Environmental Economics

I'm thinking about changing the name of this blog to "Environmental and Urban Economics"

From the inbox:

The editors of Urban Studies have now had a chance to read the revised version of your article entitled "Public support for hosting the Olympic Summer Games in Germany: The CVM approach" and I am happy to say that we would like to publish it in Urban Studies.

Yay! Here is a link to the working paper: http://econpapers.repec.org/paper/aplwpaper/15-06.htm. 

My key takeaway from this paper (and this one) is that CVM does not necessarily need to be conducted with a one-shot dichotomous choice referendum valuation question, which turns out to be the least efficient type of question possible. The referendum might be the optimal choice in terms of incentive compatibility but useful willingness to pay estimates can be obtained using more efficient valuation questions.

What color is this?*

Last year, the NFL (Nation Football League -- American Football for those not in America) televised a national game between the New York Jets and the Buffalo Bills.  In their never ending attempt to find new ways to get fans to buy 'alternate' jerseys, the NFL has Nike design special 'Color Rush' uniforms for the game.  In this case, the Bills wore solid red uniforms and the Jets wore solid green,  The game was played on a solid green turf field. 

During the game, here is what I posted to Facebook:

Watching the Bills/Jets game. Bills wearing all red. Jets wearing all green. Playing on a green field. Obviously the NFL doesn't care about those of us who are colorblind. I think I might have to call my ADA representative.

And then:

Good to know I'm not alone: Deadspin: Stupid Nike Uniforms Wreaking Havoc On Colorblind NFL Fans. http://google.com/newsstand/s/CBIw8-__2yM

It's good to know that the NFL cares about the 2-5% of us who are colorblind.  This year, they have decided to expand the fun, but remedy the problem:

Expanding on last year's limited release, the NFL unveiled Nike Color Rush uniforms for all 32 teams. 

After testing out the unconventional jerseys with eight squads last year, the league will wear them during Thursday Night Football games throughout the season.

...

The New York Jets and Buffalo Bills will wear the Color Rush uniforms this Thursday night. Their respective green and red attire caused problems for colorblind viewers last year, but the Jets will instead wear all-white jerseys to prevent another contrast controversy. 

*The standard question I get when I tell someone I am colorblind.

Some college football economics

Sigh:

With Kentucky football off to a spirit-crushing 0-2 start, the $12 million contract buyout that it would take to remove Mark Stoops as UK head coach after this season has garnered national focus.

Were UK to change its coaching staff following the 2016 season, it could cost far more than $12 million, however. ...

The only thing that would justify paying a coach $12 million — and, potentially a coaching staff almost $18 million — not to work would be a complete competitive collapse.

via www.kentucky.com

Actually, to this alumni, losing doesn't justify paying a coaches $18 million not to coach ... unless the lost gate revenue over the next several years is greater than $18 million. Let's say attendance falls to 30,000, about a 50% reduction. If tickets cost $40 each then each game results in lost revenue of $1.2 million. If there are 6 home games per season the revenue loss is $7.2 million. If there are two seasons left on the coaches' contracts then the total loss is $14.2 million. You'd still want to keep the coaches. The only way an $18 million buyout makes financial sense is if the recovery in ticket revenue begins sooner, rather than later, you'll break even sooner (maybe they should fire the athletic director that set up the $18 million buyout).

"Hosting The Olympics Is A Terrible Investment"

Chris Dillow:

When Rio de Janeiro won its bid to host the 2016 Summer Olympics back in 2009, the Brazilian government estimated that costs directly related to hosting the games would run just shy of $3 billion. But by the time the Vanderlei de Lima lit the Olympic torch at last week’s opening ceremonies, the country had already spent some $4.6 billion on venues, administration, transportation and the like, putting the games roughly 50 percent over budget. By the time the games close on Aug. 21, the tally for the games will likely be higher still. ...

The numbers above come from a new study led by Bent Flyvbjerg at the University of Oxford’s Saïd Business School, who looked at six decades of Olympic budgets. ...

For its part, Rio is on track to come away from the 2016 Games more or less in line with what’s become the normal amount of additional expense on its books. But the implication of Flyvbjerg’s research is that Rio still may have been better off building $3 billion in roads and bridges (which likely would have ended up costing $3.6 billion to $4 billion because of their own overruns) than hosting the Olympics (which will end up costing at least $4.6 billion, and likely quite a bit more).

At the very least, the return on investment would have likely been greater. While most major infrastructure projects go over budget, megaprojects such as bridges, dams and railway lines tend to yield economic benefits for longer than the few weeks that many Olympic facilities are used. Host cities almost invariably fail to cover Olympics costs with associated revenues (for instance, in 2012 London took in $3.5 billion in revenues and shelled out something like $18 billion to host the games), leaving them with piles of debt and various useless venues. Research has repeatedly shown that in most cases the Olympics are a money loser for cities, particularly those in developing nations where the cost-benefit proposition tends to skew even worse.

via fivethirtyeight.com

The good old days

I'm fielding a post-ride survey for the Blue Ridge Brutal and this was in the comments section:

No concerns, but I was your student at ECU in the 90's for Environmental Econ and I played intramural sports for the Econ Society. If you ride, hope to see you on the road. Cheers

Wow:

• Small world. Q: Would the IRB have a cow if I associated the comment with an email? A: yes
• I have two bikes and neither see enough action.
• I was the captain of the ECU Econ Society IM teams (football, basketball, softball). The highlight was when we won the second summer session co-ed softball tournament. In the finals we upset a team that had beaten us twice. 
• I'll have NABE Student Chapter students do a short economic impact report. In return, I get to ask some goofy questions. With this survey I'm comparing results from a payment card-style willingness to travel question with those from a double-bounded dichotomous choice. Here are some preliminary results:
  
  
  

"Diamondbacks Try To Squeeze More Money From Taxpayers"

And the voters will get to have their say (again):

The Diamondbacks have been playing in their current ballpark since 1998. Their stadium cost $364 million to build, and Maricopa County picked up $238 million of the tab. Eighteen years later, it is need of some repairs, and the fight over who is going to pay for them has gotten ugly.

The team recently said they needed $65 million for a new paint job and a new scoreboard, among other things. They requested the money from Maricopa County, but the county has largely refused to pay up. The Diamondbacks are locked into their lease with the county for 12 more years, and the stadium will need about $187 million in repairs over that time, according to the Arizona Republic. The county is essentially trying to set a precedent and force the team to pay for their own repairs over the next decade and change.

Both sides appear to be furious with each other, and it has turned personal. The Republic acquired a letter that current Maricopa County Supervisor Andy Kunasek sent to Diamondbacks president Derrick Hall in April, in which he yells at him in all caps, reprimands him for trying to squeeze more money from taxpayers, and calls modern professional baseball “parasitic.” When he delivered it, he apparently told team owner Ken Kendrick to go back to “[effing] West Virginia.” ...

Based on Kunasek’s fiery rhetoric, it doesn’t appear that he plans on backing down. However, he said that he will not run for re-election this November, so the resolution to this impasse could come down to the results of the election. Voters might not have gotten a chance to vote on the construction of the stadium, but they will get a chance to pick the politician in charge of its immediate future.

via deadspin.com

According to Forbes, the Diamondbacks are valued at $925 million with annual gate revenues of $44 million. If the county budget is as tight as any other county in the U.S., then it seems that the Diamondbacks have a greater ability-to-pay for maintenance of their primary capital input.

Are there any sports economists out there who could tell me about this "parasitic" claim? Is baseball, football, etc. the most heavily subsidized industry in the U.S.? 

Who else is looking forward to watching the Las Vegas Raiders?

History tells us that the public will pay for the stadium:

Las Vegas ABC station KTNV polled Clark County residents about whether or not they would want to pay $500 million in order to help build the Raiders an NFL stadium. Of the 750 people polled, 55 percent said they opposed spending half a billion dollars on a new stadium, while only 35 percent were in favor. ...

Additionally, $500 million is the floor of how much the public would be required to pay. That price tag could increase by 50 percent and balloon up to $750 million, easily the most voters would ever have to pay for a new stadium. The 11-person committee meets tomorrow to work on hammering out a final figure and sending a proposal to Nevada governor Brian Sandoval. Billionaire Sheldon Adelson and his Las Vegas Sands Corporation would theoretically be on the hook for any construction overages.

Once the Southern Nevada Tourism Infrastructure Committee makes their recommendation to Gov. Sandoval, the State Legislature would have to approve any tax increases. They are currently scheduled to meet in February 2017. It doesn’t appear that voters will get a chance to directly approve the use of public funds, but the politicians who can approve the deal do have the threat of getting voted out of office for betraying their constituents. It happened to Cobb County’s Tim Lee last night after he helped the Atlanta Braves secretly secure $400 million in taxpayer money.

via deadspin.com

And Billionaires will become richer. 

Your daily reminder ...

... that I'm a very famous sports economist*:

This study shows that fans and people living in the region of 28 Football Bundesliga teams from all three divisions are willing to support their team financially. Survey respondents were asked for their willingness-to-pay to avoid a negative outcome (e.g., relegation) and to achieve a positive outcome (e.g., promotion). Fan bonds are applied as an alternative payment vehicle within the contingent valuation method. The results show that different factors affect the decision to support the team and the actual amount of willingness-to-pay—for attendees and nonattendees. Public goods are particularly relevant for reporting a positive willingness-to-pay. (JEL Z23, L83, H41)

Wicker, P., Whitehead, J. C., Johnson, B. K. and Mason, D. S. (2016), WILLINGNESS-TO-PAY FOR SPORTING SUCCESS OF FOOTBALL BUNDESLIGA TEAMS. Contemporary Economic Policy, 34: 446–462. doi: 10.1111/coep.12148

via onlinelibrary.wiley.com

One of my favorite quotes from the Western meetings is that "the CVM is like Wal Mart...." I forget the rest but it kind of says it all, right?

*And athlete, here I am draining a three in the High Country Senior Games 3v3 basketball on Wednesday night. The without-their-big-man High Country 50+ lost to the Ashe Panthers 55+ by a handful of points. Three of us fouled out (huh?) and we finished the game with only two guys on the court. You gotta have a big man in Senior Games. 

Quote of the Day: On Concussions and Climate Change

The scientific debates between human-induced climate change and sports-induced Chronic Traumatic Encephalopathy (CTE) are eerily similar:

...a consensus statement issued by two dozen neuroscientists, [noted] that CTE has "only been found in individuals who were exposed to brain trauma, typically multiple episodes."

...until researchers are able to study football players over time, including issues such a genetics and substance abuse, it will be impossible to assert whether head trauma is the main cause of CTE in football.

 

"Economists do occasionally agree on something"

Neil deMause at Field of Schemes:

SI.com asked a bunch of economists whether St. Louis and San Diego should have coughed up more money to keep the Rams and (potentially) Chargers from moving to Los Angeles, and if you read this site with any regularity, you can probably guess what they said:

Brad Humphreys, sports economist and professor at the University of West Virginia: There is no evidence in any peer-reviewed scholarly journal that a professional football team will generate any tangible positive economic impact on a city. There is no evidence that the departure of a football team ever harmed a city’s economy.

[Peter] Von Allmen [president of the North American Association of Sports Economists]: There is a substantial body of economic research indicating that funding stadiums is not a successful economic development strategy.

[Victor] Matheson [sports economist and professor at College of the Holy Cross]: I would advise them to let the teams go. I don’t think these teams are worth that amount of money. We don’t spend that sort of money on anything else. Way more people go to movies every year than go to NFL games, yet we don’t have the government build movie theaters.

All of the economists noted that if you want to go ahead and build a stadium just because you think sports are keen and not in search of elusive economic benefits, go right ahead. Which is where I kind of wish SI had reached out to Centre College economist Bruce Johnson, who conducted surveys to determine how much monetary value residents typically put on the joy they get from the presence of a pro sports franchise, and came up with a number under $40 million — which, needless to say, is typically way less than cities are spending on most new sports facilities.

Still, good article to take note of for the next time you need evidence that economists do occasionally agree on something. Elected officials not so much, but hey, maybe some of them read SI.

Basking in reflected glory ... two of those guys are my co-authors.