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March 24, 2003
Dollars and sports collide in innovative class
By Corinne Colbert

Economics professors usually demonstrate the concepts of supply and demand with the age-old examples of guns and butter. But in Tony Caporale's Economics of Sports class, students consider economic concepts in terms of public stadium funding and the rookie draft.

Caporale, associate professor of economics at Ohio University, has taught Economics 318 since 1999, when he revived it after the course had lain dormant on the Department of Economics' class list for at least a decade. The class originated in the late 1960s with Gerald Scully, now professor of economics at the University of Texas at Dallas. (Similar classes are offered at universities nationwide.)

Students thinking they're ordering a cream puff quickly discover they're in for a heaping plate of economic meat and potatoes.

"Sometimes students are disappointed that it's actually an economics class, that I don't just come in and wave a copy of 'Sports Illustrated,'" Caporale says.

Instead, the course is a way to apply bedrock economic concepts to a specific industry. "There are elements of public finance with the building of stadiums, and labor economic issues with free agency, the draft, and salary caps," says Caporale. "We can discuss market structure, antitrust -- a hodgepodge of ideas."

Caporale admits the subject matter is sexier than more vital segments of the American economy. "Paper envelopes are more important to the economy than baseball, but paper envelopes don't have their own section in the newspaper every day," he notes wryly.

The class is one of several sports-themed classes available to Ohio University students, including the Philosophy of Sports, Sports in American History, and American Baseball History. The courses are wildly popular; enrollment in Economics of Sports increased nearly five-fold between 1999 and 2002, and the class is now offered three times a year.

The appeal of sports to economists begins with the same thing that fascinates many sports fans: numbers.

"The nice thing about sports is that there is a huge amount of data available -- fine, nitty-gritty data that doesn't usually exist in other industries," Caporale says.

And because sports are governed by specific rules -- from the size of the playing field to the behavior of the players -- economists can conduct studies that have a true constant. "The big thing in economics is 'ceteris paribus', or 'all other things constant,'" Caporale says. "That doesn't usually happen in the real world, because the real world is complicated. But in sports, you have a lot of factors that you can hold constant.

"The sports industry and markets are little laboratories, mini-economies," Caporale continues. "If you make changes to that min-economy, what are the implications?"

The implications of changes in sports can become powerful metaphors for significant economic and societal questions -- and can guide policymakers' decisions. For example, when the Atlantic Coast Conference added a third referee to its college basketball tournament games in the early 1980s, economists Robert McCormick and Robert Tollison wondered what would happen. Would there be more fouls called, with a third referee to watch for them? Or would players be less likely to commit fouls knowing that there were more eyes on them?

McCormick and Tollison compared the ACC's action to a government's expansion of its police force, with the referees as police and fouls as crimes. With more police on the streets, would there be more arrests -- thus putting more suspects in already crowded courts and prisoners in overflowing jails? Or would criminals be deterred from wrongdoing? The researchers found that the presence of a third referee resulted in fewer fouls; by extension, they inferred, governments could actually reduce crime by putting more cops on the beat.

Papers like McCormick's and Tollison's are getting increasing acceptance in some of the top economic journals. In fact, the subfield of the economics of sports has grown so much that it now has its very own journal, The Journal of Sports Economics.

The growth of the field reflects a shift in economic research away from the traditional -- field-gathered data restricted to business and government finances -- and into more unusual avenues. Recent Nobel prizes in economics have gone to political economists and economic historians. The co-winner of the 2002 award, Daniel Kahneman, doesn't even teach economics. A professor of psychology and public affairs at Princeton, Kahneman was recognized for his work in applying psychological concepts to people's economic behavior."

"Economics has conquered a lot of the traditional topics," notes Caporale. "We're now moving out into issues such as political science, history, and several other social sciences."

That's just fine with Caporale, whose own research revolves around monetary policy. The expansion of economics beyond its traditional bounds is drawing more students toward the field.

"Economics is getting hot," he says, noting that economics is now a favorite undergraduate major for students entering law school.

And whether they look at economic issues in terms of the sports gambling market or plain old guns and butter, students can't go wrong in studying economics.

"It's a logical, rigorous way of thinking," Caporale says of the field. "If you can get through economics, you have that thought process even if you don't become an academic or research economist."

Corinne Colbert, BSJ '87, MA '93, is a freelance writer living in Amesville, Ohio


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