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2018

The NBA season begins this week. In most sports, the start of a new season is time for optimism.  But in the NBA -- as I detail in my latest for Forbes -- for most teams, there isn't much reason to be optimistic. At least, if by optimism we mean "there is hope your favorite team can win a championship in 2019" then for most teams there is no real hope.

This conclusion is based on the story told in Chapter Five of Sports Economics. Basketball suffers from a "short supply of tall people." As detailed in the book, the average height of an NBA player (which is about 6-7) is somewhat rare in the world.  And 7-foot tall players - who are somewhat common in the NBA -- are immensely hard to find.

Because the NBA is drawing on a very small population, the supply of tremendously gifted basketball players -- like LeBron James, Kevin Durant, Ben Simmons, etc... -- is quite limited. This means that most NBA teams must fill out their rosters with less gifted players. And the teams with less gifted players really don't have a chance. Or in other words, the NBA lacks competitive balance.

Of course -- again, as detailed in Chapter Five -- the NBA has adopted quite a few institutions to address the lack of competitive balance. The NBA has a reverse-order draft, a cap on payrolls, a cap on individual salaries, and a luxury tax.  All of these institutions are designed to improve competitive balance. But because balance appears to be about the underlying population of talent --which the NBA can't change -- these institutions do not have much impact on the NBA's competitive balance problem.

Fortunately for the NBA -- again, as detailed in Chapter Five -- it doesn't appear a lack of competitive balance really has much impact on demand.  So although the NBA season lacks the drama we see in other sports, we can still expect fans to enjoy watching the games and the NBA to do quite well.  But we can also expect that if you are not a fan of the few teams that are truly going to contend, the ending for your team is likely a foregone conclusion. 

A few more thoughts on my latest for Forbes:

Few Would Take The Nobel Prize Selection Process Seriously If Applied To Sports

In sports -- as noted in Chapter Six -- we have a number of metrics to answer that question. But this class isn't just about sports. It's also about economics.

When people ask the question "who is the best?" in economics, often they turn to Svergiges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (i.e. the Nobel Prize in Economics). Economists who receive this prize are often thought of as "the best". But as detailed in my latest for Forbes, the methodology used to determine this award seems a bit suspect. Specifically, it appears the Nobel Prize is determined by less than ten people primarily from Sweden.

To put that in perspective, imagine if the NFL's Hall of Fame -- located in Canton, Ohio -- was entirely determined by six people from Canton, Ohio. Or members to baseball's Hall of Fame-- located in Cooperstown, New York -- was selected by six people from Cooperstown. One suspects that many people might wonder if each Hall of Fame was really selecting "the best" with this approach.

Perhaps the issues with the Nobel Prize selection played a role in the interesting story told in Chapter Four.  As the book notes, Ronald Coase received a Nobel Prize (in 1991) for the Coase Theorem. But as the book notes, what Coase said was

  • originally said about sports by Simon Rottenberg in 1956 (well, sort of -- Rodney Fort stated more clearly what Rottenberg was saying).
  • and as Paul Samuelson notes, the Coase Theorem wasn't really said by Coase. It was originally said by George Stigler (who also was given a Nobel Prize in 1982 -- but not for this).

Yes, it is a bit confusing. But one could argue that Coase's Nobel Prize could have gone to Rottenberg. Or maybe Rod Fort!

Regardless, the story of the Nobel Prize in Economics does give us an opportunity to think about how we measure performance. This is a crucial topic in economics (not just sports economics) because by being able to measure performance we can discuss a host of issues including the existence of discrimination (race, gender, nationality, etc...), whether or not workers are exploited, how managers impact performance, and many more.