Arsenic and Gold Medals

I stirred up some controversy on Tuesday with my post equating Olympic athletes to Ponzi schemers, so I want to provide a little more explanation.

What do scammers and Olympians have in common? Let’s start with a simpler question: What do sugar and arsenic have in common? Answer: There’s such a thing as having too much of either. With arsenic, any amount is too much; with sugar, some is good but too much is bad. Likewise for scam artists and athletes. Scam artists, like arsenic, are bad in any quantity; athletes, like sugar, are good in moderation and bad in excess.

What counts as excess? Well, for starters, if everyone in the world were a fulltime athlete, that would be excess. We’d have no farmers, no scientists, no engineers, and eventually no way to stay alive. So there should be absolutely nothing controversial about saying that there’s such a thing as too many athletes. The question then becomes: Is the current number too large or too small? Or to put this another way: If we converted one Olympic athlete to a taxi driver, would the world be a better place or a worse one?

[Note: I realize that if we converted all Olympians to taxi drivers, we’d surely be worse off; given its popularity, losing the entire Olympics would be a very bad thing indeed. But the question isn’t whether we’d be better off with no Olympics; it’s whether we’d be better off with a smaller Olympics.]

Whenever you want to know if you’ve got too much or too little of something, you should start by asking: “What incentives do the suppliers face?”. Orange growers, for example, face pretty much exactly the right incentives: Their rewards depend on the price of oranges, and the price of oranges depends on how much people are willing to pay for them. Grow an orange that’s worth a dollar, and you get paid a dollar. That’s a recipe for producing neither too many oranges nor too few. (For more on this point, see my video lecture on why More Sex is Safer Sex.)

Now let’s look at the incentives facing athletes. Take a stylized example: Suppose a race between two runners is entertaining enough that someone’s willing to offer a $5.9 million prize. A three-way race is a little more entertaining, so the prize goes up to $6 million. When the third athlete enters the race, he’s got a 1/3 chance of winning $6 million, which is a $2 million reward on average. But he’s added only $100,000 to the entertainment value of the race.

Unlike the orange farmer, our athlete receives a reward that’s out of line with the value of his product. That’s why you tend to get too many athletes. In my example, the rewards are monetary but the same problem arises when the prize is fame or glory.

The athlete who reaps large personal rewards while producing very little value is parasitic in pretty much the same way as Bernie Madoff. He puts a lot of effort into getting rich (or famous) at other people’s expense, which is tragic because the same effort directed elsewhere could have enriched the world.

Before you accuse me of being anti-sports, please note that my example assumes that a race is roughly a $6 million social boon. It assumes, in other words, that sporting events are quite valuable. But you can still get to a point where the value added by one more athlete is almost zero. In other words, you can still have too much of a good thing.

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41 Responses to “Arsenic and Gold Medals”


  1. 1 1 RL

    SL: “The athlete who reaps large personal rewards while producing very little value is parasitic in pretty much the same way as Bernie Madoff.”

    But Bernie Madoff engaged in fraud. If he REALLY could have consistently achieved the returns he claimed, his clients WOULD have benefitted. The athlete is not defrauding anyone. He gains great rewards–and the very best gain very disproportionate rewards compared to those only slightly worse–because of voluntary market choices.

    So is what you’re describing a market failure, or the successful market transmission of admittedly perverse but nonetheless accurate subjective preferences of market consumers, the desire to assess the value of top athletes discontinuously, ranking the A tier MUCH higher than the B tier?

  2. 2 2 P

    So we’re really talking about bankers here? Or am I just being paranoid :)

    Seriously though, isn’t the third athlete creating social value as long as his reservation price is below $100K? And isn’t the $1.9M just redistributed producer surplus from the other two?

    Now, his reservation price could well be below $100K, but the point is, he will only join on the margin if there’s enough producer surplus to redistribute so that the whole deal still pays off for every contender (otherwise one of the other two athletes leaves the business – which just means he’s the more efficient supplier, not the marginal one). And why should we care about the distribution of producer surplus?

    I’m surely missing something, typing this quickly at work, but it seems there’s not enough data in the example..

  3. 3 3 Scott

    The best athletes in a given sport will be the first to sign up, simply because they know they are the best and have a good chance of winning. Chances are the 20th athlete has much less than a 1 out of 20 shot at winning. And appropriately, the 20th athlete has much less of a chance of securing funding for their Olympic attempt, and so they compete at a higher personal cost than the 1st athlete. Also, few people outside your sport (and your family) will care if you got 4th place at the Olympics. Everyone is interested in the medal winners, not the 4th-placers; the personal benefit to being 4th place is very low.

    The personal benefits to each additional athlete fall more quickly than I think you’ve allowed for, and the personal costs rise more quickly as well. Granted, they’re not perfectly aligned, but I think we could just as easily be in a world with too few athletes as with too many. It’s only your choice of numbers that gives you the result that there are too many. You could just as easily say a two-way race is valued at $3 million and a three-way race at $6 million, so that the third racer is receiving $2 million in expected benefits but is adding $3 million to the value of the race.

    For the Olympics in particular, the addition of many extra athletes from new countries is especially valuable. There are international competitions all the time in sports that most people outside of that sport don’t care about. But those same people will watch the same sport in the Olympics simply because it is the Olympics. And I would argue that it is the Olympics because obscure countries that you’d never hear about otherwise are put in the same race as the world’s giants. It showcases diversity and internationality in way that you just couldn’t with athletes from a dozen countries, even if they’re the ones who win 90% of the medals anyway.

  4. 4 4 Harold

    “It’s only your choice of numbers that gives you the result that there are too many. You could just as easily say a two-way race is valued at $3 million and a three-way race at $6 million, so that the third racer is receiving $2 million in expected benefits but is adding $3 million to the value of the race.”

    I think this is sort of an appeal to common sense – it seems unreasonable that a three way race is worth that much more than a 2 way race. I think the numbers look odd if you make the third athlete add value. I expect this has a more rigourous analysis also, but much more difficult to get one’s head around.

    I accept that there seems to be too many athletes. I am still not sure how much this costs us. The athlete in your example gets $2 million, for only $0.1 million worth of added value. He becomes “over- enriched” by $1.9 million. But if he had put that effort elsewhere, perhaps he could only generate $0.5 million. Have we “lost” $1.9 million or $0.4 million? The reason this is important is if all we have lost is the productivity of the athletes, then it probably doesn’t add up to much. It is wasteful, but as there are only a few thousand “extra” olympians in the world, it adds up to negligible amount. If we have “lost” the extra money we pay them, then it adds up to a much larger amount. Or perhaps it is not a matter of “losing” the money, but distributing it in a non-efficient way.

    The wages of the England 1966 world cup winning squad were about 6 times the national average. Now the average figure for Premier League players is over 50 times, and for the top performers much more than this. This is just wages, so adding sponsorship, total income is hundreds of times the average. The league is the same size, so the total number of footballers is about the same. Assuming a 6 times increase was enough to persuade all the 1966 players to choose football over other work, we have lost the same amount of productivity. Are we worse off now than then? (In fact there are some more players, because squads are larger, and professionalism has gone further down the league – the extra money has caused an even larger excess of footballers. But I think the number of extra players is small compared to the amount of extra money).

    This is important, because it applies not just to athletes. The effect of “superstar” income applies in many other fields. In the US, CEO’s pay in 1970 was 25 times that of the average worker. In 2000 the multiple was 600. This is justified as “market rate”, but if the market is destined to produce a non-optimum outcome, then it is not a good justification. Bankers’ and traders’ bonus rates have escalated massively, again justified by “market rates” and the banks afraid to lose their “superstar” traders- but how much better is one trader than the next? Is not the marginal improvement argument also valid here? It might not be a matter of causing too many CEO’s, but is the matter of their “superstar” salaries a cause for concern?

  5. 5 5 Parag

    Maybe i am missing something, but why would anyone pay that much money to watch 2 athletes compete unless those two athletes had already proven themselves better hundreds of others.

  6. 6 6 Harold

    I think it still works if you paid them $59 for a two horse race and $60 for a three way. You have to assume the extra 60$ would displace the same amount of productive work – perhaps a few less cab rides.

  7. 7 7 Andre

    I’m not sure what exactly is the problem, and I have absolutely no idea what or whether a solution is being proposed. Should “something be done”? Should the gov’t appoint a blue-ribbon commission? Should we make stay-out-of-sports education mandatory in schools? If not, then why are we talking about it?

    Getting more nitpicky, I don’t get what the significance of the “if everyone became an athlete” analogy is. I would imagine that if everyone became an English Lit professor, it would also be a bad thing. Or if everyone became a taxi driver. Or an orange grower. But these are also a things that will never happen. So what is the point of the analogy?

    I happen to think there are too many sociology professors. And psychologists, astrologists, and nail salons too. Too many people drink bad beer. But I’m not advocating government action, nor raiing against it in any other way. If people want to become psychologists, the market will take care of it. Same goes for athletes – the decisions are made by the clientele. Just as it is with the orange grower. He does not set out to grow a $1 orange. He grows an orange. That’s it. It is the market that decides whether the value is a dollar, or more, or less. And the orange grower either has enough to afford a ballgame, or he has to switch to growing endive.

    And so it is with athletes. We have plenty of leisure time, and apparently enough money to throw around on various forms of entertainment. People tried putting together new football leagues, both indoor and out, soccer, tennis, and who knows what else. They mostly failed. That is the market saying “no more – enough”. If the Olympics are too big or too long, the market will send the message, and the ratings will dictate the resolution. Don’t worry, everything is under control.

  8. 8 8 Harold

    In a simple market system analysis, for oranges perhaps, the outcome is always efficient – the maximum benefit is extracted from every buck (I may be putting this badly). Therefore the outcome is always the “right” outcome, since any alteration would be less good. I think what is being said here is that the market for athletes is not efficient – an alteration could result in a better outcome. This is a very significant conclusion in principle, although if it only applies to athletes is probably fairly trivial.

  9. 9 9 Dave

    Is it possible that there are too many athletes because of government intervention in the sporting market? I know in Australia, government subsidises top training through various methods. There is no doubt that China does the same. And the amount of government spending and promotion to make huge sporting events (olympics, world cup soccer, wooing professional teams to their cities etc) such glorious undertakings is quite clear.

  10. 10 10 Al V.

    We all know that markets work best when buyers and sellers have all information available. It seems possible that part of the challenge here is that the sellers don’t have all information. An Olympic athlete is selling his or her ability, but their expectation of reward is higher than the actual reward. For example, 40 skiers enter a cross country race. 10 believe they will/can medal, but only 3 actually medal. In the same way, every NCAA Division I basketball player believes he can make the NBA, but only about 60 do each season.

    The 30 skiers who know they can’t medal are still competing for a reason. It’s not a monetary reward, but maybe they are competing for respect or celebrity.

  11. 11 11 RG

    Care to comment if the marginal value of having one more additional professor adds one too many in American education? Or, for that matter the value of granting tenure?

  12. 12 12 Steve Landsburg

    RG: In what way would you expect this market to fail?

  13. 13 13 neil wilson

    You are absurd.

    The market is good at determining a lot of things. At least you think so.

    However, there are some things the market is not good at. For example, anything you think we have too much of or too little of then your thinking is correct and the free market is wrong.

    I grow oranges. My brother competes at the Olympic level. I made a free choice. He made a free choice. I am better at growing oranges than he is. He is better at skating than I am.

    You appear to be missing the main point. The reason why the two person race is worth $5.9MM and the three person race is worth $6MM is because there are thousands or millions of people who are interested in paying a little of their money to make it worth paying $6MM.

    Yes, changing the number of runners in the NYC marathon from 45,000 to 45,001 adds virtually nothing to the race. However, the reason the first place gets paid so much is not that I entered the race and ran a 3:45 marathon. The reason is the first place runner beat the best in the world.

    I could set up a NYC marathon with 200 runners and I am quite sure that I would have the same 5 runners posting the same times. However, the winner wouldn’t get anywhere near the prize money or other rewards because the event would not be the same.

    The reason that the best make the money is because they have a huge following. If you reduce the number of followers then you reduce the value of being the best.

    But then, there is no real point in showing you a different opinion because you don’t let facts get in the way of your opinion.

  14. 14 14 Steve Landsburg

    Neil Wilson:

    But then, there is no real point in showing you a different opinion

    The single most important lesson in economics is that not everything is a matter of opinion. Here we have a private optimization and a social optimization problem; the question of whether they have the same answer is a matter of mathematics, not of opinion.

  15. 15 15 Neil

    I think the clearest example of the economic waste of tournaments is the tens of thousands, perhaps more, of young people every year who have spent their lives training to be professional athletes rather than something else, but didn’t make the cut.

  16. 16 16 Steve Landsburg

    Neil:

    I think the clearest example of the economic waste of tournaments is the tens of thousands, perhaps more, of young people every year who have spent their lives training to be professional athletes rather than something else, but didn’t make the cut.

    This is not, I think, clear evidence of waste. Tens of thousands of restaurants fail shortly after opening, but that’s not wasteful investment because we need this weeding out process to get the best restaurants. The expected return to a new restaurant is equal to its expected social value, so the incentives are right and we get the correct number. Ultimately, restaurants are different from athletes because additional restaurants are needed to serve additional customers, whereas a fixed population of athletes can entertain the entire world.

  17. 17 17 jrod

    Hmm… Not if this line of reasoning is correct but I am going to give it a shot. (Although to preface this, I am a big skier, like the winter olympics, and think athletic competition in general is a good).

    Say instead of a person sponsoring the stylized Race, the Orange Growers get together and decide to sponsor this race. I doubt these guys would say we are going to sponsor this race for a netloss we are banking on it being a net gain for us. We decide to put up a $5.9million price and have pegged two athletes to get involved, but Joe Schmo has done well in amatuer events nearly matching Joe Pro 1 and Joe Pro 2′s time. I am betting the orange growers get together and say hey lets invite Joe Schmo and make the prize $6mil. True hes added only $100k in value but through his Rocky vs. Apollo Status hes had an offsetting and abnormal amount of fans. Now because of this race more people go out and buy oranges there is more demand and thus more orange growers.

    I think the spill over effects maybe understated to a degree. In the analysis, but its just a thought. I am sure I have logical flaws (and will most likely hear about them in this fast company blog).

    Not only that; any of the athletes who win have to redistribute the prize to a degree, to coaches, agents, trainers, and so on. Thats the thing a lot of people benefit by jobs produced from the athletes. Now there are more athletic trainers and one has invented a more efficient way to stay in shape and publishes his research, a lot of people have lost weight. Is that better or worse then the athlete sidelining himself and growing oranges?

    I always think of Red Bull when I think of things like this. Red Bull really isnt a good sports drink, you would probably cramp up drinking it after some sort of physically demanding race. Ironically enough they sponsor physically demanding races. They sponsor a lot of athletes (Lindsey Vonn, Shaun White and the list goes on). The spill over effects must be huge for them to be so successful.

    Not that I totally disagree with you. I think there is some bloat to the olympics. Skier cross for instance is a classic case of a special interest group at work. Many of those guys are former world class racers (which is ironic considering the event is termed as freestyle!). As a market share in skiing they arent that big (look at the X games and see where skier half pipe ranks) yet somehow they managed to get into the olympics while the half pipe skiers are left at the sidelines.

    Also invite only FEE free races are rare at best and most likely non-existent.

  18. 18 18 neil wilson

    Steve:

    “The single most important lesson in economics is that not everything is a matter of opinion. Here we have a private optimization and a social optimization problem; the question of whether they have the same answer is a matter of mathematics, not of opinion.”

    So, you are saying that you have used math to “prove???” that the free market does not work in some areas?

    There are market incentives to everything. I grow oranges because it is the best thing for me to do. I only spend 50 hours a week doing it because the marginal benefit of working 51 hours exceeds my opportunity cost for my free time.

    My brother spends 75 hours a week skating because he has a dream. How much is that dream worth? I think we all think it isn’t worth the time and effort but my brother has a different view.

    But just because you and I agree that my brother is nuts doesn’t mean that he is wrong to go after his dream.

    Except of course, you have used math to prove that my brother is wrong.

    I still don’t understand why the free market doesn’t work here.

  19. 19 19 Stephen Coy

    Converting one athlete into a cab driver doesn’t increase the demand for cabs rides, so the same number of fares would then be spread across n+1 drivers. The net gain is zero and in fact may very well be negative if you account for the cost of having and running a cab for the new driver.

  20. 20 20 Ben

    Steve, it still seems like business innovators would fall into this category as well — they are competing for a fixed prize of developing the next invention and only one of them wins. When a third competitor enters the field, the expected time to innovation decreases slightly (a social good akin to the value of the race going from $5.9M to $6M), but the innovator’s expected value is 1/3 of the value of the innovation ($2M). Would you therefore agree that the world has too many business innovators in the same way it has too many athletes?

  21. 21 21 Neil

    “Ultimately, restaurants are different from athletes because additional restaurants are needed to serve additional customers, whereas a fixed population of athletes can entertain the entire world.”

    True, of course. I was trying for some tangible example of the waste. Another difference with restaurants, is that the owners did not invest their life’s human capital in the enterprise like young people who fail to acquire sufficient marketable skills becasue they spent their youth competing for the lottery ticket of being the next Alex Rodriguez.

  22. 22 22 Neil

    Let me bend you minds a little more on this.

    Type A tournament. An eccentric billionaire decides he will get a million dollars worth of satisfaction to see who of a hundred people can jump the highest, so he sets a prize of $1 million and gives people a month to practice. Clearly there is waste–100 people spend a month of their lives practicing how to jump to try and beat the others, but none of that effort changes the $1 million in satisfaction to the billionaire.

    Type B tournament. The eccentric billionaire decides it is worth $1 million to him to see people jump higher than a certain height and pays a $1 million prize to any of 100 people who manage to jump higher than the specified amount. Again 100 people practice jumping for a month and as it happens only one of them jumps high enough to win the prize.

    Question: Is there economic waste in tournament B?

  23. 23 23 Steve Landsburg

    Neil: I don’t have enough information to answer your question about Tournament B. First: what happens if more than one person succeeds? Do they each get a million, or do they split the prize? Second: Does our billionaire get additional pleasure out of seeing additional people succeed, or is he equally happy as long as one succeeds? Those things matter.

    PS: Your Tournament A is a great example.

  24. 24 24 Steve Landsburg

    Ben:

    Would you therefore agree that the world has too many business innovators in the same way it has too many athletes?

    As you have correctly argued, the same forces that cause there to be too many athletes also cause there to be too many business innovators.

    However, there are *other* forces that cause there to be too *few* business innovators—namely, business innovators tend to have ideas that get copied by other people, and they are not fully rewarded for those ideas, so innovation is under-rewarded.

    On balance, we have two forces pulling in opposite directions, and the amount of innovation could either be too great or too small. My guess is that in most cases, it’s too small, but that’s just a guess. (I’m sure there are people who have thought about this far harder than I have, and they could probably do better than guess.)

  25. 25 25 Neil

    Steve:

    Yes–the billionaire gets $1 million pleasure from each successful jump in tournament B and will pay a prize accordingly. But as it happens, only one person is successful, so appearance-wise the outcome is the same as it was in tournament A. The billionaire pays out $1 million and 99 people practiced jumping for nothing in both cases.

  26. 26 26 Steve Landsburg

    Neil: I think you are not asking exactly the right question. The question is not whether there is waste in any *particular* tournament, but whether there is waste in tournaments on average.

    I do not think the tournament you describe is wasteful. It’s also misleading to call it a tournament; it’s 100 separate contracts of the form “I will pay you money if you succeed in pleasing me.” (I am assuming here that each successful jumper gets a full million.) If each jumper has a 1% chance of success, then the expected prize is $10,000 and the expected social value (i.e. the value of the billionaire’s expected pleasure) is also $10,000. People will participate only when their opportunity costs are less than $10,000, which is exactly as it should be.

  27. 27 27 Neil

    Yes, I agree. There is no waste in “tournament” B because the chance of success by any jumper does not depend on the success of the other jumpers. But the apparent similarity of the outcomes probably explains why the wastefulness of true tournaments is so darned hard to explain.

  28. 28 28 Steve Landsburg

    Neil: Good point.

  29. 29 29 Ron

    “With arsenic, any amount is too much”

    Nice analogy, but factually incorrect. In the past, many women
    used to ingest small amounts of arsenic to enhance their
    complexion.

  30. 30 30 Patrick R. Sullivan

    For some odd reason I’ve now become more sympathetic to James Heckman.

  31. 31 31 dave

    would someone be so kind as to define the term ‘market’ for me please?

    as i understand it: one could associate a vector with a trade such that any set of vectors could be considered a market?

  32. 32 32 EricK

    If the market can see to it that there is the correct number of taxi drivers, then why would it be a benefit to convert an Olympic athlete to a taxi driver?

  33. 33 33 S.V.

    Do we need additional economics professors as well?

  34. 34 34 Philip

    S.V.-

    “Do we need additional economics professors as well?”

    Steve’s original post inspires the following answer in the same vein:

    First, we must answer the question: where do economics professors come from? Of course, they’re supplied by other economics professors. (Although there’s another theory that they are spawn of the devil, but the multiplier used in these studies is questionable.)

    Now, whenever you want to know if you’ve got too much or too little of something, you should start by asking: “What incentives do the suppliers face?”.

    Economics professors, for example, face pretty perverse incentives: Their rewards are independent of either the value students receive from their educations or the price (salary) paid to economics graduates when they get their first jobs.

    Grow an economics graduate worth $100,000, you’re paid X; grow an economics graduate worth $10,000, you’re still paid X. Grow 10 economics graduates, you’re paid X; grow 100 economics graduates, you’re still paid X.

    But the economics professor industry is more complex than the orange growing industry.

    Economics professors have a second line-of-business: published research. Unlike their education line-of-business, there are strong incentives operating here: tenure awarded based on the quality and quantity of published research.

    Since there are no incentives on the education side of the business and a powerful incentive on the research side, economics professors invest heavily in conducting and publishing research and ignore their education line-of-business.

    That is until, they receive tenure. Then the incentive for production of research disappears.

    So, where does this leave us?

    * In the education line-of-business, since there’s no incentive to educate students, no education occurs. Therefore, there’s no return on economics education investment; even one economics professor is too many.

    * In the research line-of-business, there’s a powerful incentive for as-yet untenured professors to publish research, and there are more untenured professors than tenured positions awaiting them. Also, there’s an inadequate supply of siginificant questions to be researched (with corresponding data and analytical tooks) to meet demand. As a consequence, much of their research efforts will be wasted, and too much irrelevant, flawed, and trivial research will be produced. Therefore, there are too many economics professors.

    * As for tenured economic professors, since there’s no incentive to produce anything, one tenured economics professor is too many.

    * Finally, in a market in which there are too many economics professors, some will explore other markets in which to sell their wares, such as public policy-making and partisan politics. Fortunate for them, there are long-established (some of them 60+ years) and well-funded buyers in this market (think tanks, the oldest and best-funded being conservative or libertarian). Unfortunate for them, the analytical tools and data sets available to economists are too crude to shed light on most public policy and political issues. Also, most policy makers, politicians and the public lack sufficient economics knowledge to know what these economists are talking about.

    Since in this market economics professors’ products are of little value to consumers, there are too many economic professors, especially of the conservative and libertarian variety.

    Boottom line: there are WAY too many economics professors.

    :)

  35. 35 35 Ben

    Steve, there are *other* forces that cause there to be too *few* athletes-namely, athletes tend to create new tricks and techniques that get copied by other people, and they are not fully rewarded for those ideas, so athleticism is under-rewarded.

    In fact, business innovators are awarded legal monopolies on the use of their ideas while other athletes are free to, and in fact encouraged, to copy the innovations of other athletes with little delay.

    On balance, we have two forces pulling in opposite directions, and the amount of athleticism could either be too great or too small. My guess is that in most cases, it’s too small since we both agree there are probably too few business innovators, athletes have less incentive to innovate than business innovators, and people respond to incentives.

    Put another way, I think most athletes tend to be participating in type-B tournaments from Neil’s example. Curling seems very likely to be a type-A tournament, but snowboarding seems clearly more like a type-B tournament. And, I’m guessing more parents are proud to say their child is an Olympic snowboarding than an Olympic curler.

  36. 36 36 Neil

    Ben,

    I don’t see any difference between the curling and snowboarding events. In both cases, you simply have to beat the other competitors to win. Both are type A. In a type B tournament, you’d have to set a world record, or something, to win.

  37. 37 37 Ben

    Great snowboarders improve the performance value of snowboarding by creating new tricks. I’m unaware of curlers who do the same. I don’t think snowboarding is fully type B, but it’s clearly more so than curling.

    Either way, athletes (particularly snowboarders) are innovators in the same way as business innovators, except that athletes don’t enjoy any patent protection. Steven’s arguments here apply equally as well to business innovators, yet he still believes there are probably too few business innovators. Therefore, there is little reason to think that there are too few athletes just because this argument applies to them as well.

  38. 38 38 Harold

    It cannot be type B unless every competitor has a chance to win the prize. As there is only one gold medal, in the olympics it is type A. However, it may be possible to attract rewards other than the medal, so in this way it could be type B. This is using the tournament as an advertisement for your skills, perhaps to get bookings on the exhibition circuit. I suppose we get these mixings when the sport is not just about the first accross the line, or furthest, or highest, but is a performance as well. It is then a talent contest, which perhaps is different from a tournament.

  39. 39 39 Steve Landsburg

    Ben:

    On balance, we have two forces pulling in opposite directions, and the amount of athleticism could either be too great or too small. My guess is that in most cases, it’s too small since we both agree there are probably too few business innovators, athletes have less incentive to innovate than business innovators, and people respond to incentives.

    Ben: I’m sure you’re right about the opposing forces, but I’d make the opposite guess about which one wins (in the case of athletics). A technological innovation can get copied and improved on in many ways by many industries, whereas an athletic innovation pretty much adds value only to the athletics industry. (And even there, it’s ambiguous, since doubling the speeds of all the runners doesn’t clearly make the race any more exciting.)

  40. 40 40 Neil

    After all, look how exciting snail racing can be.

    http://www.snailracing.net/

  41. 41 41 Ben

    An athletic innovation adds value to the athletics industry (as snowboarders improve performance value), the recreation industry (as people enjoy snowboarding more after watching the improved performers), the manufacturing industry (as technological improvements driven by athletic innovations are made available to the public), the retail industry (as Shaun White action figures become popular with children), etc. Clearly some/most of these “value adds” are competitive also and destroy value in the second-best option…just like business innovation.

    But, if the important observation here is that athletics’ cons outweigh its pros when everything is summed up, why not make that argument rather than this tertiary argument (the supply of competitors is too big) that applies equally well to situations where the opposite conclusion is drawn (competition in business innovation)?

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