Sign in / Join

What is the Ultimate Economic Impact of Sports?

The economic impact of sports is usually framed in terms of how many jobs it generates and how much spending it generates.  But this misses the point.  Here's commenter bobby on my most recent post (on jobs and income creation with sports!) here at The Sports Economist:

i find it mildly distressing that almost all of the discussion about economic impacts of sporting events is about rectangles with rarely if ever a discussion of triangles. i was always trained that welfare was measured by consumer and producer surplus, not expenditures, but then what do i know?

and, to make matters worse, i was always taught that if bundle B was chosen when bundle A was available that it could be concluded that A was better than B. i guess i’ll have to go back and study some more, someday.

i guess the idea that people are happier with a baseball game than a movie doesn’t mean much anymore, and its downright silly to suggest that a baseball game makes a place better off because people could have gone to a movie instead.

i think i’ll go drink a beer, eat a hot dog, and polish it off with some apple pie, now that i realize how silly i was to believe in revealed preference, consumer surplus, and consumer choice. oh well.

He's exactly right.  Any discussion of the ultimate economic impact of sports, government policy, whatever should not be about how many jobs are created, how much people spend, etc.  It should be on the overall well-being that activity generates in terms of producer and consumer surplus.  That is the ultimate economic impact.  Jobs and spending numbers do little more than obscure that fact.

Cross-posted at Market Power