21.12.11

LOOKING FOR AN ARMS CONTROL TREATY?

There's a collection of observations about the various college football bowls that, taken together, suggest the consequences of coordination failure, but no easy way out of the dominant strategy equilibrium.  We'll start with University Diaries, a critic of long standing of Big Time Football, with Schadenfreude over the failure of big time programs to sell their allotment of bowl tickets.
Human enterprises don’t come any more prestigious than the Bowl Championship Series; and – dang! – football’s the front porch of the American university! I challenge you to say one word against big-time university football! So WHAT the hell’s going on.
When the morning talkers on a radio station that carries the Packers and Badger football notice the same thing, something might be happening.  A few days ago the conversation was about the absurdity of 6-6 Illinois, which had just fired its coach, playing Pacific 12 runner-up and 6-7 UCLA (motto: On! Wisconsin) in the Kraft Fight Hunger Bowl.  This morning it was about the naming rights.  The broadcasters were happy to note that Wisconsin would be playing Oregon in The Rose Bowl presented by Vizio, while the other traditional bowl games were the Allstate Sugar Bowl and the Discover Orange Bowl and the AT&T Cotton Bowl Classic.  They also had scorn for the GoDaddy.com Bowl, intending to watch it only for the commercials.  I view it as a perfect curtain-raiser for the Allstate BC$ National Championship Game.  The presence of Allstate as major sponsor intrigues, but I'm not sure why.

At Grantland, Tyler Cowen and Kevin Grier suggest that bowl participation ought be viewed as a capital investment.
There are plenty of statistics about how many schools lose money in bowl games, but they are based on comparing travel costs with the payout received from the game. That’s a flawed analysis. It’s all about advertising. What schools may lose up front they usually make up in the long run, and that is why competition to play in bowls is so fierce.

Larger schools pull in most of their revenue from tuition and donations, and successful collegiate sports teams boost both areas. That’s why a good football coach can make several times more than the college or university president, with top coaching salaries reaching well into the millions.
That reference to "top coaching salaries" will merit further scrutiny, First, though, the authors make a claim that might not be true.
In years following a championship football performance, admissions interest in a school rises significantly, including relative to its peer institutions. That means more students and a better selection of students, and over time it also means more and better donors for the school.

The prospect of alumni donations drives the structure of big-time collegiate sports.
Donations, perhaps. Student quality, not so much.
On campus, a successful football team is a cause for celebration.

So much celebration, in fact, that three economists have found a link between a winning season at one big-time football program and lower grades for male students.

In a new paper, the economists at the University of Oregon chart the grade point averages of students there alongside the fortunes of the football team between 1999 and 2007. Their findings could give ammo to critics of big-time college sports.

Their conclusion: When the Ducks were winning, students celebrated more and grades suffered. And that doesn't bode well for upcoming report cards — the Ducks are 11-2 this season, Pac-12 champions for the third straight year, and headed to the Rose Bowl.

"They drink more when the team wins, they party more when the teams wins, and they study less when the team wins," said professor Jason Lindo, who is one of three co-authors and says the study is the first of its kind.

Women's grades held up better than men's when the team was doing well — and the drop in men's grades compounded a GPA gender gap that was already present at Oregon, as it is on many campuses.

The bottom line: Three extra wins for the Ducks' football squad in any given year caused a drop in male GPAs that's about as steep as the one you'd expect if male students had scored 27 points lower on their SATs.
It's intriguing that Huskie Wire picked up the story, which includes the obligatory spin from university administrators, as well as the proper on-the-one-hand, on-the-other observation from Professor Lindo.
"This is a cost, it's an important cost," he said. "But it has to be weighed against potential benefits."
Professors Cowen and Grier come to a less satisfactory conclusion.
In sum, we have a system where the games are not designed to produce the best on-field matchups, the competitors often lose money but fight fiercely to participate, outsiders and observers complain vehemently, and the organizers amass and waste a great deal of money with little oversight.

Welcome to capitalism, American style. Get back to us when you’ve found a better system.
There's an area of economics called industrial organization, in which game theory (often no more complicated than the prisoners' dilemma) is a useful analytic tool, and I'm surprised that Professor Cowen in particular wouldn't recognized the rent-seeking phenomenon (itself an inefficiency) in that amassing and wasting a great deal of money.

That understanding of rent-seeking might clarify Huffington Post commentator Wendy N. Powell's investigation of the peculiar economics of college football, which complements the Cowen and Grier essay in part, and conflicts in part.
The reality is that coaches have created their own salary market, a task that the rest of us cannot afford to do. In this economy, we don't have the luxury of holding out for the highest bidder. Most of us take what we can get. But, they have driven up the market by making demands of public institutions that would be a fantasy to most. It's about "me too" and drive up the next bidder.
Let's rephrase that. Most of us are not Paul Krugman, who is in the position of being able to play Princeton off against Columbia or MIT or Stanford for an endowed chair, or to negotiate with the New York Times for a column.  Paul Krugman and Robert Barro and Thomas Sargent and other highly regarded economists compete in a different segment of the market, but they did so by working more creatively than those of us who are using a day the offices are closed to catch up on blog posts and electronic mail.  Think of the reserve army of underemployed Ph.D.s as the academic equivalent of volunteer assistant coaches holding tackling dummies at small high schools.  A few of those people become high school head coaches, a few of those secure assistant coach appointments at universities, and on occasion a science teacher named Lombardi leaves St. Cecelia High School to have a trophy named after him.  The question Professor Powell and the others ask is really whether it is worthwhile for public institutions (and Notre Dame and the University of Spoiled Children and Syracuse) to be validating those demands, or whether it is time to end the positional arms race.

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