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Colorado, Bowl Games, and the Deadweight Loss of Gifts

(Cross-posted at Market Power)

Economists, the scrooges that we sometimes seem to be, are well-aware of the Deadweight Loss of Christmas: the gifts people buy provide less value to the recipient than what the giver spent on the gift. Because of this, I often recommend giving cash as a present. But in the spirit of amateurism, the NCAA forbids the giving of cash to athletes in its sanctioned sports. But at times, gifts can be given:

The University of Colorado is buying 103 iPods for its football players to the tune of about $36,050, a week after a state audit criticized athletic department spending.

CU will spend up to $350 apiece on the music players, rewards for student athletes for making it to the Dec. 27 Champs Sports Bowl in Orlando, Fla., according to a request for bids the university filed Monday.

It's nothing new for universities to buy gifts for football players after a successful season. In the past, CU players have received portable CD players, electronic organizers, DVD players and Walkmans.

"They always get the kids some nice gifts for bowl games," CU assistant athletic director Dave Plati said. "Whatever is the latest in technology."

The practice is widespread and is "legal" within the sphere of the NCAA:

Bowl-game gifts are fine with the NCAA as long as they don't exceed $350 an athlete and do not include cash or gift certificates, said NCAA spokeswoman Jennifer Kearns. Players typically get gifts from bowl sponsors as well. Those gifts can't exceed $500, Kearns said.

Bowl-game gifts throughout the Big 12 Conference range from warm-up suits to rings, watches and electronic equipment, conference spokesman Bob Burda said.

... Bowl-game gifts are fine with the NCAA as long as they don't exceed $350 an athlete and do not include cash or gift certificates, said NCAA spokeswoman Jennifer Kearns.

Players typically get gifts from bowl sponsors as well. Those gifts can't exceed $500, Kearns said.

For players who already have iPod's or who don't want iPod's, there's always Ebay or some other secondary market where they can get their hands on that good ol' medium of exchange/unit of mesurement/store of value - net of any transactions costs. Heck, why not just give them the cash and let them decide what they want to buy? Oh yeah - to protect that romantic notion of amateurism.