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The benefits of a winning sports team?
The consistently interesting Drake Bennett writes:
...a few scholars have started to suggest that there may indeed be another kind of benefit from big-time sports. There's a catch, though: the team has to be good. In a forthcoming paper, economist Michael Davis and the psychologist Christian End say that having a winning NFL football team increases the incomes of the people who live and work in its hometown by as much as $120 a year. And while the study doesn't identify exactly what causes the boost, the authors point to psychological literature suggesting that winning fans are at once harder workers and bigger spenders. In short, buoyed by the team's success, we work longer hours, take bigger risks, and shop more avidly, all of which helps the local economy.
I have a simple hypothesis. Winning sports team cause local fans to feel better and thus to spend more money. Most importantly, consumption tends to be local and thus the spending shows up in the city of the winning sports team. Saved funds, in contrast, are invested but banks and securitization make these funds mobile. Savings will help the national or international economy but not the local economy so much.
Since more savings would be desirable, the best outcome is if no team wins, if a small city team wins, or if the victory is uninspiring. Detroit vs. San Antonio, anybody? That's what the American economy needs.
Alternatively, you might think that the economic boost comes from greater confidence, higher labor supply, and other supply-side effects. Then you should root for the teams from the largest cities (Los Angeles, New York, Philadelphia) and most of all you should root against the Washington Wizards.
Posted by Tyler Cowen on September 10, 2008 at 07:08 AM in Sports | Permalink
Comments
Winning sports team are simply morale boosters,people suddenly became inspired and generous by working and spending much.
Posted by: San Antonio Lawyer at Sep 10, 2008 7:18:22 AM
Hmm. How about the no-brainer explanation that cities with higher income have also richer teams that are able to attract more talented players?
Posted by: Tiedemies at Sep 10, 2008 7:51:18 AM
But I just read a study that says that people who feel better do not in fact spend more.
Posted by: Robin Hanson at Sep 10, 2008 8:06:21 AM
People will drive in from out of town to see a good team.
Posted by: Cyrus at Sep 10, 2008 8:21:38 AM
I don't see why this sort of economic growth is automatically a benefit. If people work longer hours and spend the extra cash, they are gaining some goods which shows up in the statistics, and losing free hours that where not in the statistics.
Presumably, they valued that free time basically the same as the goods, so there is no clear gain. the best you can say is 'a winning sports team make people value stuff over free time'.
Posted by: Zamfir at Sep 10, 2008 8:33:06 AM
When the sports team have win, their sponsors can make money more and more.
Posted by: nick at Sep 10, 2008 8:36:00 AM
Perhaps they have the causality backwards and wealthy cities are more able to afford winning teams.
Posted by: Bill Nichols at Sep 10, 2008 8:55:55 AM
Reading the article, they say first, that the effect is very small - $10/win. And second, that it only applies to football, but they looked at basketball and baseball and don't find the effect. Therefore, my hypothesis is even simpler - this is a statistical anomaly in their particular data set or control methods, rather than a real effect.
Posted by: David at Sep 10, 2008 9:55:30 AM
As a Packers fan, I strongly agree with whatever your argument was for cheering for small-town teams.
Posted by: dWj at Sep 10, 2008 10:18:09 AM
We spend ten minutes Monday morning congratulating ourselves on a win, and an hour monday morning quarter-backing on a loss.
Posted by: Tom at Sep 10, 2008 10:43:34 AM
The effect is small; if we're talking successful teams, hosting one playoff game could be the cause of slight bump we see here.
Posted by: Playoffs at Sep 10, 2008 10:48:00 AM
Perhaps it is because winning teams have higher ticket prices and people are willing to work harder to afford tickets, buy team goods, and help pay off the public financing of their new stadium?? Or, just as likely, $120 is within the margin of error of their measurement.
Posted by: Ron at Sep 10, 2008 10:53:17 AM
tiedemes and Bill Nichols have it, I think.
Would anyone argue that putting a lot of high-end luxury stores in a city makes that city rich?
Posted by: Bernard Yomtov at Sep 10, 2008 12:05:48 PM
"Then you should root for the teams from the largest cities (Los Angeles, New York, Philadelphia)"
Uhhh...Chicago?
I feel ignored by the elitist coastal crowd now. >:(
Posted by: Robert Olson at Sep 10, 2008 12:57:17 PM
I know i would be interested to go see a football team if they were good. People love to jump in the bandwagon when they see potential in a good team. And when the fans come to see, here comes the fans with the funds . When football teams win more people spend more. I play college football and things like this there.
Posted by: Josh Wright at Sep 10, 2008 2:09:59 PM
The great thing about spectator sports is that you can be a sunshine soldier and hop on the bandwagon when your local team is good and lose interest when they are bad. So, while fandom looks like a zero sum experience -- for every win there must be a loss -- it's actually a positive sum experience for fans on the whole.
Posted by: Steve Sailer at Sep 10, 2008 2:47:56 PM
Hmm. How about the no-brainer explanation that cities with higher income have also richer teams that are able to attract more talented players?
Detroit Red Wing 3 Stanley Cups in 10 years
Detroit Tigers. 2006 ALC.
Detroit Shocks WNBA Championship 2006.
Detroit Pistons. 6 semifinal in 6 years and one champiomship.
So Detrot must be the richest country in the USA
Detroi , San Antonio? Uninspiring for you maybe
. That was real basketball
Posted by: k at Sep 10, 2008 9:10:34 PM
Do losing team fans work less? That's to say, are sports a zero sum game?
Did the Lion cause the Big Three to fail, not unions?
Posted by: aaron at Sep 11, 2008 3:21:02 PM
I'm a bit late to this party, but for what it's worth:
Tiedemies, Bill Nichols and Bernard Yomtov, you obviously aren't sports fans. Much to its credit, the NFL (which this study was based on) is a well-run league that, unlike Major League Baseball and the European soccer leagues, manages its revenue-sharing well, and therefore is not dominated by large-market teams. Check the standings over any recent five year period and the parity will jump out at you - going from last to first, or vice versa, is quite common. Wealthy cities can't buy their way into NFL the playoffs - the salary cap means that everyone spends just about the same on their players. Salary cap management, not revenue, is probably the biggest determinant of success.
Even in the absence of a decent revenue-sharing and salary cap arrangement, it's hard to see how per capita wealth would affect a team's success - other sports leagues tend to be dominated by cities with larger television markets, not necessarily high per capita income.
Posted by: bcw210 at Sep 16, 2008 5:25:45 AM
I think that good NFL teams have a positive externality on the income of the people in their home town. But let's take that as a positive and true statement and try to explain why. The economic boost might be due to the raised self confidence in the town. I am not quite sure that greater confidence leads to higher labor supply, but I think that it leads to greater quality of the labor. I think that the working people will unconsciously work harder because they have positive attitude. I also think that the people from the winning team town will be watching the team's games more often than the rest of the people. Even if they are not interested at the game itself they will still get together and watch it because the team is from their town. That I think leads to greater consumption of goods(let's say beer and burgers, or gas to go to see the team if it is playing outside of town), which leads to more profit for the little business.Plus I am pretty sure that if the team is really good there will be a lot of people from other places going to the team's home town and spending money there.
I also think that the fans will be willing to pay greater price for the team tickets.If the team is good the prices of the tickets will be usually higher. That means that the inspired home town fans will be willing to spend more money than the fans from other towns. Their spending will increase, which will be possible only by an increase of income(if we suggest that the football game is not an inferior good).
Let's go back at the begging of the comment. We took the statement that wining sports teams lead to an increase in income in their home town.We could look at the subject a little different and reverse the statement: the towns with greater income have a greater chance of having a winning team. That
We can also look at the problem from another point of view. If the statement was true for an NFL team is it true for other type of sports team?!That needs further fact or statistics research.
As a conclusion I think that good sports teams are an inspiration to the fans and especially to the teams' home town fans.The moral boost leads to an increase in spending and increase in income.
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Posted by: 租車 at Oct 2, 2008 10:08:28 PM
What an interesting hypothesis! I agree with the author that when people feel good, they are more likely to spend more money.
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Posted by: ro zeny at Jan 2, 2009 1:05:40 AM
Tiedemies, Bill Nichols and Bernard Yomtov, you obviously aren't sports fans. Much to its credit
Posted by: 花蓮租車 at Jan 11, 2009 7:39:40 AM
Even if they are not interested at the game itself they will still get together and watch it because the team is from their town. That I think leads to greater
Posted by: 花蓮租車 at Jan 11, 2009 7:44:52 AM
