Next Year in Baltimore: NAASE at Western Meetings in Portland

Had a good morning in Portland. I presented my paper and it went reasonably well. My discussant had some good comments, of course I wish the paper had fewer issues it's always good to have someone point them out. Plus I had lunch with the discussant afterword so all is well.


I haven't seen that many papers yet at the North American Association of Sports Economics (NAASE). Two good ones were by economists from Baltimore. The first John Burger & Stephen Walters (Loyola just down the road from Towson) and the second paper Dennis Coates (UM Baltimore County) co-authored with Brad Humphreys (University of Alberta, not from Baltimore)

In the first paper we learned that World Series rating fall as income goes up. The presenter Steve Walter said MLB has managed to make the World Series an inferior good. I agree if we are talking about 2006 as a Tigers fan. Also the paper finds that long games decreasing ratings. So get the hitters back in the box and let's play ball!

The second paper looked at NFL attendance. Using betting lines Coates and Humphreys find that having each team with an equal chance of winning every game would have decreased total attendance 9% over what it was over the last 25 years. Their work concludes if the home team has a better chance of winning attendance goes up. Just a quick thought, this could imply that improving home field advantage could improve attendance. Does this mean the NFL will mandate piped in vuvuzela noise when ever the visiting team has the ball. If the World Cup is any indication scoring is impossible when vuvuzela's get going!

Why I'm at Seattle's Best in Portland?

Updating from Seattle's best in Portland. I know Portland has better coffee shops, but I need wireless to find them and Seattle's Best was close to the hotel. Funny enough I walked passed a Starbucks that was full to this Seattle's Best, and Starbucks owns Seattle best. Must find the Coffee People!

Also some one found my blog by googling "Do Professors really work during the summer?"

The answer is a lot do, but some don't. My department and college expect that I publish 2 articles every 5 years (and even more if I want tenure, which I do). How I would only do my research in 9 months of the year while teaching I don't know.

Some professors work very little during the summer. On the other hand professor contracts are technically for 9 or 10 months.

But summer work can be rewarding currently (while not at this exact moment) I'm working for the InterAmerican Development Bank and the British government's development agency on grants.

So yeah I'm working, but it's not so bad when you can do it from a coffee shop in Portland.

2,400 miles from my sandwich

I'm sitting in the Phoenix airport on my way to the Western Economic Association meeting in Portland. There I'll be presenting a paper on minor league baseball attendance and top prospects. I'm discussing a paper on NASCAR, and I'll be attending a lot of sessions on Sports Economics. I'll try to blog some impressions over the next couple of days, if I don't fall asleep at dinner given I'm on EST-dad time.

On my trip today I tried to bring a sandwich. Experienced travelers know airport food is generally low quality and high priced. So I bought a really tasty sandwich at Whole Foods today. But I left it in my fridge at home, so no tasty sandwich for me.

Why is it more people don't pack food with them on a plane?

Food spoils so you need to buy it shortly before you leave. But you also have to do lots of other things last minute, so your opportunity cost (value of your time) is higher just before a trip. Also the cost of carrying something is higher than when you say go to work, since when traveling you have to carry a bunch of other stuff. Then finally you have to remember your sandwich, which is harder since you have to remember things you don't normally have to think about (did I pack tooth paste, my hotel's address, and my flight time).

Hope my wife enjoys the sandwich!

The Honey Moon is Over in Lancaster

Yesterday the Wall Street Journal had an article on the Lancaster Jethawks a minor league baseball team. Lancaster's home field features a great home run environment where the winds are blowing out so fast that the coach sometimes cancels batting practice because it's too easy to hit a home run.

I liked this article because it relates to some research Tom Rhoads (a Towson colleague) and I have been doing on minor league baseball (paper). In the linked paper we found that hitting home runs doesn't seem to increase the number of fans that attend games. The Jethawks hit almost 50% more home runs than the average team at their level over their 14 years of existence.

The one thing that really seems to increase attendance the most is a new ball park. The Jethawks played their first season in 1996 in a brand new ball park, in that year attendance was over 300,000 attendance. However, the honey moon didn't last attendance then fell every year until 2006 when it reached it's lowest point at just over 117,000. Last year there was an uptick and 150,000 people attended a game. The results are right in line with our findings that stadiums tend to have their biggest impacts in their first ten years, with the impacts declining over time.

The stadium cost over 14 million dollars to build. I'm not sure if this stadium was built with public funds, but many like it were. Our research also shows that particularly at the lowest levels where a stadium might add 400,000 fans over 10 years, that public spending outlays to pay for stadiums are much more than their economic benifit based on increased attendance.

This research is in line with research by economists at the major league level that stadiums don't pay off.

Lemon Law Students

“If somebody’s paying $150,000 for a law school degree, you don’t want to call them a loser at the end,” says Stuart Rojstaczer, a former geophysics professor at Duke who now studies grade inflation. “So you artificially call every student a success.”

From a recent NY Times article on grade inflation in law schools. One thing I didn't know about law schools is some of the top law schools (Harvard, Standford, Yale, Cal) have eliminated grades according to the article, moving to a pass fail system.

I would guess non-top schools won't be eliminating grades, because I think it would create a lemon problem. The lemon problem is a classic story from economics. In the problem you have a seller traditionally a used salesman and a buyer. The seller (or in this case the law school) knows more about the student than the buyer the hiring firm. If the firm can't tell good from the bad students apart or the buyer can't tell the good cars from the bad cars (lemons), then fewer students are hired and cars are bought. The solution is to provide a GPA or for used car an independent inspection, so buyers can separate the two. Then high quality students will get hired with higher salaries and high quality used cars will go for higher prices.

I'm not sure if this is the case but potentially one reason top schools might have an incentive to make it unclear who is good, is that typically the best students might be on scholarship while the not as good students are paying full tuition. So by hiding the quality of their students top schools can attract better students to pay full tuition.

Lower quality schools cannot hide grades, because they cannot convince hiring firms their average student is of sufficient quality to hire.

I don't know anything about law schools though, so please don't sue me if I'm wrong.

Video Killed the Economics Prof?

A recent paper by Figlio, Rush, and Yin tests the impact of going to a live lecture versus taking the same class online. They got about 300 volunteers and assigned them randomly to an online or live lecture. They find there are positive impacts of having a real live prof instead of watching the same lecture on video. Not surprisingly the biggest impacts of live lectures were on low GPA students who saw their scores increase 4 percentage points (on the typical 0-100 scale), not sure if this is surprising but a similar impact is found for male students. Although total impacts of live lectures were measured only at about 1 point.

A few other things. The class the students would be attending live was a 200 person lecture, so this isn't the type of class you would think would make a difference to see live. I wonder if you would find greater impacts if you tested the same thing on a 20 or 30person class?

Some final questions...

What are the costs differences?

What do the students think about online classes?

Does the live audience increase the performance of the prof?

h/t to Chris Blattman

Economics of Being Bert or Ernie

If you have a minute here is a classic Bert and Ernie, I suggest you watch it. No really watch it, it will be more fun than more short description that is at the end of the post.

One of the many differences between Bert and Ernie is their discount rate or how they value the future. Bert values the future more, preventing future rain problems, while Ernie values playing in the sunshine now more.

What influences the decision to repair the window? Not only how much they value the future, but also how likely it is to rain again and when. So Bert and Ernie will also take the probability of future events into account when figuring out the best time to repair the window.

Finally, since Bert and Ernie share an apartment fixing the window is a public good, that is once it is fixed both get the benifit of a working window and no rain. Ernie knows that Bert probably has a higher value of having a fixed window, so he's really just pointing it out in hopes of free riding on Bert fixing the window.






(OK if you can't watch it. Ernie won't fix the window that won't close because he has to go outside. Bert says Ernie should fix it once it stops raining. Ernie points out it is no longer a problem because the rain has stopped so he should go enjoy the sunshine)

Natural Resource Curse: How Finding $1 Trillion in minerals could be bad?

In my economic development class I have my students read Paul Collier's book the Bottom Billion. In the book he lays out four traps that lead to country's falling behind. Afghanistan is clearly one of those countries. Of the four traps Afghanistan has a conflict,it's landlocked, and it's small with bad neighbors.

The fourth trap surprisingly to some of my students is having natural resources. Over 1 trillion dollars in minerals deposits were recently discovered in Afghanistan (NY Times Story), how could this be bad. In Collier's book he points to previous research that shows when large natural resource finds happen that governments tend to become even more corrupt. In short with more revenues there is more to steal. The second problem is that natural resource exports make it hard to develop other industries. Once a developing country starts exporting minerals their currency increases in value making their other exports less desirable since their prices will increase internationally with an appreciation in their currency. Once the minerals run out or the price of minerals falls briefly the country doesn't have other industries to take up the slack.

In theory what a country should do is use natural resource money to invest in schools and other industries, but this type of strategy has not been too successful in countries with weak governance.

Burger King Short Ribs

In today's Wall Street Journal a story documents the tragedy that Burger King may be running out of ribs (or maybe the tragedy is that Burger King serves ribs).

In part Burger King was surprised that so many people bought ribs. Even better for the chain was the ribs were one of their most profitable items on their menu.

I think in intro to economics we often underplay the importance of a potential sell out. It creates buzz and probably leads to future sales. So will Homer Simpson have a Burger King rib tour planned this summer (assuming Krusty burger isn't serving ribwiches).

Grinnell Founders Day, Wedding Procession Dance, and Glee

When people ask where I went to undergrad I say a small school in Iowa, because if not the next question is where the hell is Grinnell?

Today is Grinnell founders' day. On this day in 1846 James J Hill laid a silver dollar down on a table and started Iowa College which a few years later would become Grinnell an awesome school with over 1 BILLION silver dollars in their endowment.

My favorite Grinnell Economics fact is that we are number 3 in economics PhD per student graduated. (link)


About a year ago a Grinnellian became an internet sensation as a bride in the famous J&G wedding dance. For those of you who don't remember it here is a previous post. In short her video used a song (Chris Brown's Forever) that was copyrighted. Instead of taking the video down they worked out an agreement with the song's copyright owners and the video stayed up and more people bought "Forever" on Itunes.

I was thinking about this when I read a recent Salon article on the show Glee. The article points out that the performances in Glee (a show about a high school show choir) would all be copyright violations or that the school would have to spend tons of money to get the rights to perform such classics as "Don't Stop Believing" & "Push It".

Glee has been quite successful as the Salon article points out selling over 4 million songs online. So if we go back to the J&G video we see that you can get around copyright problems if you are awesome.

And truth be told I've really been enjoying the first four episodes of Glee they really are good, although not as good as my four years at Grinnell.

Wrap up From Yesterday

It was quite the blog day yesterday. I got linked by Marginal Revolution one of my favorite blogs (welcome Marginal Revolution Readers). My wife pointed out the post is even funnier (or less funny) if you know me and realize I make the DO NOT TALK ABOUT FIGHT CLUB joke about once a month

I also sent my post on Strasburg and Nationals tickets to Jodi at Economist Do it With Models (also a favorite econ blog) you can find her take on the question here. I like how she found quotes from Greenspan and Bernanke. As an added bonus you can read a second take from Tony at This Young Economist.

Related the Business of Baseball shows that on the secondary market (stub hub), Nationals average ticket prices were almost double their average for the year.

Related my favorite recent bundled good is that when you buy a 1lb of Starbucks beans you get a free small cup of coffee at their store.

First Rule of Kidnapping Insurance

First rule of kidnapping insurance is you do not talk about kidnapping insurance. This American Life did a program on kidnapping. In some countries such business people and politicians are kidnapped for ransom. If you are kidnapped you would need someone to pay the ransom,if you buy kidnapping insurance the insurance company pays your ransom and helps negotiate your release.

So why not talk about the fact that you have kidnapping insurance, well of course you will be more likely to be a target of a kidnapping, since you probably are now able to pay a higher ransom through your insurance.

The spread of kidnapping insurance could actually increase the number of total kidnappings. Similarly a recent blog post (from a humourless lot) argues that it is a bad idea to try to buy the freedom of sex slaves, since it only increases the profits from enslaving people.

There isn't a good answer to either the problem of kidnapping or sex trafficking, but creating a market for it can make it worse.

Strasburg is so good he gets you to buy tickets to 4 games

Stephen Strasburg is making his Major League debut for the Washington Nationals tonight. For those of you who don't follow baseball he's predicted to be a great player in the future (or maybe even now). If you want to buy tickets to tonight's game at this point you have two options. You could buy off the secondary market or you can buy tickets to tonight's game as part of a 4 game package.

Surprisingly this package includes one free game. So really you just have to buy 2 more games to see Strasburg. The Nationals must think they make more money from selling tickets to three different games at 2/3 the price then they would not selling those tickets. Since other than tonight the Nationals probably won't sell out a game the rest of the year this isn't a bad bet. Unless fans who would buy tickets to future games decrease the number they would have purchased when the buy the 4 pack of games to see Strasburg tonight.

A lot of teams do this trick where in order to see a marque game they force you to buy less desirable games. I tried to see a Twins game earlier this year and they were sold out unless you bought tickets to many more games as part of a season ticket plan.

Why don't teams just raise their prices for marque games? They are starting too, many teams charge more for better opponents (Yankees, Red Sox) or weekend summer games. There is some negative reaction to this. I think there would be even more if the Nationals raised their prices just for tonight.

In short people hate it when teams or companies increase prices, but don't seem to mind so much when the increase in price is including as part of buying a larger item such as tickets to 4 games.

Bruised Mangos

Economic development isn't easy. This American Life had a great recent episode on Haiti. The first story focuses on the mango industry. The reporters talk to a local exporter named the Mango Man who is trying to earn more money and in turn help the poor farmers that sell him mangoes. He could sell a lot more mangoes to Americans if only the mangoes weren't bruised from sitting around on farms or under beds of poor mango farmers. He tries to give out plastic crates to have the farmers store the mangoes and preventing bruising. The crates aren't used for mangoes but for chairs and he looks for other help. He tries an NGO who specializes in mangoes, but it only leads to more problems stemming from NGO rules, land tenure, lack of credit access, farming knowledge, port access, and then finally the earth quake.

The story really shows that even with a bunch of smart people with good intentions with local knowledge improving economic conditions is hard because there are so many problems.

Why I don't do all you can eat or upload

For a man of about 30 I just don't eat that much. I like to say I eat like a 6 year old who just ate dinner. My wife likes to point out this is a good thing.

Because I don't eat a lot I tend to avoid all you can eat buffets (well that and food quality). I never quite feel I'm getting my money's worth, when I see the person next to me getting their 4 or 5th plate of food. Generally economic theory says that when businesses are competitive that prices should go to average cost. The people getting 4 or 5 plates are driving up the average cost and the price.

I also don't have a smartphone. If I did have one, I would probably use it for GPS and the occasional surfing. Most cell phone carriers have all you can use (eat?) data plans costing $30 a month. AT&T has just announced it will offer plans based on your data usage instead of an all you can use. For heavy users this will be bad, but for me it makes a phone with a data plan more enticing.

But I'm still a Luddite, and think I'll keep going without the smartphone even for only $15 a month.

Game Theory and Bros Icing Bros

The rules for bros icing bros are simple. Suppose two players bro 1 and bro 2

If bro 1 hands bro 2 a Smirnoff Ice bro 2 has been iced and must get on one knee and chug the bottle.Unless bro 2 also has a Smirnoff Ice on his person in which case bro 1 must drink both Smirnoff ices.If bro 2 refuses to drink when he has been iced then he is banned from future play.


First, many of you may ask why would anyone do this. It looks like the hilarity comes from making your bros drink a terrible tasting beverage. There also might be a macho element, since Smirnoff ice is considered a "girly" drink.

Bros icing bros can be modeled as a repeated game. I think three solutions are likely.

Solution #1) bro 2 refuses the first ice and the game ends
solution #2) bro 1 and bro 2 always carry a Smirnoff ice on them at all times and no one is iced
Solution #3) no one ices anyone

Bros icing bros reminds me of a recent paper on the economics of dueling by Kingston and Wright (link). In short then found that dueling may have been used to maintain honor. They argue when credit depended on honor in the 19th century it may have made sense to duel, since those refusing to defend their honor would have lost their livelihood.

Will a paper some day prove bros icing bros incentive-compatible?

I doubt it...