January 19, 2010
Score one for the good guys?

Vic Matheson, Phillip Porter and I were cited in this reasonably balanced Miami Herald story concerning the net economic benefits of hosting the Super Bowl, especially in the case of South Florida.

It is somewhat telling about who declined to be interviewed for the story (economic impact study authors) and the "arguments" offered against the increasingly large number of academic studies showing ex post how little net economic impact the biggest sporting events seem to have on local host economies.

There is one interesting paragraph in the story:

Advocates of the Super Bowl as an economic engine dismiss its academic skeptics as using complicated formulas to obscure the obvious. And they note that the reports bashing NFL figures bring the professors coveted media coverage as the big game approaches.

This is an interesting argument. First, it is possible to paint the OLS estimator as a "complicated formula" but it is immensely more elegant than the strained assumptions and calculations that go into the generic regional economic impact study. Rather than making assumptions about what will be spent, in what sectors money will be spent, and what multipliers to assign to these dollars, the ex post studies (by myself, Dennis Coates, and Vic Matheson, to name a few) look at tax revenues, taxable activity, hotel occupancy rates, and so forth, all after the event takes place. This is a vital distinction and does not make us skeptics.

Indeed, I think most of the sports economists I know would be happy to find the magic formula that turns sporting events into big impact events. Without sporting events, stadiums, leagues and franchises, sports economists have very little to talk about. We are "skeptics" only to the extent that we investigate the impact of the events ex post and let the data speak rather than imposing our priors onto the results.

As for "coveted media coverage," I didn't seek out the reporter, he called me. Do I like spending 1.5 hours discussing the findings of myself and other economists? Sure. Do I care if I make into a newspaper story in the process? Not really. I get no raise from my college, I get no free coffee at the local gas station, and after being mentioned in over 75 articles in publications ranging from the Wall Street Journal to Newsweek to Bloomberg, the marginal "press coverage" is no longer coveted.

The more lucrative approach would be to find evidence that the NFL Super Bowl generated $500 million or more dollars for the host economy and sell that peer-reviewed research to the NFL in exchange for tickets to the game.

I probably read too much into such nameless accusations, but I wonder if such accusations come from others projecting their own "coveting." It is dangerous to claim knowledge about the motivations of others, although there is no shortage of people willing to do so. In my case, the accusation is unfounded and mistaken. I hope, in the end, such accusations come across as fairly weak and the reading audience sees them that way.

Outside of about thirty (or slightly more) macro-economists who have a hot-line to the White House or Congress, it often feels that most of us (economists) have little impact on public policy and the public debate. However, in the case of sports economics and the stadium game, my sense is that we are are having some success in alerting the public to the true costs and benefits of building stadiums, hosting franchises, and bidding on events.

Does this imply that sports economists do not want Miami to build a new stadium for the Dolphins? I can only speak for myself and say, I don't really care what they do. I do care, however, that the public debate (at least about this little corner of the collective sandbox) be based on, as much as possible, accurate measures of costs and benefits. Once that is done, the actual outcome of the public choice experiment is of little concern to me.

Posted by Craig Depken at 02:14 PM in Sports

The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith

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