Category Archives: Economics

The uncertainty-of-outcome hypothesis and the industrial organization of sports leagues: Evidence from US College football

E. Woodrow Eckard
Journal of Sports Economics, September 2017, Vol. 18 Issue 3

The uncertainty-of-outcome hypothesis (UOH) posits that sports fans value competitive contests, implying that competitive imbalance within a league will motivate stronger teams to leave. Testable hypotheses can be formulated utilizing the many college football conference realignments over the last century. The results support the UOH. For example, schools leaving an existing conference to form a new major conference, or join a preexisting one, were on average stronger than their former associates in the years before their departure. Also, the number of seed conference championships won by departing schools generally exceeded their “fair share” under an equal-likelihood assumption.

Do Colleges Get What They Pay For? Evidence on Football Coach Pay and Team Performance

Gary J. Colbert and E. Woodrow Eckard
Journal of Sports Economics, Vol. 16. Issue 4, 335-352

We use a data set of Football Bowl Subdivision (Division-IA) universities to investigate the hypothesis that higher coach pay leads to improved team performance. Our analysis finds that pay and team performance are positively correlated and that, when schools change coaches, higher pay is associated with improved performance. The evidence suggests that additional rating points are increasingly valuable, perhaps over US$1 million for top teams. Our descriptive analysis reveals the median 2011 head coach pay of US$1.2 million, significant increases over our 2006-2011 study period, and large disparities among schools and conferences. We conclude that administrators perceive highly ranked football teams have significant value.

Is the Bowl Championship Series a Cartel? Some Evidence

E. Woodrow Eckard
Journal of Sports Economics, Vol. 14, No. 1, February 2013, Pages 3-22.

The cartel view of the Bowl Championship Series (BCS) implies that it creates an advantage for automatic qualifying (AQ) member schools relative to other Division IA/FBS schools in recruiting the best players and hiring other inputs. The resulting playing-field advantage should produce more wins over “outsiders.” Weaker AQ schools benefit relatively more because previously they had competed more closely with outsiders for players. The evidence generally supports the cartel view. The AQ BCS schools and conferences have significantly increased their win percentage against outsiders. Also, the weaker AQ schools have performed better against the top tier, and have shown the greatest improvement against outsiders.

The impact of price discrimination on consumer surplus at popular music concerts

E. Woodrow Eckard and Marlene A. Smith
Economic Letters, Vol. 118, Issue 1, January 2013, Pages 222–224

We estimate consumer surplus gains and losses from concert ticket price discrimination. Fans purchasing low-priced tickets enjoy a surplus gain of about $9.26 per ticket while high-priced ticket buyers suffer a loss of about $17.63 per ticket. We estimate consumer surplus gains and losses resulting from price discrimination. A demand-based model provides the counterfactual uniform price and tickets sold. The sample includes 45 popular music concerts in the U.S. Our results suggest an estimated net consumer surplus loss of about $1.3 million. The dollar loss to high-income fans is more than twice the gain to low-income fans.

nue Gains from MultiTier Ticket Pricing: Evidence from Pop Music Concerts

E. Woodrow Eckard and Marlene A. Smith
Managerial and Decision Economics, Vol 33, Issue 7-8, Oct 2012, pages 463–473

We provide empirical estimates of the revenue benefits of multi-tier pricing at a major US pop music venue. Our unique sample includes data on the number of tickets sold at every price. Mean revenue gain from multi-tier pricing is estimated to be about $20,000 per show, a 4.2% increase over uniform pricing, although the gains were as high as 21.2% for one performer. We also provide evidence that customer segmentation by income is a likely motive of multi-tier pricing and, for the first time, that the standard assumption of zero marginal cost of additional venue attendees is valid.

Anti-Irish Job Discrimination circa 1880: Evidence from Major League Baseball

Eckard, F. Woodrow
Social Science History, Vol. 34, Issue 4, Dec. 2010, pp. 407-443.

Historians have generally presumed that Irish immigrants in the late nineteenth century suffered from ethnic job discrimination. However, empirical scholarship reports conflicting evidence. The present article presents new evidence on the issue based on data from Major League Baseball circa 1880. These data are unique in that “firms” (teams) and individual “employees” (players) can be identified along with “job assignments” (positions played) and “performance” (e.g., batting averages). Linking the players’ names with U.S. census enumeration records allows relatively accurate identification of ethnicity. I test various hypotheses derived from Gary S. Becker’s economic theory of discrimination. The main results are that Irish players outperformed non-Irish players both on average and at the margin, were (generally) relegated to less central positions in the field, were more often required to fill in at nonregular positions, and were less likely to be hired as managers. In addition, the proportion of Irish on ball clubs and in their host cities was positively correlated, and team win percentage had a (weak) positive correlation with the team’s proportion of Irish. Overall, the results generally support anti-Irish discrimination against skilled workers in this highly visible, albeit small, “industry.

NCAA Athlete Graduation Rates: Less Than Meets the Eye

Eckard, F. Woodrow
Journal of Sport Management, Vol. 24, Issue 1: p. 45-59.

The standard evaluations of NCAA student-athlete graduation rates involve comparisons with rates for the general student body. The latter rates as actually calculated, however, include a significant number of part-time students at many schools. This is problematic because athletes must be full-time, and should be compared to other full-time students. The downward “part-timer bias” in the student body rate distorts the comparison, making the relative graduation rates for athletes appear more favorable. Example calculations demonstrate that relative rates for major college football and men’s basketball players are substantially worse when the bias is removed.

Retail price concentration, transaction costs, and price flexibility circa 1900

Eckard, E. Woodrow
Explorations in Economic History Vol. 44 Issue 1, p. 131-153

This paper studies a unique 1901 data set containing prices of three products obtained from grocery stores in over 1400 cities nationwide. A striking characteristic is a high concentration of retail prices at relatively few “even” numbers. I propose a novel transactions cost explanation for this phenomenon on which existing theory is silent. In particular, grocers selected prices that simplified the task of toting up customer bills by hand and reduced related costs. As stores independently adopted this strategy across the country, prices converged to a few even numbers. Several empirical regularities for all three products are consistent with this explanation. An important implication is that preferences for computationally convenient prices would have made prices “sticky.” An independent study of price flexibility circa 1890 supports this hypothesis. The underlying data show price concentration patterns similar to the 1901 data, suggesting that the phenomenon covered a wide range of products.

Are Autocratic Rulers Also Inside Traders? Cross-Country Evidence

Eckard, E. Woodrow
Economic Inquiry Vol. 43, Issue 1, p. 13-23

Autocratic rulers can use economic regulation under their control to affect individual stock prices and then profit through insider trading. They are therefore less likely to have or enforce insider trading regulation. A cross-sectional analysis of 101 countries with stock markets supports the hypothesis. The probability of observing an enforced insider trading law is much lower in autocracies than in other countries.

Team promotion in early major league baseball and the origin of the closed sports league

Eckard, E. Woodrow
Explorations in Economic History Vol. 42, Issue 1, p. 122-152

I argue that a quasi team-promotion system similar to European professional sports leagues once existed in the US, contrary to common perceptions. The first American pro team sport was baseball. From the creation of the first major league in 1876 to the early 1890s, entry was common, occurring primarily by the “promotion” of clubs in operation the previous season. The informal system ended abruptly after an 1892 merger that formed the prototype closed monopoly sports league. Empirical analysis indicates that the cessation of entry reduced competitive balance, and that in their initial year promoted teams outperformed new start-ups. While historians have recognized the elimination of between-league competition as an underlying motive for the monopoly merger, the simultaneous elimination of club entry and competition for league membership has gone virtually unnoticed.


Eckard, F. Woodrow
Economic Inquiry Vol. 42 Issue 1, p. 101-110

Price dispersion in 1901 is analyzed using a unique U.S. government survey yielding retail prices for four products at more than 1500 stores nationwide. Three of these products are still sold today, allowing comparisons based on modern survey data. Despite the introduction of significant search cost-reducing technology during the intervening century, dispersion appears to be lower in 1901.