Economics of Sports: The ticket holder

When an individual purchases a ticket for a sporting event, what rights does he or she have? Apparently according to most sports writers this does not include the right to boo. However, if this is the case then they must not have the right to cheer either.

LeBron James had a great first half the other night. However, in the second half he missed seven free throws in a row. His team, the Cleveland Cavaliers, eventually lost the game and James was booed heavily by the crowd. Sports writers have come to his defense claiming that overall he had a good game. They have claimed that Cleveland fans should not have been so callous because James is a free agent after this season and could possibly leave for another team. This thought process, however, ignores the fan’s perspective.

Many sports writers have been known to be critical any time fans boo the home team. Nonetheless, as ticket holders, the fans have the right to react in any civilized manner that they please. They are not restricted to cheering for the home team and booing the opposition, they have a right to react any way they see fit. The ticket gives them that right.

Also, I have previously discussed the “wisdom of crowds”. This situation is no different. If I attend a game and I am disappointed with the performance I can express my displeasure. However, there are also 10,000 other people that have an opinion. These other people have no obligation to join in my expression. So when the entire arena is echoing with boos, it would seem that there is a consensus.

As a ticket holder an individual is allowed to respond to the performance of the players any way that he or she see fit (within limits, obviously no one can throw things onto the playing surface, at players, etc.). Sports writers should not dictate the rules of the spectators. And why should anyone question a consensus opinion?

The next time you attend a game feel free to express you opinion.

More from the Meathead

From a WSJ editorial on the mass exodus from California:

And things may soon get worse, thanks to Rob Reiner, who played the liberal “Meathead” on the “All in the Family” sitcom in the 1970s and now plays the same part in real life. He and his rich Hollywood friends have put an initiative on the state’s June ballot that would add a 1.7-percentage-point income-tax surcharge on “millionaires” with income over $400,000, with the proceeds earmarked for universal pre-school.

More:

Ironically, Mr. Reiner sometimes seems to understand the reverse supply-side impact of his tax policies. Last November a coalition of liberal health groups proposed raising the tobacco tax yet again to pay for more public subsidies. Mr. Reiner opposed that increase by arguing that the higher cigarette tax would cost $35 million in revenues because smokers would buy cigarettes out of state. But he refuses to acknowledge that steep income-tax rates also affect taxpayer behavior, as high-skilled high-earners look for better opportunities out of state.

By the way, Mr. Reiner serves on the board of the Children and Families Commission, which oversees the expenditures of the tobacco trust fund. That Commission approved spending $23 million of tobacco taxes to finance TV ads that promote his own new tax-and-spend-on-pre-school scheme. This use of taxpayer dollars to lobby for more taxpayer dollars may violate state law preventing taxes from being used to finance campaign activities. And the Los Angeles Times reports that some $200 million of the children’s education fund has found its way into the bank accounts of public relations and advertising firms, some of which are run by friends of Mr. Reiner.

Meathead.

It’s Called a Refund for a Reason

It is that time of year when the dreaded tax forms must be filled out and sent to Uncle Sam for inspection. After filling out the forms — or having them filled out — individuals wait impatiently for their tax refund. I, on the other hand, would be content to never receive a refund.

The plain and simple fact is that a tax refund is called a refund for a reason. You receive a refund from the government because you have paid too much of your income in taxes. I suppose that for some, this maximizes their utility — satisfaction for non-economists — because rather than saving a little at a time over the course of the year, they would much rather enjoy receiving a lump sum. This way they can take their spouse out to dinner or buy a new television depending on the size of the refund.

Personally, my utility would be maximized by breaking even. I would find it most beneficial to finish the year without owing the government money and without big brother being in my debt. The reason I say this is that every penny that you overpay over the course of one year is an interest-free loan to the government. Therefore not only have you overpayed, but you have had some of your money taken from you. A dollar today is worth less than a dollar a year from now just purely due to inflation. Additionally you have foregone any possible return that you could have made on that money. You may argue that the U.S. has a relatively low inflation rate and that interest rates remain low and thus you have not truly lost all that much money, but over the course of one’s lifetime these losses add up to a great deal of income that has essentially been stolen from you.

So the next time you get your tax refund try not to get so excited.

Deal or No Deal

Just a reminder “Deal or No Deal” returns to NBC tonight.

For those who have not read my piece explaining the economics behind the show, click here.

More on the ports

Our friend Perry Eidelbus has come out against the ports deal. Although I disagree, I think that those interested should be able to hear both sides of the debate in order to make an informed decision.

Canadian health care is failing

The New York Times reports on the Canadian public health system:

The country’s publicly financed health insurance system — frequently described as the third rail of its political system and a core value of its national identity — is gradually breaking down. Private clinics are opening around the country by an estimated one a week, and private insurance companies are about to find a gold mine.

More:

Prime Minister Stephen Harper and other politicians remain reluctant to openly propose sweeping changes even though costs for the national and provincial governments are exploding and some cancer patients are waiting months for diagnostic tests and treatment.

Killer quotes from Dr. Brian Day

“This is a country in which dogs can get a hip replacement in under a week and in which humans can wait two to three years.”

“In a free and democratic society where you can spend money on gambling and alcohol and tobacco,” Dr. Day said, “the state has no business preventing you and me from spending our own money on health care.”

Nevertheless the liberals in the U.S. push on.

Econometrics colloquium: Updated

More on the debate of econometrics can be found here.

Here is the text of the latest e-mail that I sent to our friend Don Luskin:

It seems to me that the debate regarding econometrics has become less of a debate about the discipline and more of an exercise in disproving the arguments from each side. Even those who claim that econometrics is a “pseudo-science” have acknowledged that it is useful or that they, in fact, use it in some capacity.

The problem seems to be with using econometrics for political purposes. Econometrics is useful for economists and investors, but can be dangerous in the hands of others. The problem with many of the academic studies is that professors are rewarded for having many citations to their work, regardless of its quality. In other words, an academic can receive many citations disproving a scholarly article in which he “proved” something that is counterintuitive or even contrary to economic theory. Thus he has been rewarded for producing what is essentially useless garbage. However, an abuse of the method is not enough reason for condemnation.

The debate is not whether or not econometrics is useful as even the biggest skeptics have agreed that it “can be a valuable discipline”. The debate is actually in regards to whether or not econometrics should be allowed to be used for public policy. That, unfortunately, is left up to individual opinion.

The bottom line is that econometrics has a useful purpose; the extent to which it should be used and trusted can be debated.

UPDATE: The debate continues here and it gets pretty heated. Here is a taste:

If Mr. Beck’s characterization of econometrics as “bullshit” is correct, why does he think intelligent and successful market participants (e.g., big banks, bond trading houses) pay good money to econometricians? I am always curious to know why people in the business of making money would so readily throw money out the window when all they need to do is consult wizards such as Mr. Beck, who can provide such compelling evidence of their folly and presumably can offer alternative analysis as well.

Ouch.

Attack on Property Rights

The Toledo Blade reports that a candidate for county commissioner would like to create a “student village” on the south side the University of Toledo’s campus. According to the story, Democratic candidate Ben Konop thinks that “packing the street with bookstores, coffee shops, restaurants, and other small businesses would help the university attract top students – and the region create next-generation jobs.”

The are two major problems with this proposal.

First, there is the slippery slope argument that adding bookstores and coffee shops would lead to a creation of “next-generation jobs”. The argument is based on the assumptions that top students enjoy frequenting these establishments as well as the fact that such establishments would be a deciding factor in their decision to attend a university. Although the former may be true, the latter is much harder to substantiate. Nevertheless, even if the first two assumptions were true, there is hardly evidence that attracting these students would result in their permanent residency or the creation of “next-generation jobs”.

The second and most important problem with the proposal is that fact that,

“The area now features rows of gas stations, auto-service centers, and chain-operated restaurants. . .”

and

“. . . several existing businesses likely would need to relocate to make the concept work.”

Ah, those pesky property rights. Am I the only one that sees a problem with developing a plan for land that belongs to someone else? I cannot go to the bank and ask for a loan to start a business on my next door neighbor’s property. Sure I could purchase the land from him, but I haven’t. Similarly, my next door neighbor’s property could be an eyesore and my business might be able to beautify the area and provide a service that cannot be provided elsewhere. However, these statements are circumstantial and ignore individual property rights.

Property rights are an important aspect of a free society. The reason that the business exist south of campus is because the owners are making money. Why should the government have the right to establish a “student village” because it is not satisfied with the current businesses? Furthermore what message does this send to business owners in Toledo? It makes very little sense to drive businesses out of their current location in an effort to attract business to the city.

Krugman Truth Squad Update

Our friend Don Luskin has a new piece about Krugman’s fuzzy math regarding the Abramoff scandal:

Try to imagine this scene taking place in the ivied halls of Princeton University. Economics professor Paul Krugman — who happens also to be America’s looniest liberal pundit — has decided it’s time to ask for a raise. So he marches into the office of Princeton president Shirley M. Tilghman and makes his demand.

“I was hired in September, 2000,” Krugman says. “I’ve been making $250,000 a year for six years. It’s time for a raise.”

Tilghman says, “Okay, let’s make it $300,000 a year. And a reserved parking place for your very old Volvo, too.”

“What?” Krugman screams. “I asked for a raise and you gave me an 80 percent pay cut! And by the way, I ride my bike to school whenever I can.”

It only gets better…

Rethinking Economic Boundaries

Don Boudreaux has written a great piece entitled “Political Boundaries Are Not — and Ought Not Be — Economic Boundaries”. Here is a taste:

Thinking of economies as national phenomena, we measure them as if they are so. We measure Gross Domestic Product of the United States and compare it to the GDP figures of other nations. We calculate America’s trade deficit. These statistical exercises reinforce the presumption that the salient economic unit is the nation-state.

Read the whole thing.