Basketball Team Composition and Relative Prices
By David Henderson
I’ve been too busy to watch much of the NCAA March/April madness, but I started watching the final game tonight. When I realized that it’s a private school (Duke) vs. a government school (U. of Wisconsin), I made a prediction.
I predicted that when the 5 starting members of each team were announced, at most one Duke player would be from North Carolina and at least 3 Badgers would be from Wisconsin.
Why? Not the relative populations of the two states: In fact, North Carolina’s population is almost double Wisconsin’s.
The reason is relative prices.
Think about the recruiter’s challenge. At Duke, it doesn’t matter whether you recruit from North Carolina or from anywhere else. Either way, if you give a scholarship, you have to come up with the steep tuition, and the tuition is the same whether the recruit is from Durham or Durango.
At Wisconsin, it matters a lot where the recruit is from. If the recruit is from Wisconsin, the team doesn’t have to come up with the steep out-of-state tuition. If the recruit is from outside Wisconsin, by contrast, the team has to come up with that steep fee. So the relative price of a Wisconsinite is well below the relative price of a non-Wisconsinite. QED.
Sure enough, the numbers worked out.