asked them why they do that,” he said. “They are catering to their audience. The audience wants to hear heads crack.”
A bit like how they soup up Planet Earth II with all kinds of phony noises for the animal movement.
Larry was in superb form, and we talked about mentoring, innovation in higher education, monopoly in the American economy, the optimal rate of capital income taxation, philanthropy, Hermann Melville, the benefits of labor unions, Mexico, Russia, and China, Fed undershooting on the inflation target, and Larry’s table tennis adventure in the summer Jewish Olympics. Here is the podcast, video, and transcript.
Here is one excerpt:
SUMMERS: Second, the VIX — people tend to underappreciate this. The volatility of the market moves very much with the level of the market. The reason is that if a company has $100 of debt and $100 of equity, and then the stock market goes up, it’s 50/50 levered.
If the stock market goes up by $100, then it has $100 of debt and $200 of equity and it’s only one-third levered. So when the stock market goes up, its volatility naturally goes down. And the stock market has gone way up over the last 10 months. That’s a factor operating to make its volatility go significantly down.
It’s also the case if you look at surprises. The magnitude of errors in the consensus estimates of company profits or the consensus estimates of industrial production or what have you, numbers have been coming in close to consensus to an unusual degree over the last few months.
I think all those things contribute to the relatively low level of the VIX, but those are more in the way of ex post explanations. If you had told me everything that was going on in the world and asked me to guess where the VIX would be, I would expect it to have been a little higher than it is right now.
COWEN: If there’s an ongoing demand shortfall, as is suggested by many secular stagnation approaches, does that mean monopoly cannot be a major economic problem because that’s from the supply side, and that the supply side constraint isn’t really binding if you think of there as being multiple Lagrangians. Forgive me for getting technical for a moment. Do you see what I’m saying?
SUMMERS: That wouldn’t have been the way I’d have thought about it, Tyler, but what you’re saying might be right. I think I’d be inclined to say that, if there’s more monopoly, there’s more money going to monopoly firms where there’s a low propensity to spend it, both because the firms don’t invest and because the owners of the firms tend to be rich or endowments that have a low propensity to spend.
So the greater monopoly power, to the extent that it exists, is one factor operating to raise savings and reduce investment which contributes to demand shortfalls and secular stagnation.
I also think that there’s likely to be less entry in competition in markets that aren’t growing rapidly than there is in markets that are growing rapidly. There’s a sense in which less demand over time creates its own lack of supply.
COWEN: What mental qualities make for a good table tennis player?
SUMMERS: Judging by my performance, qualities that I do not possess.
SUMMERS: I think a deft wrist, a certain capacity for concentration, and a great deal of practice. While I practiced intensely in the run-up to the activity, there were other participants who had been practicing intensely for decades. And that gave them a substantial advantage.
If you think you know someone who is very smart, Larry is almost certainly smarter.
This paper, “The Hot-Hand Fallacy: Cognitive Mistakes or Equilibrium Adjustments? Evidence from Major League Baseball,” delivers on both the theory and the empirics:
We test for a “hot hand” (i.e., short-term predictability in performance) in Major League Baseball using panel data. We find strong evidence for its existence in all 10 statistical categories we consider. The magnitudes are significant; being “hot” corresponds to between one-half and one standard deviation in the distribution of player abilities. Our results are in notable contrast to the majority of the hot-hand literature, which has generally found either no hot hand or a very weak hot hand in sports, often employing basketball shooting data. We argue that this difference is attributable to endogenous defensive responses: basketball presents sufficient opportunity for transferring defensive resources to equate shooting probabilities across players, whereas baseball does not. We then develop a method to test whether baseball teams do respond appropriately to hot opponents. Our results suggest teams respond in a manner consistent with drawing correct inference about the magnitude of the hot hand except for a tendency to overreact to very recent performance (i.e., the last five attempts).
Yes. The context is female jockeys in horse racing, and so we turn to Alasdair Brown and Fuyu Yang in the Journal of Economic Behavior and Organization:
Male and female jockeys compete side-by-side in horse racing.
Betting market prices provide a window onto society’s beliefs about female ability.
Women are slightly underestimated, winning 0.3% more races than the market predicts.
Underestimation is greater in jump racing, where female participation is low.
Question What are the neuropathological and clinical features of a case series of deceased players of American football neuropathologically diagnosed as having chronic traumatic encephalopathy (CTE)?
Findings In a convenience sample of 202 deceased players of American football from a brain donation program, CTE was neuropathologically diagnosed in 177 players across all levels of play (87%), including 110 of 111 former National Football League players (99%).
Mr. Ferretti, 36 years old, and Mr. Lopez, 44, had enjoyed themselves under the supervision of a doctor for what some are calling a brosectomy—a vasectomy with friends in a cushy setting of couches, snacks, big-screen TV, and in some clinics, top-shelf liquor.
Here is the WSJ story. And:
The University of Utah Health in Salt Lake City has run March Madness promotions for the past three years. It offers a vasectomy package that includes a Utah Jazz basketball ticket giveaway, goody bags and basketball-shaped ice packs. This year, its surgeons performed more than three times as many vasectomies in March compared with the average number done in the other months through May, according to the health center’s internal marketing data.
They promised us flying cars, and all we got was…
I can pass along that there’s another angle to the grunts (having played a lot of tennis). The sound of the ball hitting the racket provides useful information, particularly for a mishit or a powerful shot — because you have to move up or back quickly to cope. For years, top tennis players have used grunts and shrieks to conceal this sound from their opponents (e.g. I always thought Sharapova, and Seles years ago, were prime offenders). There’s no need for such noises as a function of effort, or events like NBA games would sound much different. But the tennis authorities haven’t done anything about it.
In table tennis, where I have a very long involvement, the spin on the ball is tremendous in high-level play — so much so that a concealed dead ball (with no spin) is a very effective tactic because the opponent will err by responding to the spin that isn’t there. Years back, a totally dead racket covering was developed for this purpose; even worse, it tends to continue the spin so that the originator effectively gets the reverse back of what he put on the ball. A top US player with whom I grew up developed a style where he used only one side of the racket for both forehand and backhand, while frequently flipping between the spinny and dead sides of his racket that were colored the same. Players could hear the difference, however, as the dead side made a little thud when struck. His innovation was to stomp his foot on the floor each time he struck the ball (going beyond the norm of the time of just stomping on the serve). A subsequent regulatory change required rackets to have one red and one black side, to facilitate keeping track of which rubber covering is being used for a given shot.
The league and union introduced the super-max to give incumbent teams more of an edge in retaining superstars. If the Bulls indeed felt queasy about the possibility of spending it on Butler, he becomes the second player — alongside DeMarcus Cousins — dealt at least in part because the incumbent team didn’t really want that advantage. Paul George may mark case No. 3, though Kevin Pritchard, Indiana’s GM, sounded heartbroken Thursday about the inevitability of George playing elsewhere. The super-max may be having almost the opposite of its intended effect.
The Bulls were rather publicly uncomfortable with the idea of Butler as foundational player.
Here is the full article, by Zack Lowe, one of the best writers around. Quick, what is the dual wage hypothesis for CEO pay? For academic hiring?
Ben was wildly charming and charismatic before the crowd. My questions tried to get at how he thinks rather than the hot button issues of the day. Here is the transcript, audio, and video. We covered Kansas vs. Nebraska, famous Nebraskans, Chaucer and Luther, unicameral legislatures, the decline of small towns, Ben’s prize-winning Yale Ph.d thesis on the origins of conservatism, what he learned as a university president, Stephen Curry, Chevy Chase, Margaret Chase Smith, and much more.
Here is one bit from Ben:
Neverland and Peter Pan is a dystopian hell. Neverland is not a good place. You don’t want to get to the place where you’re physically an adult and you have no moral sense, you have no awareness of history, you have no interest in the future. Peter Pan is killing people, and he doesn’t really care; he doesn’t remember their names. It’s a really dystopian thing. Perpetual adolescence is the bad thing.
Adolescence is special. We need to figure out how to use adolescence; it’s a means to an end. So that’s what the book’s about.
I am an Augustinian in my anthropology, but Rousseau is a romantic. I think he’s wrong about lots and lots and lots of things, but I think he’s really, really smart. You have to engage him, and you have to engage people who have ideas that are different than yours because you may ultimately be converted to their view, and you need to encounter things that are big and challenging and threatening to your worldview. Or you may sometimes come to believe you’re right and be able to respond to the counterarguments, while your argument will be better. You’ll grow through it, and you’ll become more persuasive to others through it.
So I think Rousseau’s fundamental anthropological understanding of why we feel that things are broken in our soul is, he’s got a reason to blame society for everything we feel is wrong in the world, and I think there’s a lot of brokenness deep inside all of us, and so, that’s the Augustinian versus Rousseauvian sense of what’s wrong.
But I think the Emile is brilliant, both because it forces me to wrestle with ideas that I don’t agree with, or mostly don’t agree with, but I think it’s also just an incredibly good read.
Then there was this:
COWEN: …Might one argue that the more one thinks and writes about sex, the more you’re led to Rousseauian conclusions that a certain kind of constraint will prove impossible, and then one is pulled away further from Ben Sasse–like conclusions.
SASSE: That’s a really fair question. I wanted to stay away from sex 100 percent, and then ultimately I couldn’t do it.
COWEN: There’s three pages in your book about sex.
COWEN: And page 33 mentions it once.
You’ll have to read the whole thing to see where Ben took that line of inquiry, his answer was excellent.
As organized, multiplayer video game competitions — also known as esports, or electronic sports — continue to gain recognition in China, entertainment giant Tencent Holdings Ltd. has accelerated its esports expansion with the unveiling of a new five-year plan.
The plan, which involves setting up esports leagues, tournaments and associations, nurturing players and constructing esports-themed industrial parks, was published by Tencent E-Sports, a subsidiary established in early December.
Tencent is the world’s largest mobile gaming company by revenue, according to research firm Newzoo. With the new plan, it aims to create a 100-billion-yuan esports industry in China within five years, the company announced on Friday at a press conference.
The plan was based on Tencent’s expectations that China is set to become the world’s largest esports market. Tencent predicted there will be 220 million esports players in China and 335 million globally by the end of this year.
Here is the story. And:
The number of Chinese “red tourists” who visit Russia to retrace a shared communist history has been soaring in recent years, contributing to the wave of Chinese visitors to Russia that has grown with the help of closer bilateral relations between the countries, according to industry insiders on Tuesday.
“There definitely is growing interest among Chinese tourists for Russia, especially the older generations, who are nostalgic about the history of Russia,” Zeng Qingan, general manager of Beijing Global Travel Ltd, told the Global Times.
Zeng said that since his company started tour groups to Russia nine years ago, the number of participants has increased fast, especially after the company redesigned its tour routes in 2014 to cover historical Soviet Union era sites, including the Red Square and Victory Square in Moscow, the Lenin Memorial Museum in Ulyanovsk and Moscow State University. The travel firm called it the “Red Tourism” package.
Link here. The revolution not only will be televised, but they will make an e-sports version of it, marketed on WeChat.
Via Marc Canal Noguer:
Taking My Talents to South Beach (and Back)
Shoag, Daniel, and Stan Veuger. “Taking My Talents to South Beach (and Back).” HKS Faculty Research Working Paper Series RWP17-019, May 2017.
We study the local economic spillovers generated by LeBron James’ presence on a team in the National Basketball Association. Mr. James, the first overall pick of the 2003 NBA draft, spent the first seven seasons of his career at the Cleveland Cavaliers, and then moved to the Miami Heat in 2010, only to return to Cleveland in 2014. Long considered one of the NBA’s superstars, he has received the league’s MVP award four times, won three NBA championships, and been a part of two victorious US teams at the Olympics. We trace the impact a star of Mr. James’ caliber can have on economic activity by analyzing the impact his departures and arrivals had on business activity close to the Cleveland Cavaliers and Miami Heat stadiums. We find that Mr. James has a statistically and economically significant positive effect on both the number of restaurants and other eating and drinking establishments near the stadium where he is based, and on aggregate employment at those establishments. Specifically, his presence increases the number of such establishments within one mile of the stadium by about 13%, and employment by about 23.5%. These effects are very local, in that they decay rapidly as one moves farther from the stadium.
Here’s an excellent story about Chris Carr who played in the NFL for 10 years and is now about to graduate from law school. That’s unusual but not so unusual, the late U.S. Supreme Court Justice Byron R. White also played in the NFL. What makes this story special is that Carr will specialize in immigration law. Why?
Carr grew interested in immigration law a few years ago, after reading Thomas Sowell’s “Ethnic America.” (“A really cool book,” he said.) That made him reflect on the country and “just how unique the American experiment was.” He read blog posts by Bryan Caplan, an economist at George Mason University, and the writing of Michael Huemer, a philosophy professor at the University of Colorado.
Hat tip: Fabio Rojas.
That is the topic of my latest Bloomberg column, here is one bit:
The decline of TV revenue is not the same as a decline of interest in the sport. NBA basketball is alive and well; it’s just that more people are cutting the cord on cable. They still might follow the NBA through its website, or watch highlights on YouTube, or share gifs on Twitter.
That shift is likely to favor the stars and the most athletic players, because they are more likely to be featured in very short clips. As for the incentives, player salary will matter less, and the desire to become famous on the internet — and thus win lucrative endorsement contracts — will discourage team play. Expect more attempts to produce spectacular sequences, even if that doesn’t always translate into wins. “Boring” but fundamentally sound teams — which are better to watch for a 2.5 hour game — will be disfavored by this trend. Sorry, San Antonio!
Here is another:
Another possibility is that the NBA will consolidate with fantasy basketball and video gaming to augment their revenue. The NBA already has plans to introduce an e-sports product. More speculatively, if more states legalize sports gambling, the league could enter into a revenue-sharing agreement with casinos or bookmakers. Imagine redesigning the playoffs to maximize the number of decisive games and thus boost betting interest — that could mean more but shorter playoff series. At least the fantasy component of such a basketball conglomerate might redistribute some of the attention back to players who are not superstars. Gamblers also tend to be well-informed about the teams they bet on, so this direction could encourage a smarter NBA, better designed for the nerds and fanboys.
Do read the whole thing.
Loving winning and hating losing are two fairly distinct motivations. For instance, a fairly joyless person may nonetheless be motivated by the humiliation of a loss, or a non-envious, non-spiteful type could receive great pleasure from being number one, while not minding if someone later climbs higher yet.
If you both love winning and hate losing that is especially useful in one-on-one, zero-sum competitions, such as chess and tennis, and also in most team sports and perhaps securities trading as well. Such people are more motivated, and motivated from more sides of their being, and if one of the emotions flags a bit the other is there to step in and maintain the pace and focus.
In venture capital, I suspect that hatred of losing may be a disadvantage. No matter how successful you may be, most of your individual investments will lose money and hatred of losing may make you too risk-averse. It might be better to have the ability to simply forget your losses and put them behind you.
For academics, it is more important to love gains than to hate losses. Provided they don’t embarrass you, your forgotten articles just aren’t that big a deal and everybody has them, including Nobel Laureates. A single key piece can make your career, however.
Is hatred of loss also unnecessary for book authors and music stars? Ideally, you would think they should take lots of chances, but the exact tracking of sales makes them more risk-averse and thus boosts the relative status of the loss haters. If they release a clinker book or album, the intermediaries are less keen to promote them next time around. To the extent intermediaries become more important, that boosts the loss-hating performers, because intermediaries themselves are somewhat loss-hating.
What is the correct mix of gain-loving and loss-hating for a Navy Seal? For a journalist? A lawyer, programmer, or engineer?
In a job interview, what question should you ask to discern if someone is a gain lover or a loss hater or both? Or neither!