Sports, beyond their entertainment value, are able to give a unique insight into economics.
While the traditional way to combine those two elements is to look at the economics of sport, in this article we will actually focus on the economics in sports, a field that uses athletic competitions as a lens to unravel human behaviour, biases and economic theories.
What makes sport different from other scenarios?
As suggested by scholars such as D. Kahneman (1979) in “Prospect theory: An analysis of decision under risk”: “People make many decisions that matter enormously to them under standard conditions”.
Moreover, sports data embody a huge amount of extremely detailed pieces of information that can be really useful for research. That is because ambiguity in natural environments, outside of sports, tends to be more intricate, complex and less regulated.
How can football help economics? 3 examples.
Some examples of how sport, and in this case football, served as opportunities to better study some phenomena are the following.
Kleven, Landais and Saez, in a study conducted in 2013, used migration patterns of football players to show how taxation could affect the labour market.
Another interesting example was conducted by Mogulev and Gaily (2019) analyzed how players in the Premier League were making a strategic use of time-wasting, showing how costless and destructive activities result in increased use of sabotage.
Their paper explores how the game score influences the duration of dead-ball situations that can even double in certain conditions, such as a team leading by just one goal.
This offers a deeper understanding of how players and, more generally, individuals who are focused on highly emotional goals and in stressful and competitive environments are way more likely to act unethically.
Another crucial example of how sport can help economics is through the study of biases: one of the most relevant examples has to do with the action bias, which several studies correlated with goalkeeper behaviour in penalty kicks.
There are several reasons making penalty kicks interesting: most of all is almost a simultaneous game, as the goalkeeper needs to choose his direction before the opponent shoots.
According to a study conducted by Bar-Eli et al. (2007), out of 286 penalty kicks, most goalkeepers (93.7% of the time) moved either to the right or left instead of staying in the center of the goal, which would actually be their utility-maximizer choice.
This can be explained by the action bias: “if the goalkeeper stays in the centre and a goal is scored, it looks as if he did not do anything to stop the ball”.
In fact, there is substantial evidence that indicates individuals tend to favour action over inaction, even if there’s no indication that doing so would lead to a better result.
Sports provide incredibly detailed data that researchers can use to study human behaviour.
Either exploring biases or behavioural economics theories, this wealth of information reveals to be extremely useful because real-life scenarios outside sports are often more complicated and less regulated, making it harder to analyze human actions.
Bibliography:
Bar-Eli, M., Azar, O.H., Ritov, I., Keidar-Levin, Y., Schein, G., 2007. Action bias among elite soccer goalkeepers: The case of penalty kicks. Journal of Economic Psychology 28, 606–621. https://doi.org/10.1016/j.joep.2006.12.001
Bar-Eli, M., Krumer, A., Morgulev, E., 2020. Ask not what economics can do for sports – Ask what sports can do for economics. Journal of Behavioral and Experimental Economics 89, 101597. https://doi.org/10.1016/j.socec.2020.101597
Chan, H.F., Savage, D., Torgler, B., n.d. Sport as a behavioral economics lab.
Morgulev, E., Galily, Y., 2019. Analysis of time-wasting in English Premier League football matches: Evidence for unethical behavior in final minutes of close contests. Journal of Behavioral and Experimental Economics 81, 1–8. https://doi.org/10.1016/j.socec.2019.05.003
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