Market Power

More on Queen's University's Gestapo/KGB Tactics

Here's an editorial in the National Post regarding Queen's University's decision to employ secret thought police on its campus.  An excerpt (but read the whole thing, as they say):

The six students who staff the "Intergroup Dialogue" program, (academic vice president) Mr. (Patrick) Deane declared in his e-mail blast, "have been trained to serve their peers as facilitators in difficult or sensitive discussions." Their goal: "To foster amongst students, in their ordinary interactions, a spirit of mutual respect and understanding, especially where they might potentially be divided by differences of racial identity, religious commitment, sexual orientation or ethnicity."

"The program is founded on respect," he adds, "which means that student facilitators are explicitly not intended or allowed to foist their views upon others. Indeed, they are expected to foster a safe environment in which all students can speak with assurance ... Freedom of speech and thought is impossible without respect, consideration and a commitment to mutual understanding."

Perhaps Mr. Deane needs a "facilitator" of his own to help him understand why his words immediately strike so many as creepy and totalitarian. Indeed, one sentence -- "Freedom of speech and thought is impossible without respect, consideration and a commitment to mutual understanding" -- is exactly the sort of pro-forma boilerplate that inevitably gets sputtered out by human rights commissioners before they bring the boom down on some poor conservative-minded fellow who had the temerity to speak his views.

Via John Palmer

Beer: Is There Anything it Can't Do?

Wine snags a lot of credit for its heart-healthy effects; truth is, moderate consumption of beer provides the same benefits.

Research suggests that it's the alcohol itself that lowers cardiovascular risk (by reducing inflammation, "thinning" the blood and improving insulin sensitivity). Here are six more reasons to cheer for beer!

Story here.  So now I have an excuse when I have a couple beers after work.  But dear, it's healthy.

Brian Goff on the Spread Offense

Sometimes, innovations (or re-inventions) like this merely increase the variance of outcomes without changing the average. Nonetheless, because Wins/Losses determine performance and not average score, stretching out the outcomes can bring more wins to a team with lower average scores their opponents. In other cases, an innovation increases variance but also, for a time, increases the average outcome for the innovator. Paul Westhead's frenetic 3-point barrage at Loyola Marymount serves as an example. However, opponents quickly adjust and the mean-changing element wears off.

The spread in college football appears to be changing averages and not just variance. It reshapes player advantages/disadvantages essentially by using more of the field, such that a good QB and quick receivers/backs can put up a lot of points with fairly marginal linemen. Although in use in some ways since the 1970s, teams like Northwestern and Purdue radically changed their performance levels using it in the 1990s and drew lots of imitators. They might not stop the other team any better, but they gave themselves a chance to outscore the other team. The 2007 win by Appalachian State against Michigan marked the spread's finest hour. Now, it has shown up everywhere with points at the high school and college levels reflecting the change. Texas HS playoff scores now have basketball-like outcomes, 56-49.

Will defenses catch up? Many, including Mack Brown, think so:

Some theorize that better “cover” cornerbacks will help slow the spread. That's because such cornerbacks can neutralize two of the offense's five possible receivers, enabling more defenders (five or more) to rush the passer.Another theory is that if the spread becomes too prevalent, all the bigger-name programs with better recruits will use it too, rising to the top again and forcing the have-nots to come up with a different equalizer.Asked if defenses will catch up with it, Texas' Brown said, “I'm sure it will. In my 33 years, it always has. But we're not sure how yet.”

A precursor to the "spread," the run-and-shoot lost its mojo fairly quickly. Suffering from a lack of run threat, teams just pounded the QB. In contrast, although the spread puts great importance on QB decisions, variants of it have integrated option and single-wing running principles that keep teams from defending it by merely knocking the QB on his keister. It has succeeded with QB with great mobility and those with less running ability (Chase Daniel at Mizzou, for example).

The success of the system poses real dilemmas for some of the traditional powerhouses. Is it a dominant strategy regardless of depth/breadth of talent? Does it make as much sense at Michigan as at West Virginia? Clearly, particular personnel and coaching decisions matter, but, in general, the balance of mean versus variance matters. An Oklahoma has certainly turned into an offensive juggernaut using it, but lost to arguably less talented teams in scoring shootouts against the likes of Texas Tech last year or Boise State two years back. Does using it, or using it exclusively, play into the hands of these teams? Does it under-utilize the talents of an Adrian Peterson -- someone everyone knew was good but not how good because of the OU spread?

From TSE. Here's the article Brian was writing about.  Here's the comment I left:

Chase Daniel's greatest asset, besides his accuracy and his ability to read defenses, is his decision-making ability.

But the thing that has always stopped him at the collegiate level were defenses that could get adequate pass-rush from their front four, leaving the rest of the defense in pass defense. That's why Mizzou lost to Nebraska and Oklahoma in 2006, to OU twice last year, and Texas this year.

Most teams, on the other hand, have a guns-or-butter choice when facing Mizzou: pass rush or coverage. The teams that can rush and cover present the biggest problems.

The better the pass rush, the better your chances of neutralizing the spread.  I said much the same thing in this earlier post.

Super Bowl Ads Not Selling

In another sign of the times on the sports front, the remaining Super Bowl ads are not selling.

Walker said NBC had a total of around 67 spots for Super Bowl XLIII and has sold about 59, or 88 percent. In September, NBC said 85 percent of the 30-second spots had sold for about $3 million each. Typically, 60 percent of Super Bowl slots sell by then.

The National Football League championship is considered the premier advertising event of the year, and it often heralds new trends in advertising sales and styles.

Walker said NBC could technically sell ad spots up to the last minute before the event. He declined to say whether NBC - a unit of NBC Universal, which is owned by General Electric Co. - is facing pressure from companies to discount rates.

Via Instapundit

Austan Goolsbee and Paul Volcker Named to New Advisory Board

President-elect Barack Obama will appoint former Federal Reserve Chairman Paul Volcker on Wednesday to be the chairman of a new White House advisory board tasked with helping to lift the nation from recession and stabilize financial markets, Democratic officials say.

University of Chicago economist Austan Goolsbee, one of Mr. Obama's longest-serving policy advisers, will serve as the board's staff director, along with his duties as a member of the White House Council of Economic Advisers. Members of the panel will be drawn from a cross-section of citizens outside the government, chosen for their independence and nonpartisanship.

The board's mission won't be to supplant the policy-making role of the Treasury Department and other agencies, but to give Mr. Obama an official forum for getting expert advice outside the normal bureaucratic channels. It will give briefings to the president.

The panel, called the President's Economic Recovery Advisory Board, is modeled on the Foreign Intelligence Advisory Board established by then-President Dwight Eisenhower in 1956, at the height of the Cold War, when officials worried that that the existing bureaucratic structure was inadequate to help the U.S. keep pace with the Soviet threat. The financial crisis has drawn similar worries that the government isn't properly organized to monitor and respond to modern financial markets.

Story here.  Via MR.  Megan McArdle wonders if Volcker has the "endowments" necessary to tackle the economy, seeing as he's 81.  But the rest of the staff seems to be getting nothing but thumbs up from the profession regardless of their position on the political line.

Sports Economics Test Question - Rottenberg's Invariance Hypothesis

Suppose that next season, Derrek will be worth $5,000,000 to the Mets and will be worth $3,000,000 to the Cubs.  Suppose that negotiations between any of the parties is costless and that both teams maximize profits.  Suppose that Derrek just finished playing under contract for the Cubs.  Discuss the difference between negotiations under the following labor market structures: free agency and the reserve clause.  Based on Rottenberg's Invariance Hypothesis, which of the two labor market structures results in the efficient outcome?  Based on this hypothesis, which of the two structures would result in Derrek playing for the Mets?  Describe the distribution of income under the two labor market structures.

Cross posted at The Sports Economist

Atlas Shrugged, Updated for Today's Economy

Short story by Jeremiah Tucker here.  Via MR

Indian Cricket Players Win Contest, Sign With Pittsburgh Pirates

From USA Today

Dinesh Patel and Rinku Singh, cricket players who had not picked up a baseball until April, on Monday became the first athletes from India to sign professional baseball contracts, agreeing to deals with the Pittsburgh Pirates.

"This is very intriguing for us," Pirates general manager Neal Huntington said. "We are trying to broaden our horizons internationally and to get into some non-traditional markets. I've always been curious about India, knowing they have a cultural passion for cricket, which involves throwing, hitting and running. We want to see how that translates to baseball.

"This organization benefited in Latin America when we signed Roberto Clemente, and hopefully with their success, we'll see more athletes coming from India."

Patel, 19, and Singh, 20, said Monday they never heard of Clemente, let alone Pittsburgh, when the Pirates called last week. They went to the Internet, found the city on the map, and then spent hours exploring the Pirates' website.

"It's a dream come true," said Patel, whose fastball was clocked at 93 mph in a second workout last week, according to Huntington.

Jeff Bernstein, a promoter who discovered the pitchers in a Million Dollar Arm contest in India, said he took Patel and Singh to a nearby sporting goods store where they bought Pirates hats and shirts. They even went to a jeweler and purchased black and yellow watches, colors of the Pirates.

It's not surprising they were signed by Pittsburgh (my guess is that their contracts were modest), one of the smallest markets in baseball.  It's also rather entrepreneurial, no?

Tyler Cowen has more here.  As the second commenter there quipped "They won and got to be Pirates?"  Ooooooh  SNAP!!!!

I like the third quote too: "They are taking jobs away from Americans!"  You win one free internets!

Why You are Rich

1. You didn’t go to sleep hungry last night.
2. You didn’t go to sleep outside.
3. You had a choice of what clothes to wear this morning.
4. You hardly broke a sweat today.
5. You didn’t spend a minute in fear.
6. You have access to clean drinking water.
7. You have access to medical care.
8. You have access to the Internet.
9. You can read.
10. You have the right to vote.

Reasons to be thankful, for sure.  And many of these were brought to you not by the benevolence of government, but for the cooperation fostered by capitalism.

Source here.  Via the Door.

How Sports Teams Set Their Prices

Sports teams, like any firm, set the price of their products to maximize profits.  But since the cost of putting on a game are almost entirely fixed, the price that maximizes profits is approximately the same price that maximizes revenue. 

In many studies of the demand for sports, economists have found that things like the age of the stadium, per-capita income, local drawing area population, sports entertainment options (the existence of other teams), and expected team quality are important determinants.

Quality expectations by fans is really important because tickets prices are set in advance of the season (and many tickets are bought in advance of the season).  Nobody knows how good the home team will be, so guesses are made.

Case in point.  The Kansas City Chiefs are horrible this year, and Carl Peterson has announced that the Chiefs will not increase ticket prices next year except in areas of Arrowhead that will be renovated.

The Chiefs won’t be raising ticket prices for 2009, except for those in the renovated and enclosed club level.

“Last year, we had a bad season with just four wins … I’d take four wins right now this year …” he said of his 1-10 team. “We have always tried to be sensitive to our market. (In 2008) we not only kept tickets flat, but for almost everyone, we had ticket decreases in prices. We’re going to do the same thing again this year. We sincerely appreciate your patience, your understanding …We’ve got a young team ...”