Wednesday, August 18, 2004

Score one for the critic 

Robert Weintraub has been hit and miss at Slate lately, but is certainly on the mark here:
Yesterday, I wrote about how the sabre is the most entertaining event in the Summer Games. I should've known that NBC would find a way to screw it up.

First, CNBC botched the ending of the thrilling final bout in the men's sabre by failing to show a replay of the decisive final touch. Yesterday, the peacock screwed up its coverage of the women's gold-medal match even more royally. The original plan was to have complete coverage of the four final women's matches on the cable channel Bravo. But, presumably when the NBC brass learned that surprising American Mariel Zagunis won the gold medal, the match was shifted away from the cable ghetto to prime-time coverage on the network.

That would have been fine, except fencing had to be crammed in next to old standbys swimming and gymnastics. As such, NBC condensed the thrilling gold-medal match, in which an American won a fencing gold medal for the first time in 100 years. A bout that would have taken a mere 10 or 15 minutes to show from start to finish was instead compressed into about five points. Of course, the weepy medal ceremony was shown in its entirety.
How many medal ceremonies must the network show? What's the point? I'm guessing it's my Mom, who took my son to Greece two years ago - I paid my own way, as these trips are gifts to the grandkids and not her kids! - but despite the "demographic" she'd much rather see the sport than hear the winner's anthem.

Who said draws were boring? 

The US was under the cosh for much of the second half, but Brian Ching scored a well made goal in the 89th minute to secure a 1-1 draw with Jamaica in the inaugural World Cup qualifier. Whew..., an escape. (The rematch is on US soil later this fall.)

I'll link a story when they come up. Way to go, boys.

"The man out to end us had a hurricane business" 

Thus sang Tom Petty, in "A mind, with a heart of its own." The theme is old, but the controversy never ends.

Ben Muse offers helpful commentary and rounds up interesting posts from the past two seasons on the "price gouging" that accompanies major hurricanes. He includes a link to today's anecdote-filled story in the New York Times, which essentially could have been written after Hugo (1989), Andrew (1992), or any significant storm from the past 25 years. Pathetic for the Times, really.

Listening to NPR's "Marketplace" on today's ride home, I heard the Times' account repeated, along with an interesting interview with a law professor from Cornell. The professor suggested there was a tradeoff between the short term welfare loss due to legal bans on "gouging", and a long term benefit from such bans. Where is the benefit? Supposedly, a ban on gouging keeps prices from jumping, and thereby helps maintain the public's faith in day-to-day markets. I follow, but this seems like a slim reed to me. Do these bans have any real effects that would act as a restorative to faith? The behavior at issue is not that of Home Depot or McDonald's - who don't hike prices - but that of small time operators. People who truck in chainsaws and ice, guys who operate - in a mutually beneficial form - "a hurricane business."

Update: Absent from Ben's list is Brendan Koerner's piece on gouging laws at Slate. Koerner notes the following episode, which I recall:
In some states, a governor can also institute temporary price-gouging controls with an executive order, even if a state hasn't been directly hit with a calamity. The day after the terrorist attacks of 2001, for example, South Carolina Gov. Jim Hodges signed a 15-day executive order to prevent price gouging on gas, despite the fact that his state was hundreds of miles from the violence.
Hodges' use of this law (which surely traces to the hurricane problem) illustrates the politcal nature, as opposed to the economic value, of gouging legislation.

Footnote: Fraud has something to do with this issue, but that is separate from the issue of concern to me. Those that falsely prey on people should be prosecuted. But much of the so-called gouging - indeed the behavior targeted by these laws - has nothing to do with fraud.

Nobelist commentary 

Bill Sjostrom digs up some great quotes from Robert Solow and Kenneth Arrow in this fine post on a famous commentator of the moment.

Tuesday, August 17, 2004

Olympic business 

Stat of the day:
The athletes that do land endorsements can remain marketable long after the Games end. Twenty years after winning the gold in Los Angeles, Mary Lou Retton still earns between $200,000 and $250,000 a year.
From MSNBC's look at the Business of the Olympics.

Monday, August 16, 2004

More on "pay to play" 

USAToday has several stories on the "pay to play" trend discussed here yesterday. Here's a snip from the cover story:
School sports used to mean paying only with sweat. More and more these days, sports can also mean paying a fee. Fairfield's fees are an extreme example of a national trend toward programs that require public school students to pay if they want to play sports and/or participate in other activities.

USA TODAY surveyed state high school sports associations and found 34 states in which associations say at least some school districts are charging students to play sports. Associations in 16 states plus the District of Columbia say they do not have, or are at least unaware of, schools that charge user fees.

Pay to play, as it is commonly called, is not new. But the number of public schools that impose it is growing, an assertion that state associations base mainly on anecdotal evidence — what they hear informally from schools — because most states do not track how many schools charge fees.

One that does count is Kansas, where pay-to-play districts have grown from 29 to 50 to 55 in the last three years; that's about 18% of the state's 302 school districts.

Michigan has 760 high schools; 558 returned a survey last year and 126 of those said they charged user fees, more than double from a decade ago. Missouri counted for the first time this spring and found 50 high schools with user fees.
The cover story is supplemented by this article which focuses on a vote to raise the tax levy in Fairfield Ohio. Fees of over $600 per sport await families should voters reject the tax proposal, as they've done with prior versions.


Sunday, August 15, 2004

Aging gracefully 

The notion that Olympic medal winners are increasingly youthful does not bear scrutiny.
At the 1976 Olympics in Montreal, teenagers and the 30-and-older crowd earned 10 medals each in track and field. Four years ago, in Sydney, Australia, the oldsters beat the teenagers in a rout in the track and field events, 46 medals to 4.

The shift has helped to alter athletes' and scientists' understanding of when the human body peaks. For years, people assumed that the early- and mid-20's marked the last time athletes could run their fastest or jump their highest. It was a sensible assumption, because that was the age of the world's champions.
Economic forces lurk behind this change. People often decry the influence of money in sport, yet with it comes the ability to earn a living from athletics. This enables the world's best athletes to remain in training, which has an impact.
[I]t now looks as if the reason was more economic than biological. Before the Olympics allowed professionals to compete, athletes had to retire, or curtail their training, and find jobs before they turned 30. They were quickly replaced in the winner's circle by younger athletes practicing full time.
One implication of this is that the effects of inactivity can be mistakenly attributed to aging. As Lance Armstrong would say, get off your duff and get on the bike. You'll age better.

Billboard economics 

The "economic consultant's report" on the impact of a football stadium in Arlington arrived Friday, and according to the Dallas Morning News, the city council was pleased. But Andrew Zimbalist is not impressed: "the consultant's report 'gives every appearance of being the standard puffery that you get in these types of economic impact reports.'"

At Clemson we have a name for this distortion of our craft - "billboard economics." Indeed the city council in Arlington got what they wanted: an advertisement for their plan to raise taxes and increase spending, a means of weakening the public opposition to their dreams of grandeur.

The DMN's story has good observations from credible economists who work on these issues. Craig Depken notes a highly unusual element in the consultant's report: the monetary figures are all in 2010 dollars. Although modest inflation is likely between now and then, at this date we have only a foggy idea what those dollars will be worth in real terms. Like Craig, my view is that the inflated numbers are employed to obfuscate rather than inform. That's not what I want from my government. The citizens of Arlington deserve an honest assessment of the stadium plan, not billboard economics.

Sports in schools, or in communities? 

Budget problems have led high schools to cut back on funding of sports programs in recent years, an economic trend which has been noted here before. Today's newspapers offer two different views of this issue.

In the Twin Cities, Bob Shaw discusses private sector provision of sports programs. A private program may offer better tailored programs for your child, as Shaw's article points out. Here in South Carolina, many self-organized and community programs are superior their counterparts at the middle school level. Baseball, football, and swimming are common examples. And should your child want to play hockey or soccer, there is no other choice. The growth in alternatives to school programs has some people concerned.
A generation ago, public schools and YMCAs had a monopoly on athletic programs for children. But increasingly, parents want more - and entrepreneurs have rushed in to fill the gap.

In the past several years, private sports businesses have built swimming pools, gyms, soccer fields - almost always better and more specialized than what public schools provide.

That worries some experts. Those facilities and the non-school teams they often sponsor can fragment a child's social life, forcing choices between "school friends" and "sports friends," according to Dave Stead, director of the nonprofit Minnesota State High School League, which runs public-school athletic programs.

That ruptures the sense of community for children, Stead said.
I wouldn't call an interested party like Mr. Stead an "expert," but nevertheless he is well placed to observe the tension between the two forms of providing athletic programs for children.

In Canton, Ohio, columnist Rick Senften is moved to consider alternatives by a decision which denied a 19 year-old the opportunity to play high school football.
This might not happen if we were to devise a network of community leagues for every sport. An athlete could play as long as his or her skills would allow. Sports would cease to be the distraction they are in schools, and athletes would not hold their inflated status among their peers. Schools could regain a proper focus on academics. Fans and families would, in time, redirect their support from the neighborhood school to the neighborhood club. Scouts and recruiters know where to find talent - wherever it might show itself - so that's not even an issue.

The Dennis Underwood situation may be a sad one, but it also suggests an alternative, provided the community is enlightened enough to grasp it.
The tie-in of athletic competition and education is much stronger in the U.S. than the rest of the world. Recent trends suggest that the tie may be unraveling. The school choice movement, to the extent it is successful, should accelerate this development.

Thursday, August 12, 2004

Adu creates, and scores 

Is the prodigy coming to grips with his new environs? There are signs.

Your friend, the government 

Britain's government seems to have a minister for everything. The results can be hysterically funny, as long as they are viewed from the outside. But if I lived in England, I'd view the following proposal as a call to arms. From the Telegraph's editorial page:
Margaret Hodge, the minister for children, is quietly extending her empire to embrace parents, too. In a green paper due out next month, she proposes to teach millions of mothers and fathers how to bring up their children by sending them to parenting classes at public expense.

Such classes can already be made compulsory for parents of truants and thugs. But Mrs Hodge has noticed that middle-class families are rarely summoned before the courts to be reformed in this way. So she plans to spend vast sums of taxpayers' money on a mass programme of re-education. She seems determined that no child shall fail to be indoctrinated with the political correctness that made Islington council the nursery of the "Loony Left" in the 1980s when Mrs Hodge was its leader.

The arrogance of such a policy is breathtaking. It meets no demand, solves no problem, has no empirical basis.
If Tony Blair does nothing, "nationalized parenting" will become government policy. This is nuts. Chalk up one more item in the column for limited government.

Wednesday, August 11, 2004

Technological regress 

I've long been baffled by graphs in principles texts that illustrate an inward shift of the production possibilities frontier due to "technological regress." Of course, a well-placed tidal wave could be disastrous to an economy - the decline of the Minoan civilization may be a real world example. Changes in government institutions can just as surely advance or wreck an economy. But technological regress itself? How could that come about in an economy unfettered by natural disaster, government disaster, or war? Beats me, but Eric Rasmussen offers two examples from the modern bathroom which might fit the bill: the replacement of the rubber bathtub plug by fancy stoppers that fail, and the medicine cabinet by drawers and mirrors.

Eric makes a convincing case that 21st century bathrooms employ inferior, but more expensive designs on matters that count. What then accounts for the change? Here are two possible explanations. First, these design features are just failed experiments, and we'll either revert to the prior technology or move on to something better. Second, we can afford the more expensive vanity mirrors, and have enough leisure time to tolerate being unable to easily read labels on our medicines. In the first case, "regress" is a mistake, part of the cost of trying new things. In the second, "regress" represents a wealth effect, where vanity takes precedence over functionality. The modern bathroom may be less functional, but more satisfying, for now. Like an E-type Jaguar, perhaps.

Sportsman, or mere owner? 

John Perricone, a San Francisco fan at Only Baseball Matters who (not unreasonably) wants the Giants to win while they have the game's best player, points out that operating losses are not inconsistent with profitable investment:

[Owner Peter Magowan] said the Giants will lose in the neighborhood of $15 million, same as they did last season, despite ticket sales that likely will exceed 3.2 million for a fifth straight season. He said the team made money in the first three seasons at SBC Park.

...the Giants are valued at $368 million dollars, and were purchased for $100 million. From that standpoint alone, Magowan's suggestion that the Giants couldn't afford a free agent like Guerrero, for instance, is poppycock.
In Magowan's defense, he's making a profit maximizing decision here: paying big bucks to Guerrero or a top-notch pitcher won't put many more fannies in the seats this season. But the approach of the Giants does suggest that Magowan is not much of a sportsman.

Technical change at the ballpark 

From today's WSJ ($):
Nancy Bea Hefley, the organist at Dodger Stadium for the past 17 seasons, says she can play 2,000 songs from memory. But these days, the Los Angeles Dodgers really need her for only one: "Take Me Out to the Ball Game."

Mrs. Hefley remains a presence at every Dodgers game, seated behind her Roland organ in a far corner of the press box. From high above home plate, she catches pieces of the game while chatting up sportswriters, stadium employees, former players and luminaries. Mostly, though, she spends her time knitting.

In late May, the Dodgers sharply cut Mrs. Hefley's role as principal stadium entertainer. While she used to play before and after nearly every batter and inning, her organ is now largely silent.

Instead, the Dodgers added louder music and electronic gimmicks to match the audio pyrotechnics at other sporting venues. The move is also intended to appease players who want their personal theme songs played during the game. And while it may seem as if another venerable baseball tradition is fading, organists were added to ballparks only in the 1940s, and aren't universally loved.

Mrs. Hefley's duties were first reduced in 1998 by News Corp.'s Fox Entertainment Group after it bought the team from the O'Malley family, which had owned it since 1950. But they have been more significantly curtailed by Frank McCourt, a Boston real-estate developer who bought the Dodgers in January.

Dodgers management is quick to stress Mrs. Hefley's solid future with the team. "Nancy Bea is not going anywhere; the throngs love her," says Gary Miereanu, vice president of communications. Indeed, her contract, the terms of which she wouldn't disclose, has already been renewed for next season.

But with the likes of Metallica and Dr. Dre replacing Mrs. Hefley's chirpy organ stylings, Dodger Stadium is a much different place from the days when Mrs. Hefley had free musical rein. Since joining the team in 1988, Mrs. Hefley has mastered the art of the well-timed musical snippet. When pitchers from the rival San Francisco Giants were taken out of the game, she often tapped out "Do You Know the Way to San Jose?" After a Cincinnati Reds pitcher was hammered in the first inning, she ushered him out with a song from the musical "Wonderful Town" whose refrain goes: "Why oh why did I leave Ohio?"

"That's the only one I thought was mean," Mrs. Hefley recalls.

On a recent July afternoon, Mrs. Hefley's role was limited to the national anthem and short bits before and after the game. Perhaps most important, she still owned the three minutes or so it took her to play "Take Me Out to the Ball Game" twice through the seventh-inning stretch.

Her role has been usurped by a deejay who sits directly below her. He plays a selection of hip-hop and rock, interspersed with devices designed to pump up the crowd and the stadium's volume -- all with the a click of a button on his laptop. Now, even the familiar "Charge!" refrains have been prerecorded by Mrs. Hefley and uploaded onto the deejay's computer.
I suppose tunes from a clever organist probably go over most customers' heads, but the "theme music" blasted in every stadium before each batter's plate appearance bores me to death. Maybe the digital brigade can one day match the whimsy and spontaneity of the ballpark organist, but I'm not betting on it.

Friday, August 06, 2004

Unfair and unbalanced 

Fox Sports, the roost of Gamecock-loving Clemson-hater Van Earl Wright, recently hired a Tiger defender. The Fox Funhouse is now home to the Douganator. VEW is no match for this guy. Is there enough room in LA for the two of them?

Recruiting rules 

The NCAA has adopted more restrictive rules on recruiting in what Purdue Coach Joe Tiller calls "a knee jerk reaction" to the Colorado scandal. Tiller is ticked about a new rule which forces schools to use commercial flights when bringing recruits to campus. This will keep schools in rural areas from using charter flights to get to campus directly. Tiller is thinking of a one or two hour van ride, complete with views of mobile homes along the interstate. But won't the response be transport by Escalade, with a bevy of DVD games to be played in the back seat?

There are some interesting facts in the story, from the four lobster tails consumed by Willie Williams at Florida State, to Georgia's $485,000 in football recruiting expenses last year. That's not that much, given the stakes. I'm guessing the Bulldogs fed their boys plain ole poultry.

Cowboys in Arlington 

The Dallas Morning News' Angela Shah and Steve Brown examine the issue of building a stadium for the Cowboys in Arlington. In this case, there is a record based on the city's $135m investment in a ballpark for the Rangers ten years ago. Shah and Brown gather some evidence, mostly inconclusive.

This the most compelling bit. It reflects on the ever present "stadium as catalyst" argument from subsidy proponents:
The projects around the stadium that would have generated additional tax money - offices and a retail area lining a river walk and bordering a small, man-made lake - have yet to materialize.

The only significant new office property near the stadium is a three-building, 234,000-square-foot development built for Siemens Dematic Postal Automation in 2003, with additional city tax breaks. The Siemens unit already had been located in Arlington.
That's not an impressive record.

Thursday, August 05, 2004

Another tech-savvy coach 

It's Brian Billick, profiled in a neat story by Seth Schiesel in today's NY Times:
And by the end of the 80's, when Billick was on the staff at Stanford, he was connecting computers to VCR's to start categorizing and processing game film. Around the same time, he heard about something called the Macintosh, this time through another sibling.

"My sister, oddly enough, is the one that got me started," he recalled. "My brother is a staunch I.B.M. guy: 'Apple useless, toy.' My sister: 'Oh, look at the great graphics.' Creative versus number crunching. So the number-crunching side of me is served well by my background of my brother helping me learning the spreadsheet concepts. But now as my sister starts to show me what she's doing on these little Apples, I'm thinking, 'Damn, if we can input our plays and catalog them and save them and literally drag and drop, how much time are we going to save?' "

..."We went from 16 millimeter, very cumbersome, to VHS, which was still time-consuming, to digital," he says. "If I had had to call up the film guys and asked them to do this, it could have easily taken two days and we did it in what? Twenty seconds?"
That innovation surely made a huge difference in the productivity of film analysis.

What's next? Virtual reality - film has limitations, you see. Great story (read the whole thing).

Soccer wars 

Chinese soccer fans imitate Europe's worst as Japan competes in China for the Asian Cup. At issue: long memories of World War II. William Pesek argues in his piece that the tensions between the two countries are real, and have serious economic consequences. Franklin Foer (How Soccer Explains the World) would understand.

As fortune would have it, China and Japan will meet in Saturday's Cup final. This story from asahi.com (a Japanese newspaper) has more.

I thought Germans prized thrift 

Gerhard Schroder is attempting a much-needed overhaul of Germany's welfare system. But on this proposal he goes astray: a cut in welfare benefits to children of unemployed parents who have 750 Euros in a savings account.

To the extent the policy would have teeth, it diminishes the incentive of people in at-risk jobs to save. Not good. But more likely, it will just limit the form of saving, and poor Germans will revert to sticking cash under mattresses. Nice one, Gerhard!

Wednesday, August 04, 2004

$100 for the inconvenience 

Steve Landsburg offers an unadulterated economist's approach to maximizing security on air travel. Profile, detain those statistically more likely to be terrorists, and pay them $100 in compensation for being demeaned and inconvenienced. Landsburg's idea would increase travel safety at minimal cost, but the likelihood of it being implemented is zero.

Kansas City arena clears hurdle 

The vote was not close: 57-43 in favor of plans for a downtown arena. Now to find a team to play in it. Hotel owners ($1.50 per room per day) and car rental firms ($4 per day) won't be as happy as the mayor apparently is.

A clarion call from horse country 

John Clay, surrounded by Kentucky breeders, has this to say in the Lexington-Herald Leader:
Is it any wonder why racing can't keep the public's interest when it cannot keep its stars running? And what good will stud fees be if a distracted public turns its back on the track entirely?

...Let's quit calling it horse racing, and start calling it what it is: horse breeding.
Until that issue is successfully addressed - who owns the sport - the Smarty problem will persist.

Some charts on GDP and Job growth 

George Shultz, a fellow whose opinions I respect, offers some interesting charts in today's New York Times. (Click on the "these charts" link, and ponder a while). I'm guessing Paul Krugman, a bright fellow who also has opinions on these matters, will come along soon to muddy the waters a bit, so it's worth keeping them handy.

Update: Ben Muse posts another interesting chart to ponder, on labor compensation since 1948.

Tuesday, August 03, 2004

The dismal economics of racing 

What do I mean by when I say "the dismal economics of racing" or "racing's economics are screwed up?"

Essentially, the claim is that a racehorse like Smarty Jones is worth more to the racing industry (let alone the public) on the racetrack than on the farm. Yet Smarty is going to the breeding shed. Something is dismal and "screwed up" when the lesser valued option is chosen over the one with higher value.

Let's do the math. Breeding experts put Smarty's stud fee next year at $75,000. For a book of 100 mares, that comes to $7.5 million in revenue. Only one horse in history has won more than that on the track in a single season - Smarty Jones - and he just edged it ($7.6m) due to the improbable $5m bonus for sweeping the Derby and the 3-year-old prep races in Arkansas. Smarty's expected earnings in 2005 would be no more than half his stud fees, and the owners would be required to pay extra insurance to cover the hazards of racing, a figured reported to be about $1m. Racing the horse does not make economic sense for the Chapmans. Not racing the horse is an emotional blow to them, Smarty's fans, and the industry as a whole.

Campaigning Smarty Jones in 2005 would increase interest in racing in general, and be a huge boon to the racetracks graced by his presence. The claim that racing's economics are dismal boils down to an argument that Smarty is worth more than $7.5 million to his owners, fans, and the racetracks were he to run in 2005. That is, on value realized by everyone, as opposed to cash recouped by his owners, Smarty is more valuable on the track than the farm.

Like many issues of this nature, the root of the problem can be traced to transactions costs. Smarty's owners are comparing expected earnings from racing with earnings from stud fees. To induce them to make the choice which maximizes social value, they'd have to be compensated - through appearance fees for example, or a payment from a unitized industry organization, contingent on his running in Grade I stakes. But there is no unitized organization to write such a contract, the NTRA notwithstanding. Further, it is a difficult, if not impossible contract to write - and were it feasible for Smarty, writing the contract would set up the industry for holdout threats in the future.

I'll re-state what I said earlier: no current 3-year-old other than Smarty Jones would be retired due to his current physical ailment. Yet he's the horse everyone wants to see. That's a shame.

Beyer on Smarty 

The dean of racing writers, Andrew Beyer, writes on Smarty Jones' retirement in the Washington Post:
Smarty Jones didn't accomplish enough to merit inclusion in a list of the sport's all-time greats. He ran one blockbuster race -- his 11 1/2-length romp in the Preakness.

However, he was dominating a 3-year-old crop that was of average quality at best. He never faced older horses. He never faced a truly formidable rival. The challenges that would have certified his greatness still awaited him.
It's a shame he won't get the chance. The irony is, if he were any other 3-year-old, or had he lost an early race by a narrow margin, he would stay in training next year in order to prove his greatness. We'd know. Even Secretariat, the last true icon of a horse, ran at four to cement his place in history. With Smarty, we'll never know how good he could have been.

Retiring Smarty is an economic decision by the Chapman's, and it's no use demonizing them. The decision just drives home the point that racing's economics are screwed up. As Beyer says elsewhere, "If he had raced for another year, he would have stirred more interest in racing than any 4-year-old in the last quarter-century." What might have been.... Read the whole thing.

Monday, August 02, 2004

Smarty Jones retires 

Crap.

Here's a more informative story from The Blood-Horse: "chronic bruising of the bottom of the cannon bone in all four fetlock joints." He could still make it back next year after 3 months rest. The story quotes noted veterinarian Dr. Larry Bramlage: "we bring horses back from this injury all the time. There are no structural problems and the prognosis is for a full recovery."

But stud fees beckon. The dismal economics of horse racing rears its ugly head again.

Smarty Jones' retirement is a reminder that the quest for success in horse racing, more often than in most sports, ends in disappointment. Oh well. Thanks, Smarty. You were sensational.

Justice on the Astros 

Richard Justice explains why, to my great dismay, the Astros are a deeply flawed team. There are several reasons, but at the top of the list is a cheap owner, something that Astros fans have been putting up with for decades:
Remember that owner Drayton McLane's offseason priority was to slash the payroll. He ordered the trade of Billy Wagner and wanted Richard Hidalgo gone as well. Only when Andy Pettitte took a hometown discount did he change his mind and begin talking about a championship.

He has said that Pettitte and Roger Clemens could not have been signed if Wagner hadn't been traded. This is ridiculous. Pettitte's deal was too good to pass up no matter what. As for Clemens, McLane would never have turned down the chance to have him in an Astros uniform. And he came cheap, too.
Justice is right - Pettite and Clemens were profitable signings with or without Wagner. McLane is one of America's richest men, but he can't "afford" a winner. He's cheap.

Update: Tom Kirkendall emails with a correction too large to fit in the comment box.
Mr. Justice does what many sportswriters tend to do -- they make superficially sensible assertions without factual support. In this case, the facts do not back up Mr. Justice's view.

Wagner was an expensive pitcher who was coming off one of the best seasons of his career. At his age, his performance likely does not get better than it was last season. The Stros traded him for two excellent pitching prospects (Buckholz and Astacio), and the trade has turned out to be a good one. Wagner just went on the DL for the third time this season. Moreover, based on Lee Sinins' runs saved against average ("RSAA") formula, Wagner has been a marginally above-average NL pitcher this season. Wagner's RSAA is 4, which is the same as the Stros' Pete Munro. Although Munro has been a pleasant surprise this season, the addition to this Stros' staff of another pitcher pitching at his level of effectiveness would not have made much of a difference in the Stros' overall performance this season.

Finally, the Stros' currently have the third best pitching staff statistically in the NL. Their primary problem this season has not been pitching; rather, their problem has been lack of hitting generally and lack of power hitting in particular (notably, Bagwell and Ensberg's dramatic power declines).

Which brings us to Hidalgo. Another hugely expensive player, Hidalgo has had precisely one above-average season since his monster season of 2000. Again, using Mr. Sinins' runs created against average statistic ("RCAA"), Hidalgo has been just an average NL hitter this season, which means that he is far below average as a rightfielder (where most teams field an above average hitter). The Stros did not get much in return for Hidalgo, which reflects that the trade was primarily a salary dump. But that salary dump allowed the club to pick up Carlos Beltran, who is a far superior player to Hidalgo.

So, don't be too hard on McLane. The Astros are a flawed team, but it's not because of the decisions to deal Wagner and Hidalgo. Rather, it's because the club has suffered a somewhat unexpected power drain this season while suffering the effects of a farm system that has produced too little since the likes of Berkman and Oswalt.
My reaction: excellent points, but note that Tom does not take issue with my claim that Pettitte and Clemens were profitable signings. Therein lies my beef with McLane: don't cry to me about your payroll if payments to superstars increase your revenues by a similar or greater amount. McLane did the same thing with Randy Johnson in 1998. Adding the Big Unit increased payroll, but it also sold out the Dome, just as Clemens has done in the Juice Box. They were profitable moves. McLane is no fool, but he's too prudent for my tastes. Fortune favors the brave, and McLane the Owner is not brave. He's a prude.

Event markets and the election 

Glenn Reynolds links to the picture below, and states that "Many, many readers have emailed this chart from the Iowa Electronic Markets showing Bush pulling ahead since the convention. I don't know how much these are worth, either."



Maybe not much, but research over a good many elections and election cycles shows that the IEM and other betting markets provide estimates of the probability of winning an election that are tough to beat. Much better than the polls, at any rate.*

These prices are from the "winner take all market." Specificaly, they are the cost of purchasing a contingent claim yielding $1 should that party win the presidential election. Assuming the market is efficient and that 3rd parties have a zero probability of winning, the prices should (i) sum to $1, and (ii) each price represents each candidate's probability of winning. The latest crossing of the lines implies that Bush has taken a slim lead over Kerry in the race. If one attributes this move to events in Boston last week (and not some other factor), this suggests that participants in the IEM viewed the Democratic convention as disappointing, i.e. worse than expected. It is worth noting that in years past, polls would surge in favor of the party holding the convention, while IEM prices would hold steady. Over time, the temporary boost in the polls would reverse to normal. That both the polls and the IEM reacted negatively to the events in Boston is not good news for Kerry, but not damning either. At current prices, the Iowa market still rates the election as a toss-up.


*Footnote: the IEM, run by economists and others at the University of Iowa, has been a useful laboratory for studying how markets assess the likelihood of future events for many years.

"Fuzzy math" 

Andrew Finley of The Daily Bruin takes a swipe at the USC Trojans for claiming a national title in college football, 65 years after the fact.
Athletic Director Mike Garrett announced July 26 that the school retroactively would recognize its 1939 football team as a national champion.

It's hard for me to say how deserving the team actually is. I wasn't around in those times, and neither was Garrett, but fortunately for all of us there was an economics professor from Illinois to sort things out.

In 1926, Frank Dickinson, the economics professor, devised a mathematical system to determine the Big-10 Champion. Notre Dame coach Knute Rockne liked the formula so much that he wanted Dickinson to apply it to the whole nation. Dickinson obliged and predated it so that Rockne's 1924 and 1925 teams could claim the title. Sixty-five years later, the Trojans are learning to follow the Irish's lead.

Dickinson's system widely was considered emblematic of the national champion until The Associated Press began ranking teams in 1936. From then on, most in the football community seemed to realize that writers who tracked teams on a weekly basis were probably more qualified to rank teams than a professor tracking supply and demand functions.
This economist has no argument with Mr. Finley, who makes an entertaining case for the prosecution. Read the whole thing.

Kings stung by bee 

Jean Ross presents a very good synopsis of research on the economics of stadium subsidies in the Sacramento Bee. Whether it will affect public sentiment towards the Kings' arena proposal remains to be seen.