Monthly Archives: November 2007

We seem to be turning into The Sports Economist this week, but why not make a virtue of it? Justine Henin has been complaining that tennis players who agree to fix matches should be banned for life.
Economist Justin Wolfers wrote not long ago in the New York Times:

The activity known as “point shaving” gets at the heart of the problem: a corrupt player or official is rarely asked to throw a game to one team or the other. Instead he is asked to influence something rather immaterial, like the winning margin. This is profitable because gamblers typically bet on whether a team will exceed some point differential — the “Vegas Spread” — rather than whether a certain team will win…
We have seen similar scandals in other sports, including football, soccer and cricket. The common thread in each case has been the existence of large-scale betting on immaterial outcomes, like the point spread, or how many combined points the two teams will score, or the winner of a meaningless “dead rubber” in cricket… Not all gambling leads as easily to corruption. For instance, if betting were allowed only on which team would win a game or a series, then corrupt gamblers would find it much more difficult to get referees or players to cooperate with them.

Justin argues that gambling should only be allowed on results that really matter. That might help, and although some players have been accused of match-fixing in a more dramatic way, such a rule would certainly reduce the temptation. Costs and benefits, anyone?

New research from the Centre for Market and Public Organisation at Bristol University:

Children whose mothers work full-time when they are aged between 5 and 7 are more likely to be overweight at age 16. But there is no evidence that part-time or full-time maternal employment at earlier or later stages of the child’s life lead to a higher probability of being overweight at age 16.
These are the central findings of new research by Stephanie von Hinke Kessler Scholder, summarised in the Autumn 2007 issue of Research in Public Policy. Her study also finds that mid-childhood maternal employment does not have an immediate impact on children’s weight: rather, the effect emerges as they get older.

I’m quoting here from the press release, the paper should be published shortly at the link above. The press release caught my attention because this is not the first time this sort of result has been discovered.

If England beat Croatia tonight, perhaps all will be forgiven, but over the past couple of weeks, all this talk of a "golden generation" in English football has been replaced by the complaint that it’s the fault of the foreigners that English players are rubbish: they’re coming into the top divisions, taking the jobs of English players by doing the work for less, etc. etc. Sound familiar?
I’m not sure this is a plausible argument. As the FT leader on Saturday commented:

That the English team have gone from heroes to “zeros” has nothing to do with being denied opportunities to compete at the top. English soccer was hardly stellar in the 1970s and nobody blamed Johnny Foreigner then. Nor did they when Graham Taylor’s side failed to make the 1994 World Cup.
Imagine if we heard the same clamour from Essex-born bankers in the City of London every time that trading profits slumped: “Those Russian boys in commodities are cramping our style,” or “It’s all the fault of the Yanks in fixed income.”

Two other points are worth making:
1) The more general question about the effect of immigration on native wages and employment is vexed, because so many things change at the same time. Clearly they don’t simply "take our jobs" because as the population expands, so does demand and so do the likely number of jobs. But immigrants could certainly damp down wages. However, there’s persuasive evidence that they do not, looking at natural experiments such as the Mariel boat lift, when 125,000 Cubans suddenly arrived in Miami. Relative to other cities such as Los Angeles and Houston, Miami actually did better, with lower unemployment and faster wage growth than elsewere. (David Card is the guru here. George Borjas presents the opposing view.) The story seems similar in, for instance, Israel, when there was a large influx of Russians after the fall of the Soviet Union.
2) One big difference between football and the real world. Football does have a fixed number of teams in the top division, and so it is plausible to say that foreigners are taking jobs from English footballers. Even if that were proved to have a negative effect on anyone but the footballers themselves, the lessons do not carry over to the British economy.

Update: Rob Minto has more.

The BBC reports:

The United Nations has reduced its estimates of how many people are infected with HIV in 2007 from nearly 40m to 33m. Revised figures for India account for much of the decrease, experts say. But the rate of new cases and mortality levels are declining, although figures still show that there are 6,800 new cases each day and over 5,700 deaths.

Chicago’s Emily Oster, an economist, has previously claimed that UN estimates were too high – her own estimates come from working backwards from mortality rates in the cohorts of population you’d expect to be affected. Score one for Oster. (Her estimates are still much lower than the UN’s, as far as I can work out.)
Not long ago I wrote an article arguing that Emily Oster’s work would have been better had she managed to get the epidemiologists involved. I also mentioned that the work still had its merits; evidently so.

The FT’s Chief Business Commentator writes from Abu Dhabi:

I liked the pattern on one and asked what it was. “Silk from Iran, made in Turkey” was the reply. I asked how much it was. “Six hundred and fifty dirhams,” he replied…After a bit of back of back and forth, I worked my way up from 200 dirhams to 350 – about $90 – and we shook hands on it…

After driving away and parking elsewhere in town, however, I took another look at the carpet and found a label still attached to the back. This brought home the second aspect of asymmetrical information during our bargaining session: I had not known what I was buying.

"Made in Belgium, 100 per cent Viscose,” the label read.

At this point, I was caught between just deciding I had been conned and leaving it at that or going back to confront the carpet shop owner. I decided on the latter…

Read the whole thing.

Were Scotland robbed on Saturday? Probably. Their manager thinks so:

Scotland manager Alex McLeish was furious with Spanish referee Manuel Enrique Mejuto Gonzalez after the 2-1 defeat by Italy at Hampden. Christian Panucci’s stoppage-time winner came from a free-kick that he felt ought to have gone Scotland’s way.
"The set-piece that led to their second goal was an unbelievable decision," said McLeish. "Alan Hutton was in control of the ball and their guy battered him. How can that be a free-kick to Italy?"

This sort of thing is hard to prove, but some inventive economists have looked at one particular aspect of dodgy refereeing: the idea that big teams are favoured by the referees at home. [HT: Bluematter.] Raw number crunching won’t do it for you – if Manchester United are awarded plenty of penalties at Old Trafford, might that not indicate nothing more than that they are putting their opponents under pressure?
However, Luis Garicano, Ignacio Palacios-Huerta, Canice Prendergast have spotted something:

Referees have discretion over the addition of extra time at the end of a soccer game to compensate for lost time due to unusual stoppages. We find that referees systematically favor home teams by shortening close games where the home team is ahead, and lengthening close games where the home team is behind. They show no such bias for games that are not close. We further find that when the rewards for winning games increase, referees change their bias accordingly. Lastly, we identify that the mechanism through which bias operates is to satisfy the crowd, by documenting how the size and composition of the crowd affect referee favoritism.

Clever. But no consolation to Scotland, who were playing at home anyway…

Here is an article of mine about an earlier Palacios-Huerta paper, showing that footballers play optimal game theoretic strategies when placing penalty kicks.

Economic commentator Edward Haddas has a book out, "Human goods, economic evils".

Hadas argues that human beings are not simply utility maximizers, but seek to "maximize" morality in their everyday economic lives. For Hadas, economic man is moral man, who always strives for the good according to his nature. While the weakness of human nature ensures that the good is never fully achieved, economic activity is nevertheless best understood as part of the great moral enterprise of humanity.

I’m looking forward to reading it. In the meantime you can hear Edward speak this time next week:

November 26 at 6 PM
St. Mary Moorfields Catholic Church
4-5 Eldon Street, London, EC2M 7LS

Today’s show covers speed cameras, counting birds to track avian epidemics, quants and the credit crunch, and a way to halve measured hospital waiting times with a spot of clever counting. Radio 4, 4.30pm today – or podcast from the website.

Update: No quants or credit crunch today; middle-class drinking instead. Credit crunch next week; sorry.

Over on Forbes.com, I write:

…the most reasonable judgment is that flying fresh food around the planet carries an environmental cost of no more than a few cents per meal. That sounds astonishing, but perhaps it shouldn’t be. Those Chilean grapes aren’t flying first class: They’re packed tight to save money, which incidentally saves on pollution. The most wasteful part of the journey is when you and I hop in our cars and drive to the shops and back with a bag of potato chips in the trunk of the car.

You can read the whole thing here; the Forbes piece also contains links to the research.

First, engage a company to monitor your exercise regime and punish you financially if you fail; then, buy insurance against the risk of failure.

The Undercover Economist: a guide

Publishing schedule: Excerpts from "The Undercover Economist" and "Dear Economist", Tim's weekly columns for the FT Magazine, are published on this blog on Saturday mornings.
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