The economics of sport
Chapter 1
Sports have a unique position in human psyche way of individuals, institutions, cities and nations
to define themselves.
Sports can function by which nations conduct foreign policy
Sports are though just a small part of the world economy
Opportunity costs = the value of the best forgone alternative
You need to choose between two alternative actions and by choosing one you loose the opportunity
of performing or choosing the other
In sports: if as many wins as possible is goal the opportunity cost of using a player at one position is
the wins that the team sacrifices by not using him at the other position
Absolute advantage = a person or country has an absolute advantage when it is more efficient at
that activity than another person or country
However more important is the comparative advantage a person has
Comparative advantage =when the opportunity cost of an activity is lower than it is for another
person or country
For example: Babe Ruth had an absolute advantage over his teammates for both pitching and hitting.
But because his advantage for hitting was bigger than for pitching you would choose him as hitter.
The opportunity costs for using him as pitcher instead of hitter were higher than using him as hitter.
Idea: switch it up use him as pitcher once in 4 matches not a good idea because we are better off
specializing in what we are relatively best at and leaving the rest to others
Example drug industry:
At the national level, if the United States has a comparative advantage in
producing cancer drugs, it is better off specializing in cancer drugs than in
TVs, even if it has an absolute advantage over Japan in both products. The
opportunity cost of our sacrificing cancer drugs to make TVs is higher than
the cost of sending cancer drugs to Japan in exchange for TVs
END SUMMARY CHAPTER
Sports occupy a unique place in the public psyche. Although sports generate
less revenue than many other industries, sports results are predicted, reported,
and analyzed in newspapers, magazines, books, and on TV and radio
programs. This text presents economic models from industrial organization,
public finance, and labor economics to provide insight into the economics of
sports. As you read the text, you will learn about the largest sports leagues in
North America and Europe, as well as mega-events like the Olympics and
their power to illuminate economic theory. For example, one of the most
important economic models is that of comparative advantage. Despite having
an absolute advantage as both a pitcher and an outfielder and hitter, Babe
Ruth specialized in playing the outfield because he had a comparative
advantage at hitting over pitching.
Chapter 2
Model = simplification of reality that allows economist to isolate particular economic forces make
predictions and provide explanations
Chapter 1
Sports have a unique position in human psyche way of individuals, institutions, cities and nations
to define themselves.
Sports can function by which nations conduct foreign policy
Sports are though just a small part of the world economy
Opportunity costs = the value of the best forgone alternative
You need to choose between two alternative actions and by choosing one you loose the opportunity
of performing or choosing the other
In sports: if as many wins as possible is goal the opportunity cost of using a player at one position is
the wins that the team sacrifices by not using him at the other position
Absolute advantage = a person or country has an absolute advantage when it is more efficient at
that activity than another person or country
However more important is the comparative advantage a person has
Comparative advantage =when the opportunity cost of an activity is lower than it is for another
person or country
For example: Babe Ruth had an absolute advantage over his teammates for both pitching and hitting.
But because his advantage for hitting was bigger than for pitching you would choose him as hitter.
The opportunity costs for using him as pitcher instead of hitter were higher than using him as hitter.
Idea: switch it up use him as pitcher once in 4 matches not a good idea because we are better off
specializing in what we are relatively best at and leaving the rest to others
Example drug industry:
At the national level, if the United States has a comparative advantage in
producing cancer drugs, it is better off specializing in cancer drugs than in
TVs, even if it has an absolute advantage over Japan in both products. The
opportunity cost of our sacrificing cancer drugs to make TVs is higher than
the cost of sending cancer drugs to Japan in exchange for TVs
END SUMMARY CHAPTER
Sports occupy a unique place in the public psyche. Although sports generate
less revenue than many other industries, sports results are predicted, reported,
and analyzed in newspapers, magazines, books, and on TV and radio
programs. This text presents economic models from industrial organization,
public finance, and labor economics to provide insight into the economics of
sports. As you read the text, you will learn about the largest sports leagues in
North America and Europe, as well as mega-events like the Olympics and
their power to illuminate economic theory. For example, one of the most
important economic models is that of comparative advantage. Despite having
an absolute advantage as both a pitcher and an outfielder and hitter, Babe
Ruth specialized in playing the outfield because he had a comparative
advantage at hitting over pitching.
Chapter 2
Model = simplification of reality that allows economist to isolate particular economic forces make
predictions and provide explanations
