Saturday, June 30, 2012

Western Econ Meetings: Sports on Trial and Other Quick Thoughts

The first session I went to today at the Western Economics meetings was on Sports and Trials. A couple of legal experts and economists commented on doing expert witness work for sports trials. My favorite take away was from one panelist who says he tells his clients that "they pay him for his opinion, if they like it they can pay him more to testify" It did sound like having a consistent opinion and using the tools of economics was the key to being a good expert witness, and you could get in to trouble if you started to base your conclusions on the side you worked for. One panelist Dennis Coates talked about a lengthy post he had written about two of his colleagues working on either side of the case of the SuperSonics vs the city of Seattle, which is a good inside look.

In the afternoon I saw session with a paper on rival sports leagues. Using a theoretical model the authors attempted to explain why we have only one major baseball, football, hockey and basketball league in the US. I quite liked the paper and still wonder why players leagues as were proposed during the lockout of the NBA haven't caught on. I assume this would work better in basketball where there are more potential arenas and fewer players to organize.

Finally, I am most excited by one local economist's offer to take us out to a Pakistani restaurant with awesome food, but terrible decor and will make us smell like tandori. After reading Tyler Cowen's an economist gets lunch I know I'm in good hands!

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Friday, June 29, 2012

So that's why the ads are in Chinese

Quick update from the wireless on the airplane somewhere over the heartland. I was wondering why some of the ads on the sidelines were in Chinese at the Euro Soccer tournament. Of course this probably indicates that Chinese people are watching lots of soccer. It looks like one Chinese team in a move much like bringing David Beckam to the US has signed Ivory Coast and former English premier league star Didiear Drogba. who will be making several hundred thousand dollars a week to play in China.

Tangentially related This American Life had a good podcast on American living in China. One reporter talked about how to describe China as a place with record economic growth of roughly 10% a year for two decades or a country with still 150 million people living on less than $1 a day.  One thing I have been thinking about is I have heard little about inequality. China's is rising (although we aren't sure how fast because apparently the government won't release the data). Taking estimates from that article and this article with data form Ravallion and Chen two World Bank researchers, it looks like since I have been alive China has gone from one of the most equal countries in the world to approaching one of the most unequal.  Not that this is a bad thing since some people have to get rich for their to be inequality.

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Thursday, June 28, 2012

Penalty Kicks and Economics

My friend Scott who is a soccer fan and I watched the Spain v. Portugal semifinal of Euro 2012 yesterday afternoon. Of course whenever I watch a soccer game no goals are scores and after 120 minutes of play the game went to penalty kicks.

Penalty kicks can be modeled as a "simple" game theory scenario with goalie and shooter choosing strategies  left, middle and right. Both players basically make the decision at the same time. If the goalie chooses the same strategy as the shooter it is likely a blocked shot, if the kicker and goalie choose different strategies usually a goal is scored. Making things more complex some kickers are better and kicking in particular directions and some goalies are better and moving certain directions. More complex is a kicker will chose to shoot based on what he believes the goalie will do. His beliefs will be based on the goalie's beliefs about the kicker's beliefs. This starts to get real complex real quick.

Chiappori, Levitt, and Groseclose  looked at penalty kicks in the French and Italian soccer leagues. The best result is kicking it down the middle scores a goal 81% of the time compared to 76% for going left and 70% going right. So everyone now knows to kick it right down the middle, but now goalies know that so you still have to mix strategies.

The paper shows that a split second decision gets complicated pretty quick.

Tomorrow I leave for the Western Economics Associate meetings, where I'll attend lots of Sports Economics paper presentations. I'll blog about them when I get the chance.

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Wednesday, June 27, 2012

Industrial Organization in the E-book industry

Great New Yorker article last week on the e-book publishing industry (article abstract here) provides most of the details. In short Amazon controlled 90% of the e-book market, before Apple entered. It got interesting when Apple wanted to enter the market they would only do so if 4 out of 6 of the major publishing firms agreed  to join them and sell books under an agency model where Apple took 30% and the publisher set the price, compared to Amazon where the publishers could only chose the price they sold Amazon the book for and not what it sold it to consumers for. This is interesting because Amazon bought best seller books for $15 and sold them for $10 (I guess they made it up in volume! ), actually it helped them increase Kindle sales and sales of non-best selling books. The end result of Apple joining was prices fell, the publishers got less, and then publishers were accused of and plead to colluding on prices (it is illegal to get together to set prices).

The article really shows the long run vs short run trade off of sales and the potential worry of a monopsony (a market with one buyer, Amazon the only buyer of books). A great dissertation or series of Industrial Organization pieces could be written about this and I look forward to reading it (hopefully cheaply on my Kindle)

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Tuesday, June 26, 2012

Soccket Responds

Below is Julia Silverman's (co-founder of uncharted play that makes Soccket) response to my questions regarding Soccket (which I talked about last week). I appreciate her taking the time to address my questions. My questions are numbered and Julia's responses are indented below. I also received Julia's permission to publish her e-mail on my the blog. My take on Soccket is Julia says she is taking evaluation seriously, which is good. They seem to have clear goals in mind, again good. Their evaluations aren't available yet for the public. I think this is understandable given as Julia points out the company is a year old. On the other hand I think it is understandable if that makes me cautious about recommending donating to Soccket until we know more about its efficacy (that is can they show it works under ideal conditions with the best NGOs). It is also worth reading these critiques (Staying for Tea and Sunshine is Free blogs) of Soccket which come from field experts 


Seth's Question 1. What outcomes do you expect Soccket to improve? (I would guess school learning and physically activity?)

We’re looking beyond the scope of just education and physical activity. Since more than 1 out of 5 people in the world have no access to electricity, the global energy crisis has far-reaching adverse environmental, health, and economic effects that we hope to mitigate as well.

The SOCCKET is distributed to resource-poor communities where the impact of climate change is most debilitating (OECD, 2008). The kerosene lamps used by most disadvantaged households to light their homes emit fumes that are  harmful both to respiratory health and the environment. Just one night of exposure to the smoke from burning kerosene is equivalent to smoking two packs of cigarettes (WHO, 2006)By replacing fossil fuel combustion with a renewable source of electricity for the home, each SOCCKET reduces carbon dioxide emissions by 0.2 tons annually.

Economically speaking, kerosene is costly as well; families spend 10-30% of their income on fuel to light their homes. The SOCCKET lamp is brighter and cheaper than kerosene; in less than a year, the ball more than pays for itself. Moreover, UN studies show that as electric access increases, household productivity and income increase as well (UN AGECC, 2010).

By replacing pollutant kerosene lamps and providing extra hours of light after the sun goes down, clean energy solutions like the SOCCKET can immediately and dramatically improve the lives of billions around the globe. By tracking suppressed demand for kerosene, we are gathering very persuasive evidence about the SOCCKET’s direct impact on households.

Additionally, as you alluded to above, we are also trying to keep track of metrics that tie into Uncharted Play’s “FUN and FUNction” vision. Increased hours of reading and play are certainly a part of this, but so information about increased belief in the power of imagination.  The SOCCKET is implemented with an educational curriculum that illustrates the importance of things like teamwork, innovation, and sustainable energy. We hope that the unique implementation of energy generation in the package of a soccer ball will inspire kids and families to think creatively about addressing issues in their own lives and communities. Tracking this is of course challenge, but we are attempting to capture it qualitatively through surveys at this juncture.

Seth's Quetsion 2. How have you conducted your evaluation of Soccket's ability to improve these outcomes? Have you used an independent evaluation? Do you have quantitative evidence that sockett improves the outcomes you are looking at? How was the comparison group that didn't get soccket chosen?

See above.

Seth's Question 3. Why is spending $60 on a soccket a good investment compared to say giving to other charities?

This question is a bit unfair: I cannot tell people whether their money is better spent in one place or another. I could stand on my soapbox all day and recite all the statistics laid out above, but ultimately, the consumer decides the inherent value of their contribution, and no dataset can predict that. 

That said, I can confirm that, rather than taking funding away from other causes (which is what I think you’re implying), the SOCCKET is actually attracting investment that would not otherwise come to the sustainable development space. Our corporate partners are wonderful, but they are not development institutions. When they were deciding to work with us, they were evaluating whether to put marketing dollars into SOCCKET sponsorship or into another campaign, not another charity.

Further, Uncharted Play is focused on FUN and letting kids be kids. If it were just about producing as much energy as efficiently as possible, we would be distributing a hand-crank. The big difference is that, unlike a hand-crank, a soccer ball is fun. We are working to distribute a product that emphasizes the joy in life, not another object that simply reminds users of what they lack. The whole point of SOCCKET is that it's supposed to be fun. We aim to remain firmly in the territory of the whimsical without degenerating into mere frivolity.

This stance - and the very simplicity of what we do - resonates with our partners and fans. Giving a SOCCKET is not just about creating change that numbers can track; it’s about letting magic exist in the life of a child.

Seth's Question 4. Is there a place that I can point people to about your evaluation?

Our studies are not publicly available at this time.  If you have any suggestions about where we could get funding to help us launch an open online platform, please let my team know - we'd love to do it!

Thanks again for getting in touch. I hope I was able to assuage some of your concerns. Further, I hope my responses have helped to illustrate the delicate balance Uncharted Play has worked to achieve as a social enterprise that is both financially sustainable and socially responsible. I say this not as an excuse for any failings you might perceive, but as a call to action for other organizations to follow our example and place social impact as a central objective in their mission and, more critically, their operations.

Julia C. Silverman
Co-founder & Chief Social Officer
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Monday, June 25, 2012

Price Confussion

I'll post an update on Soccket shortly. They wrote me back and I wrote a response. I'm very happy with the willingness to engage these questions.

In the mean time I liked this post on Hardballtimes. On ticket fees for Major League Baseball games. That is when you buy tickets online how much is added for the "convenience" of doing so? I wonder if baseball teams pay the same taxes on fees as they do on ticket sales. I had read airlines added higher baggage fees to avoid paying ticket taxes.

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Friday, June 22, 2012

Production Possibilities Frontier and Having it All

A much discussed article on work/life balance written by Anne-Marie Slaughter appear on the Atlantic's website (and I assume also in some paper form called a "magazine"). My quick take is to think of it in a production possibilities frontier (PPF) framework. In a PPF a country chooses a bundle of production of two goods (say guns and butter), making more guns means you give up butter. One can think of the same model as a trade off between work and time at home, working more means giving up time at home. The article really is looking at ways to try to make the trade offs more palatable between working and time at home (better scheduling, telecommuting, and less travel).

Finally, the article discusses how academia is better than government for this balance is some ways. I wonder if it is because generally in academia (at least for professors) work is rarely urgent or scheduled. Either way be revealed preferences, I prefer the academic life.
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Thursday, June 21, 2012

Easterly and Tire Problems

Bill Easterly has shared his thoughts on Soccket which I discussed yesterday. The best lines from the post which is well worth the read is

"Now I’m not going to do what you expect and get all crotchety at this point and say this is all useless nonsense. " and " So my constructive advice for the Soccket creators is please give us a little more evidence on how well the Soccket works for those poor consumers and a bit less of rich people testifying how excited they are about this story."

I should also add that Soccket e-mailed me back a thoughtful response. When I have a chance I'll provide some more thoughts.

For those of you landing here from Easterly's blog. Thought I would point you to one of my favorite blogs (Duall Services) written by a college friend who runs a service that cleans out foreclosed houses.  The linked recent post talks about how you have to pay to have tires recycled, which explains why so many tires are littered. You should read the blog, because Pete combines great photography with excellent prose.

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Wednesday, June 20, 2012

Expensive Interventions in Development Economics

A week or so ago Bill Easterly tweeted a quip about how Soccket (a soccer ball when kicken become a power socket) was a sign of the wrong way to do development. The video below is well produced and worth a watch at the end you might even want to donate. Who wouldn't want a bunch of kids to play soccer all day and study into the night?

The website for is here. In short you can send one of these balls for $60 to a country of your choice.  My guess is Easterly's problem and mine is that the website doesn't really cite any evidence that it is a good way to spend $60. A while back I cited Bruce Wydick's piece on the best bang for the buck in development. One thing worth noticing is that most of the favored policies are relatively cheap per treated individual (deworming medicine, clean water,  bed nets) even clean stoves run about $15 a piece.  The one exception is child sponsor program actually also seem to have big impact on key development outcomes.

Two thoughts. I doubt giving a soccket could do any harm directly, I think most economists worry about the opportunity cost. It is unclear if those donating soccket's would have donated money to deworming or clean water instead or just would have spent the money on themselves.

Soccket should take this criticism as a challenge to evaluate the impact of giving one to a child. Does it help children study more, are they less likely to be obese (actually a problem in some of the targeted countries), or are there other outcomes that it improves. Maybe they have done this but I couldn't find it on their website.  A similarly criticized program Tom's shoes gave one free pair of shoes to a poor child when you bought a pair of shoes (see here for a review). I think Tom's may have taken the criticism to heart as Bruce Wydick and others appear to be doing a randomized study of Tom's potential impact on the children who receive them.

Finally, one thing worth noting to do a study of the soccket starting small might be the right approach. Here is a run down of the evaluation of one lap top per child which might provide a framework how to proceed.

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Tuesday, June 19, 2012

Why Sports and Sports Economics Matter

A recent article on highlights research I did with my Towson colleague Tom Rhoads on the impact of stadium construction on minor league baseball attendance (download the paper here) in short as the article says we find that over a 10 year period that a new stadium can increase AAA (the top minor league level) attendance by roughly 1.2 million fans over the 10 years and that attendance is still 5-10% higher ten years later.

Rereading the paper (which I'm doing now as I prepare revisions requests for referees at a journal), we seem to back a little away from the idea that the construction doesn't pay off. Although our analysis indicates that it might not increase ticket sales enough at AA or A to offset construction cost, but at the AAA the returns to increased attendance might approach construction cost. Recent work by Nola Agha shows that having minor league teams may actually increase local income. This is counter to one of the main tenants of sports economics is that subsidies to professional teams don't pay off (Coates and Humphreys have a good review article).

So why does sports and sports economics matter I was listening to an interview with Frank Deford on TBTL (my favorite podcast), Deford said something to the effect that sports are important because they are part of the basic human condition. Almost all societies have as he claimed some type of game or sport (like they do religion).  Sports draw our interest in and makes talking about local government subsidies actually interesting (yes even an economist needs motivation to think about these isuees). My guess is that much larger subsidies are given in other context, but receive less attention from researchers.

Sports Economics can be used to show evidence of racial discrimination (Price and Wolfers) and  (Parsons et al.)  and be used to show the best way to set up an incentive structure (Ferral and Smith) and (Fort and Quick). So it has shown to be able to address important topics. So in that sense it matters. 

Most of the time I think of myself as an economist who studies international development who does some sports research on the side. It seems easier to think why increasing schooling or improving nutrition in Nicaragua matter more than how many fans attend a baseball game in a new stadium in Toledo. But one needs to keep motivated, and studying sports is fun and it keeps the authors going. As I see papers in a couple of weeks at the Western Economics meetings which features dozens of papers on sports economics sponsored by the North American Association of Sports Economics, I'll keep in mind why does this matter outside of the world of sports and what can it tell us about the human condition.

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