Ashes Combatants Understand Gains from International Trade in Coaches (AFR Piece)

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Another opinion piece of mine appeared in today’s edition of the Australian Financial Review (Thursday 11 June), titled: “Free Trade in Coaches Gives All Teams an Edge” (link gated), on p.51. Alternatively, if you don’t have the hard copy, feel free to e-mail me a request.

It draws analogies between generalities of the virtues of free-trade (internationally), and the specific labour market for foreign coaches of national sports teams.

This is kinda topical in Australian media circles at the moment because of Australian Trevor Bayliss recently being appointed coach of England ahead of the Ashes (starting in 4 weeks time). Happy reading!

Social Science Showing Super Results on Anti-Doping Policy Idea

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I had another op ed piece appear in the Australian Financial Review today, Monday 9 February: “Right Incentives may Keep Sports Industry Clean” (gated link). The piece is on p.35.

In it, I continue to build the case for ‘conditional superannuation’ as a possible supplementary anti-doping policy. Even though the war against doping may never be well-and-truly won; this idea remains a nice and intuitive incentive-based mechanism, which may very well produce a significant fall in the incidence of doping in sport.

The ‘REAL’ Winners of the Asian Cup

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The green-and-gold heaven that was the AFC Asian Cup Final (or as I referred to it, Confederations Cup qualifier) was undoubtedly a watershed moment for the World game in Australia, one of the few remaining markets where football is not (yet, at least) the number one sport. The 2-1 (ET) match was indeed a thriller, and I’ll take it; even though a penalty shoot-out would have better reinforced our case for penalties before extra-time.

However, this post is intended to make a very different point – one about the more general matter of cost-benefit analysis of the whole event itself. Us sports economists of the academic variety are generally united in the view that typically, use of public funds to subsidise bids for a major sports event, as well as to run the event itself (if the bid is successful), is inherently profligate. Refer to my 2009 (Australian Financial Review) characterisation of a case in point – the colossal waste of $46.5 million of Federal government funds on the FFA’s 2018/2022 FIFA World Cup bid. In that case, like so many others, the ‘boosters’ of the event tried to convince us that the economic benefits would be huge (they are always much smaller), while the costs (and timelines) invariably blow out. This is a lesson that is still most freshly (and bitterly) experienced by ordinary Brazilian citizens.

This case had a few differences to the usual story, however. Other potential suitors to the AFC for hosting rights dropped out of the race during 2010, leaving Australia as the sole bidder – the formal announcement on 5 January 2011 came as no surprise to anybody (and, curiously in hindsight, received scant media coverage). The next day on ABC News Breakfast (skip to 6:05), I was actually quite sanguine about the economics of hosting it.

The reason, as I saw it then, was as follows: unlike the World Cup, not having to compete with other ‘buyers’ for the event, Australia was effectively bestowed as hosts for a low ‘price’ – without having to promise so much (comparative to other such cases) in the way of upgraded facilities and the like. It also meant that the AFC as the ‘seller’ was forced to accept that lower price. This did not stop the Organising Committee from trying to provoke various state governments to bid against each other to host the matches themselves. It is no coincidence that Perth and Adelaide were excluded from the venue list – the WA and SA governments declining to pay – despite each being much bigger media markets than both Canberra and Newcastle combined.

So, I surmise that the REAL winners of the Asian Cup were Australian taxpayers, who in a rare example, paid a relatively modest amount for the hosting rights for this event!!! Furthermore, given that the hosts prevailed in a thrilling Final, the sporting gods delivered them even more bang for their tax dollar buck than they might have expected.

A final word of caution: if in the aftermath of this success, you are inclined to believe that Australia should once again throw its hat in the ring for World Cup hosting rights in 2026 or beyond, hold your horses. The last decade has taught us that Australia should stick to the smaller-scale international football events that it can host well and economically. Other examples would include the Women’s World Cup, Youth (U/20) World Cup or Club World Cup. Let us allow other countries – the largest national and continental media markets (or even those with massive reserves of oil) – to fight with each other for the ‘privilege’ of grossly overpaying for the World Cup.

More on Optimal Sequencing: Soccer Edition

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[Cross-posted at: Wages of Wins Journal, 7 August 2014]

This earlier Wages of Wins piece by Shane Sanders (July 29, 2014) generated plenty of discussion. It highlighted the problem of Triathlon deaths in the swim leg. One crucial point to make with many economic policy analogies on which to draw is that sequencing of the legs (or phases) matters – all other considerations aside, the ‘best’ sequence of phases can be optimized according to some objective (in this case, minimizing fatalities).

One such possible economic policy analogy is with respect to unemployment benefits. Imagine a two-phase policy, where in the first six months the recipient is eligible to a relatively unrestricted entitlement of an amount according to some predefined percentage (say 40%) of some benchmark (average weekly earnings or minimum full-time wage). If the recipient is still unemployed after the 6 months have elapsed, a second phase kicks in at which the benefit is now highly restricted thereafter (having to satisfy minimum job search requirements, etc.) and/or reduced in value. Now, many people will disagree as to whether this two-phase policy is too generous or too miserly (or even on the basis of something else entirely). However, one aspect most of us would agree on is that swapping the sequence of these two phases would make absolutely no sense whatsoever.

It got me thinking about other such analogies about sequencing from sport that could be useful in policy circles. Recently, I published an article in the December 2013 issue of Journal of Sports Economics [gated], along with Jan Libich (my colleague at La Trobe) and Petr Stehlίk (University of Western Bohemia, Czech Republic). We took on soccer’s penalty shoot-out problem.  In knock-out matches that are tied after 90 minutes, the following 30 minutes of overtime is often beset with overly-defensive play due to insufficient incentive to attack.   This means that overtimes often finishes goalless, and that nearly 50% of the time, the match is decided via penalty kicks anyway (put differently: in nearly one of every two ties, overtime fails to achieve the one and only thing it is fundamentally there to do).

We show that an alternative sequence – regulation time followed by a penalty shoot-out followed by overtime – improves attacking outcomes. The qualification is that, while the shootout produces a winner – you still play overtime, with the winner of that winning the contest as currently. It is only when overtime fails to resolve the deadlock that the winner becomes the team that had won the shootout already (think of winning the shootout as worth half-a-goal lead at the start of overtime).

Specifically, we show that the probability of at least one goal being scored in overtime rises by approximately 50% (depending on the underlying characteristics of the match). Exactly how we estimate the effect of a policy that’s never existed is outlined in the paper for those of you who are interested to read further.

Coming back to sequencing, why the simple economic intuition (as well as the data) says this rule change will likely work is the following: there will always be one team chasing the next goal, because they will be eliminated unless they do – they have little else to lose. While the other team may correspondingly become more defensive, we show the net effect to be overwhelmingly positive. Furthermore, what you will no longer get are those overtimes where both teams sit back having jointly overestimated the probability that they will win if it goes to a shootout.

Had Mario Götze spurned that chance just minutes from time in the recent World Cup final, and it had have instead gone to spot kicks, the penalty shootout problem would now be far higher on the soccer agenda. Nonetheless, better public policy (optimal sequencing included) should never be far from the agenda, so I hope to see more studies like this make some impact in the broader public policy debate.

More on Penalty Shoot-out Alternative

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Following on from my post on 2 July, I had another newspaper piece in the Australian Financial Review (today, Tuesday 15 July), called: “GOAL! A Better Alternative to Penalty Shootouts“. The link is gated as usual (see p.43 of the hard copy if you have it, or e-mail me a request). It further delineates the economic case for shifting the penalty shoot-out to before extra-time.

Superb World Cup ‘Selection Bias’ Example

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[Cross-posted at: The Sports Economist, 4 July 2014]

For all those economics professors and tutors out there who struggle to explain the crucial concept of ‘selection bias’, a nice illustration can be found in FIFA World Cup finals records. With students (at least those who do not loathe sport) currently in soccer-crazy mode, they may be more motivated to understand this concept through the following trivia question:

Q: In World Cup (finals) history, which team has the highest goal-scoring ratio (goals scored divided by games played)?

Scroll below for the answer, which may be surprising to many, except the amateur World Cup historians among you.

Most people would instinctively say Brazil; however, they appear second on this list at 2.16 per game (218 from 101 games, inclusive of the second-round of the 2014 edition). Germany follows at a very-close third with 2.15 (221 from 103).

The record-holders are…wait for it…Hungary! Yes, those ‘Mighty Magyars’ top the list and (get this) by a comfortable margin, too – indeed a chasm – their 87 goals in 32 games comes in at an astonishing 2.72 goals per game.

If you don’t believe me (and you’re more than entitled not to), check the figures here. Hungary has never won the World Cup, but have twice reached the final: in 1938, when they lost to Italy; and again in 1954, with legends Puskás and Kocsis (et al.) in their ‘Golden Team’, which came into that World Cup undefeated in more than 4 years, only to squander a two-goal lead (which they had after only 8′) to (the then-West) Germany, who incidentally they had annihilated in the first round by the incredible scoreline of 8-3.

OK, so what is the selection bias here? Well, look at the chart below, which displays average goals per game by World Cup. The flags I added at the top of the bars denote the World Cup finals that Hungary both entered and qualified for.

goals by world cup

From this, it is easy to see that scoring outcomes were lower from 1962 compared to earlier, with a further decline (albeit slight) since then. Hungary is but one of a number of national football teams that were among the best handful in the World for considerable periods at any time since the inaugural World Cup in 1930 (according to retrospective Elo ratings, they were ranked number one as late as 1965). However, of all national teams in this category, Hungary is the one that played the highest proportion of its matches in higher-scoring World Cups.

For all you Magyars out there lamenting your boys’ extended absence from the big stage (28 years now and counting), rest assured that (since it’s unlikely that Brazil and Germany will ever get anywhere near 2.72) the only way to guarantee holding this highly-prestigious record in perpetuity is to continue to NOT qualify for the finals – proof that there is indeed success in failure!

UPDATE: OK, Germany (2.181) now overtake Brazil (2.146) for second-place after that unbelievable semi-final; but Hungary’s place at the summit still looking just as safe in the bank vault as before!

Solution to World Cup Penalty Shoot-out Problem: ABC Interview with Waleed Aly

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I returned to ABC Radio National’s Drive program with Waleed Aly, yesterday evening (Tuesday 1 July, go to link for audio).

The 2014 World Cup now in its knock-out phase (which brings with it the inevitable problem of extra-time and penalty shoot-outs, as well as perverse incentive effects to both teams to over-defend). Shining a light on this, Waleed and I discussed a simple rule-change proposal, based on economic principles, which we believe would produce better scoring outcomes in extra-time and diminish reliance on the game’s cruel version of Russian roulette to decide the winner (among numerous other improvements).

If you’re interested in the economics behind the proposal, you can see the abstract of the article from Journal of Sports Economics (December 2013 issue), on which it’s based, here.