The Concise Encyclopedia of Economics


by Robert D. Tollison
About the Author
Until recently, economists who analyzed sports focused on the such things as the antitrust exemption, the alleged cartel behavior of sports leagues, and the player draft (see Sports). Sportometrics is different. It is the application of economic theories to the behavior of athletes in the real world to see if we can explain what they do, and to see if what they do can help us explain the behavior of people in other professions. Instead of being about the "economics of sports," sportometrics introduces the idea of "sports as economics."

In other words, sportometricians view sports as an economic environment in which athletes behave according to incentives and constraints. Economists have, for example, shown how incentives and costs can explain how much effort runners exert in a footrace (see Higgins and Tollison). Using data from sprint events of the modern Olympics from 1896 to 1980, the cited study found that running times were faster when there were fewer contestants in a race. This makes sense. With fewer runners each runner's chance of winning is greater, and therefore, each runner's expected gain from putting out additional effort is greater. This cannot be attributed to decreased congestion: because each runner is given a lane, congestion does not diminish when the number of contestants falls.

The study also found that the harder an Olympic record is to break, the less effort contestants will expend to break it. Can any fan ever forget Carl Lewis's pass on a third attempt to break Bob Beamon's long-jump record in the 1984 Olympics? Horse racing is an even better contest to analyze, because there prerace odds were used to control for the differential abilities of the racers. The study found similar results: an increase in the number of competitors leads to an increase in average race times.

The economic activity called arbitrage also enters into sports. Arbitrage is what economists call the exploitation of price differences for the same commodity. For example, if wheat sells for $3.00 a bushel in Chicago and $3.30 in Indianapolis, and if it can be transported to Indianapolis for 20% per bushel, then an arbitrageur can make 10% on each bushel he buys in Chicago and sells in Indianapolis.

What does this have to do with professional basketball? A lot. Each player has an incentive to build up his individual performance statistics, particularly the number of points he scores. But a good coach enforces a regime in which shots are allocated—arbitraged—among players to maximize the probability that each shot taken will be made. Players who make a higher percentage of their shots should, thus, be given more chances to shoot. Using data from the National Basketball Association, Kevin Grier and I found that coaches who are better at enforcing such an allocation of shots—better arbitrageurs—are more likely to win games and to have longer tenure as head coaches. Among the better coaches, we found, was Cotton Fitzsimmons, the former coach of the Phoenix Suns. He became head coach of the Kansas City Kings in 1977 and, in his first full season, led the Kings to forty-eight wins and a shooting efficiency rating of 66 percent, which is very high.

In each case studied, economists gain insight not only on the behavior of athletes and coaches, but also on more general economic problems. The behavior of runners is analogous to that of bidders for a government contract: a bidder will expend more effort—lobbying and the like—the fewer competitors it has for a contract. Coaching a team is analogous to managing a company: within a company, managers "arbitrage" tasks among employees.

Analyzing sporting events, moreover, provides insights into the workings of all competition within well-defined rules—just as we see in our economy. Incentives and constraints are spelled out clearly; players behave as rational economic actors; sporting events and seasons can be seen as the operation of miniature economies—and so on. One of the first sportometrics analyses done (see McCormick and Tollison) showed, for example, that basketball players respond rationally when an additional monitor (referee) of their behavior is on the court. Using data on the Atlantic Coast Conference Basketball Tournament, the study found that, other things being equal, adding one referee reduced the number of fouls per game by about seventeen, a reduction of 34 percent! A more general application of this research is to the issue of how we can reduce the number of crimes by adding additional police.

Most economic analysis is based on the idea that when the incentive to do something increases, people will do more of it. Kenneth Lehn, formerly chief economist at the Securities and Exchange Commission, showed that this idea applies even to the amount of time baseball players spend on the disabled list. After players were signed to multiyear, guaranteed contracts with no extra pay for each game played, their incentive to play diminished. Sure enough, Lehn found that the amount of time players spent on the disabled list increased from 4.7 days in the precontract period to 14.4 days after—an increase of 206 percent.

Sports data have been used to understand other interesting issues. Another study (see Fleisher, Goff, and Tollison), using data on how the National Collegiate Athletic Association (NCAA) enforces its rules, studied cartel behavior by colleges and universities. Although this study is closer to what I called the "economics of sports," it produced the novel finding that the NCAA apparently enforces its rules to help the old-time football powers that have long controlled the organization. As other teams improve on the playing field, we found, they are put on probation as a way to protect the athletic success of old-time schools such as Notre Dame and Ohio State.

Yet another study (see Goff, Shughart, and Tollison) found that the structure of high school basketball competition affects the career longevity of NBA players. "Open" competition refers to situations where all schools compete for the state championship, as in the movie Hoosiers. Under "classified" competition, schools compete in divisions that are based on school size. We theorized that NBA players from the open states should be "fitter" and better "adapted" for survival in the NBA. Using a large sample of NBA players, that is exactly what we found. Players from open competition states, such as Indiana, have careers in the NBA that, on average, are 1 to 1.5 years longer than players from states with classified competition. Given an average tenure for NBA players of about five years, that is an increase of 20 to 30 percent.

About the Author

Robert D. Tollison is a professor of economics at the University of Mississippi. He is a leader in using economic analysis to explain behavior of politicians and of athletes.

Further Reading

Fleisher, Arthur A., Brian L. Goff, and Robert D. Tollison. The National Collegiate Athletic Association: A Study in Cartel Behavior. 1992.

Goff, Brian L., William F. Shughart II, and Robert D. Tollison. "Homo Basketballus." In Sportometrics, edited by Goff and Tollison. 1990.

Goff, Brian L., and Robert D. Tollison, eds. Sportometrics. 1990.

Higgins, Richard S., and Robert D. Tollison. "Economics at the Track." In Sportometrics, edited by Goff and Tollison. 1990.

Lehn, Kenneth. "Property Rights, Risk Sharing, and Player Disability." Journal of Law and Economics 25 (October 1982): 343-66.

McCormick, Robert E., and Robert D. Tollison. "Crime on the Court." Journal of Political Economy 92 (April 1984)

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