In this episodeEconTalk host Russ Roberts hosted Roger Noll, eminent American economist and Emeritus Professor of Economics at Stanford University. One of Noll’s many research interests is the economics of sport and entertainment.
Roberts and Noll discuss the economics of everything sports-related, ranging from the financial output of football, baseball and basketball arenas, to the free agency labor market in Major League Baseball (MLB ) and finally the increased intensity of sports for young people. The episode questions the structure of both new and traditional values in sport as Noll and Roberts shed light on the motivations that dictate the action of the various parties involved in the world of sport.
We hope you’ll use the prompts below to share your thoughts in the comments. or start your own offline conversation:
1- Roberts and Noll agree that some parents have an end in mind that rests on the hope that their children will achieve higher levels and economic gains by encouraging their children’s participation in sports. The odds of moving beyond high school sports into potential payout are against the kids, but I agree with Noll that the level of organization and seriousness in youth sports has intensified.
Do the parents have a rational motivation or do they hope that their children will reach an academic or professional level in their sport? How common is this feeling, and how can Noll’s point about Jeremy Lin’s anomaly be applied to the case?
2- Baseball has an interesting dynamic between several well-known value-determining statistics and the inherent unpredictability of game difficulty. Roberts and Noll discuss the ever-changing strategy of GMs and how small market teams can compete even when the odds are in favor of franchises with much higher spending.
How does the measurability of expected value associated with random outcomes in baseball play a role in managerial decision making and competitive balance in MLB?
3- Economists would predict that the introduction of a normal labor market (free agency in MLB) would lead to a competitive imbalance within the sport, but Roberts and Noll agree that free agency hasincrease competitive balance. MLB owners should hope for savvy general managers who play more successfully than not, but many teams, like the Mets, with more buying power than others, are still underperforming. Even with a predictive database of measurable statistical parameters, there is a knowledge issue with other independent variables for managers when drafting, signing, or negotiating players.
What is the ideal strategy for GMs in running an MLB franchise, and how should buying power influence strategy?
4- Roberts and Noll point to the improbabilities of sports that contribute to their immense popularity. This season, Major League Baseball has more buzz. Rule changes, like the pitch-clock and larger bases, each produce more action, removing periods of stagnation that may have diminished the sport’s entertainment value for some fans in the past.
How did rule changes increase baseball’s popularity and its “it” factor as an unpredictable spectacle featuring the highest level of athletic competition?
5- Noll advocates for greater player influence on Major League Baseball’s performance-enhancing drug policies, where the top policymaking influencer considers the The prisoner’s dilemma: What drugs will be used to get ahead and leave other players in the dust?
Following Noll and Roberts’ discussion of Barry Bonds’ impending Hall of Fame induction, how could the player’s perspective be more rational in establishing a fair drug program in MLB?
Brennan Beausir is a student at Wabash College studying Philosophy, Politics and Economics and is a 2023 Liberty Fund Summer Fellow.