Environmental Economics

Running the LA marathon is exhausting...

...I know because I watched my second oldest daughter run it on Sunday and she looked really tired at the end (Picture is at the start line at Dodger Stadium the day before the race).

New publication: Estimating the Value of Medal Success in the Olympic Games

From the inbox:

Your article Estimating the Value of Medal Success in the Olympic Games has now been published in Journal of Sports Economics Volume 19 Issue 3, April 2018 and can be viewed at doi.org/10.1177/1527002515626221

Here is the abstract:

We estimate Canadians’ willingness to pay (WTP) for medals won by Team Canada in the 2010 Winter Olympic Games using data from contingent valuation method (CVM) surveys of nationally representative samples conducted before and after the Games. The results permit an assessment of Own the Podium, a government program designed to increase Canada’s medal count. International prestige and national pride are important determinants of WTP. The results are sensitive to cost and scope, respondents’ beliefs about the effectiveness of the program, as measured by expected medal count. WTP estimates suggest that Own the Podium generated benefits above its cost to a degree unique in the growing literature of sport CVM studies.

Notes:

• This paper uses data from what could be the last phone survey ever.
• Errata: Ugh, the sample size indicator (n) is lower case in Table 6 and upper case (N) in Table 7.
• Yes, we tested for endogeneity of the medals variable (Table 7). It's not a clean comparison since we sum the gold and other medals variables for the test, but still. Using the attitudinal (Table 2) variables as instruments correction for endogeneity does not affect the value of medals in the pre-Olympic data (but the predicted (i.e., endogeneity corrected) medals coefficient is statistically significant at less (more than?) than p=.10 [t=1.51]). In the post-Olympic data the endogeneity corrected model leads to a WTP for an additional medal of $58 versus $24 in the biased model. The confidence intervals overlap so I don't feel bad about presenting the more conservative, and more realistic, estimates.

New publication: "Estimating willingness to pay for a cycling event using a willingness to travel approach"

John C. Whitehead and Pamela Wicker, Tourism Management, Volume 65, April 2018, Pages 160-169

Abstract

This study examines the monetary value of nonmarket benefits to participants of an active sport tourism event, such as happiness and pride from participating in an event. Willingness to travel (WTT) greater distances for future events is assessed and converted into willingness to pay (WTP) estimates using travel costs. Using survey data from the 2014 and 2015 Blood Sweat Gears bike ride, the intended visitation models show that changes in travel cost have a significant negative effect. WTP to revisit the event was between $41 and $57. The likelihood of return visit decreases as travel costs increase, indicating that WTP estimates are internally valid. WTP estimates stemming from two years of data collection are stable, suggesting that they are also temporally reliable. This study demonstrated the feasibility of using stated preference WTT questions to assign a monetary value to nonmarket benefits of active sport tourists.

 https://doi.org/10.1016/j.tourman.2017.09.023

A 2+ year publication lag

My hard copy just now arrived in my box. The website says it was "First Published October 16, 2015." Abstract:

American households’ willingness to pay (WTP) for soccer player development is measured using the contingent valuation method. Data are drawn from two national surveys administered before and after the 2014 World Cup event. Individuals are asked whether they perceive that additional funding for player development will improve the chances of the national team’s performance at the 2018 World Cup and whether they are willing to pay an annual household tax to fund the program. A bivariate probit model accounts for correlation between the two decisions. WTP estimates indicate that the intangible benefits of player development are roughly twice the cost.

O. Ashton Morgan, John C. Whitehead, Willingness to Pay for Soccer Player Development in the United States, Journal of Sports Economics, Vol 19, Issue 2, pp. 279 - 296

My favorite part is the author bios (one of these guys is from the USA):

Hot Dog! A nice clean example of the relationship between elasticity of demand and revenues

There's a well known result in Econ 101 (I need to write this chapter for Env-Econ 1010 sometime) that if the demand for a good is elastic*, lowering the price will increase revenues, and vice-versa.  If the demand is inelastic, then lowering the price lowers revenue.  Unfortunately it's rare to get a nice clean real world example to demonstrate this.  But here's one:

Sports fans who have long criticized their favorite teams for the prices they charge at the stadium might finally get their wish of cheaper concessions.

That's what could happen if others follow the lead of Atlanta Falcons and United owner Arthur Blank, whose group revealed Thursday that, despite lowering their food and beverage prices to the lowest in all of major professional American sports, fans actually spent more.

Steve Cannon, CEO of the AMB Group, Blank's holding company, told ESPN that although food and beverage prices were 50 percent lower in its new Mercedes-Benz Stadium than the prices in the Georgia Dome the previous year, fans spent 16 percent more.

"There's a huge value in delighting your fan base, to make them as happy as they could possibly be," Cannon said. "We started with one of the biggest pain points and it paid off."

 

Example of the Day: Dig a hole, fill it in, everyone benefits...

Having trouble believing the return on this will be positive:

The least sexy part of the Olympic process is when the games are over and giant, state-of-the-art stadiums remain standing often in sparsely populated areas with no potential tenant in site. This conundrum was highly publicized after the 2016 Games in Rio, when the Marcana stadium deteriorated into a ghost town stadium shortly after the games. 

South Korean officials are determined to avoid a scenario in a the stadium serves as a physical reminder that the money invested into hosting the Games doesn't always produce a return. Their solution? Tear the thing down. 

That's apparently the plan—the 35,000-seat Olympic Stadium in PyeongChang will reportedly be demolished after just four uses. The $100 million venue will host the opening and closing ceremonies of the Olympics and Paralympics before it's torn down completely, according to the Associated Press. 

I knew I should've put money on it

While sitting at home recovering from my recent neck surgery I had plenty of time to watch the NCAA Basketball Tournament (AKA March Madness, AKA Crap Shoot).  To occupy some of my time I entered some of the big (free, non-gambling, for entertainment purposes only) online bracket challenges.  The ESPN Mike and Mike tournament challenge had roughly 500,000 entrants (actual number unknown because it stops counting at 400,000+).  Here are my results:

RANK		R64	R32	S16	E8	F4	NCG	CHAMPION	TOTAL	PCT
2,281		260	180	200	160	320	320	UNC	1440	99.5

Just sayin'.

John hasn't had a new reason to hate Duke for a while, then this

Ouch.

Daily Demand and Supply: Ticket Prices

ESPN Senior Writer Darren Rovell tweets seniorly:

The average price paid on StubHub for a ticket to tonight's college football playoff title game is $1,266. That's almost three times the price paid last year ($425)

Why?

In a well-functioning market there are only four possible changes, and resulting effects on prices and quantities, in supply and/or demand:

• Supply decrease (price rises, quantity falls)
• Supply increase (price falls, quantity rises)
• Demand increase (price rises, quantity rises)
• Demand decrease (price falls, quantity falls)

Tonight's game is being held at Raymond James Stadium in Tampa, capacity 65,890.  Last year, the game was in Arizona at University of Phoenix Stadium, capacity 63,400.  So we can rule out a supply decrease as the cause of ticket price increases--if anything, supply has increased and we would see downward pressure on prices, all else equal.

So demand must have increased between last year and this year--since the same two teams are playing, Alabama and Clemson.  Why might demand have increased?  

According to Google, it is 1,649 miles from Tuscaloosa to Phoenix, and 1,970 miles from Clemson to Phoenix.  

It is 583 miles from Tuscaloosa to Tampa, and 573 miles from Clemson to Tampa.

Since travel is cheaper, demand for tickets has increased.

Bigly.

 

 

The Wealth of Nations and the Price of Baseball Tickets

I was cleaning off some bookshelves this afternoon and I came across a copy of The Wealth of Nations that I borrowed from a local library my senior year as an undergraduate (and never returned, but that's not part of the story)--in 1991.  Sticking out of the book was a ticket to an Orioles/A's major league game in Baltimore at old Memorial Stadium (ticket is pictured below):

I know it's difficult to read, but the price of an upper reserve ticket in 1991 was $3.75.  That's $6.63 in today's dollars.

An upper reserve ticket to tonight's Orioles/Red Sox game at Camden Yards would run you between $15 and $30.