Hypothetical Bias

Perfect substitutes

At halftime of the ASU-Furman game, televised on SportsSouth, the ASU Chancellor (i.e., President) stated that holding the NCAA I-AA championship football trophy felt just as good as having a Nobel Prize winner on the faculty.

Update: Towards the end of the 3rd quarter the Chancellor was seen being carried on a board by four male cheerleaders, wearing an away football jersey, and performing, what appeared to be, the slash across the throat sign (didn't the NCAA ban that?).

By the way, #1 ASU is winning 33-7 over #8 Furman. And, why am I not at the game? I'm in charge of both little kids, its 40 degrees out, with 40 mph wind gusts. The 4 year old could handle it, but the 2 year old has never been to a football game so I chose the TV.

Your guest instructor in sports econ today is ...

John Whitehead!

Those sports stadium impacts are going to be huge in Charlotte (sarc):

A City Council vote on the plan to bring a $35 million baseball stadium to uptown -- along with related commercial projects -- won't likely come before December, more than four months later than backers were pitching for.

Curt Walton, assistant city manager, says an economic-impact study by UNC Charlotte professor John Connaughton isn't finished, delaying the next presentation to City Council until next month. The steps that would lead to a formal vote would make a December meeting a likely target.

Because look what's going on with the Panthers:

Anecdotal evidence indicates business is brisk when the team is in town, though a lack of local data makes it nearly impossible to determine the economic impact of a Panthers home game. And some studies in other cities suggest home games actually siphon sales-tax revenue. But you wouldn't know it from all the money changing hands in the blocks around Bank of America Stadium on Thursday afternoon.

/.../

But the apparent increase in local economic activity can be misleading, some studies show.

In years when the old Houston Oilers and now the Texans hosted one more home game in October than in other years, local sales tax receipts in that city dropped $500,000, according to a study co-authored by Dennis Coates, a professor of economics at the University of Maryland, Baltimore County.

Total monthly average sales-tax receipts for Houston during the study period 1990 through 2005 were $15.9 million, Coates said. "Every place will have its different circumstances," he said. "Will it be the case some cities are reaping enormous gains (on game day)? I seriously doubt it."

Other studies show that bars and restaurants at ground zero of urban NFL stadiums often report a boom eight days out of the year, said Victor Matheson, an economics professor at College of the Holy Cross in Worcester, Mass. But not so for those just three or four block away.

He noted that every time there are 70,000 people at a game, "those are 70,000 people who are not at the shopping mall."

John Connaughton, an economics professor at UNC Charlotte, hasn't seen these studies, but is skeptical of their findings.

"Did they capture all the beer and stuff that's bought for the tailgate maybe the week before?" he said. "The way you corral a study influences what the answer is."

Ian Terhune, general manager at Fuel Pizza on the Green, sees no ambiguity. On game day, "we have a line out the door," he said. "The dining room is packed."

It's the same story for Sunday and those rare Monday night games.

And here is the presentation.

Just in time for Halloween, a spooky international trade example

Headstones Too Go Global, and One City Pays the Price:

For decades, the granite industry made Barre, near Montpelier, a boomtown and Vermont’s biggest melting pot, drawing immigrants from Italy, Ireland, Poland and Canada. During their heyday, in the early-to-mid-20th century, the manufacturers here employed about 3,000 people.

Today the number is only 1,500, said John P. Castaldo, executive director of the Barre Granite Association, and most of those are in sales or administration. Roughly 300 actually make headstones and memorials, working with heavy machinery, and those who still hand-carve granite are no more than six or so.

The biggest problem during the last decade has been imported headstones, mostly from China and India, which cost about half as much as those made in Barre (pronounced BEAR-ee).

“The labor costs in China are significantly lower than they are here, and it’s taking its toll on the American manufacturers,” said Pennie Sabel, president of the International Cemetery and Funeral Association, a trade group.

Barre’s manufacturers describe the quality of the imported stones as poor and say it shows, but to the typical customer the only difference is price. Further, Chinese companies are also producing black granite headstones, which are becoming more popular than gray ones.

Demand and supply test question

Consider the following (Americans paying less ... $$):

The National Association of Realtors reported today that the average price of a previously owned home fell to $220,000 in September, down 2.2 percent from September 2005. At the same time, the pace of home sales slowed to a seasonally adjusted annual rate of 6.2 million, down 1.9 percent from August.

Illustrate these changes with a model of the market for previously owned homes.

Kristof on opportunity cost

From the NYTimes Select ($) (Iraq and your wallet):

In the run-up to the Iraq war, Donald Rumsfeld estimated that the overall cost would be under $50 billion. Paul Wolfowitz argued that Iraq could use its oil to “finance its own reconstruction.”

But now several careful studies have attempted to tote up various costs, and they suggest that the tab will be more than $1 trillion — perhaps more than $2 trillion. The higher sum would amount to $6,600 per American man, woman and child.

“The total costs of the war, including the budgetary, social and macroeconomic costs, are likely to exceed $2 trillion,” Joseph Stiglitz, the Nobel-winning economist at Columbia, writes in an updated new study with Linda Bilmes, a public finance specialist at Harvard. Their report has just appeared in the Milken Institute Review, as an update on a paper presented earlier this year.

Just to put that $2 trillion in perspective, it is four times the additional cost needed to provide health insurance for all uninsured Americans for the next decade. It is 1,600 times Mr. Bush’s financing for his vaunted hydrogen energy project.

/.../

My vote would be to spend a chunk of that sum instead fighting malaria, AIDS and maternal mortality, bolstering American schools, and assuring health care for all Americans. We’re spending $380,000 for every extra minute we stay in Iraq, and we can find better ways to spend that money.

And check out the "... nifty Web site, www.aei-brookings.org/iraqcosts, where you can tinker with the underlying assumptions and come up with your own personal estimates."