Maximise Attendances with Economically-Designed Fixture

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I ‘dropped’ (as they say these days) my latest op ed in the Australian Financial Review (today, Thursday 7 April), called: “Clash of Rivals will Boost Flagging Football Crowds” on p.47 of the hard copy. The link is here, but if you find it gated for you, then e-mail me to request a copy.

It builds on a paper that is forthcoming to be published soon, with Dr Jordi McKenzie (Macquarie University) and Stephan Lenor (University of Heidelberg, Germany).

In a good day all-round media-wise, I was also interviewed on ABC Radio Melbourne (774 AM) with Jon Faine regarding this research. Audio of the interview is available here for one week (go  straight to 57:15).

We believe that using our mathematical optimisation technique, we could increase AFL attendance by 100,000 spectators a year via a simple reform of how the fixture is determined (It could also do a similar thing for the NRL). This change would not even compromise the fixture with respect to any of its existing constraints. Over to you, League officials!!!

Hawthorn’s Case for All-time AFL Premiership Supremacy

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I thought I’d blog a brief post about Hawthorn’s 2014 AFL Grand Final triumph because…well, I can.

In an orgy of brown and gold hubris, I chose to celebrate the occasion by gloating shamelessly in today’s Australian Financial Review (Tuesday 30 September), in the article: “Adjusting the Count Makes the Hawks AFL Winners” (gated, on p.55 of print copy).

The thrust suggests that all things considered for ‘opportunity’ (both seasons in AFL and number of teams in each season), Hawthorn now goes statistically to the top of the AFL all-time premiership tree, despite being equal-fourth on raw numbers.

I also had a short interview on Mornings with Geoff Hutchison on ABC Radio (Perth), discussing other findings arising from this adjustment (with an emphasis on the two WA teams).

E-mail me a request if you are interested in either of these files.

Perhaps the final word on AFL season 2014 should belong to Titus O’Riely: “The good news is that finally, the drought is over for those long suffering Hawks supporters. How they have waited. It’s not every year Hawthorn wins a Premiership, but it really feels like it.”

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.

Back on ‘ABC News Breakfast’

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I was back on (ABC1) News Breakfast with the all-Bev team (Scott Bevan and Beverley O’Conner) for the first time in nearly 2 years. It was on 10 January (took me a while to get up online) during the Open. I was talking about home-ground advantage (or lack thereof) for Australian tennis players. Details below.

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Liam Lenten interviewed on ABC1 News Breakfast about his study (with James Reade, U Reading, UK) on home-court advantage in tennis – specifically, that it is not significant for Australian players, at least for seeds. The interview was recorded during the Australian Open.

Anti-Tanking Policy in Media

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It’s been a monumental week for me in the media – the anti-tanking policy story is beginning to get some real traction in the newspapers, specifically: (i) Beverley O’Connor in the Herald-Sun (p.23); and (ii) Greg Baum in The Age (pp. 58-59), both on Wednesday 19 February.

In addition to this, I had two Melbourne radio interviews: (i) 3AW (Drive with Tom Elliott on Monday 17 February); and (ii) SEN (Hungry for Football with Kevin ‘KB’ Bartlett, Thursday 20 February). I have the audio file for the latter – e-mail me if interested.

I have been pleasantly surprised with the positive feedback I have received on my Anti-tanking policy for the AFL Draft, rather than the pugilistic resistance that hard-core sports fans are notorious for sometimes.

More generally, it’s nice to see economic research (and its contribution to policy) getting airtime and a good reception from media.

I will be presenting the findings soon at some seminars: internally at La Trobe (6 March); Economics Society, Victorian Branch (12 March; and University of South Australia (19 March). Anyone is welcome, but please tell me if you would like to attend, so that I can notify the conveners.

Media Misses Point on Cricket’s Decision Review System

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[Archived from: The Conversation, 15 July 2013]

The first Ashes Test was indeed a veritable thriller. England edged Australia by a mere 14 runs, after an absorbing four-and-a-half days of action to go one-up in the best-of-five series. For those not well versed on the sport, only a dozen or so of more than 2,000 Tests dating back to 1877 have been decided by fewer runs.

Partly because of the closeness of the match, much of the media focus has centred on decision outcomes arising from the Decision Review System (DRS). This system, which allows up to two incorrect challenges per innings, is in economic terms a resource like any other – a scarce one, and one to be used, lest it be lost.

Opening with a disclaimer, I have absolutely no sympathy for my team here. No Australian cricket fans were complaining back in the pre-DRS era in 2008 when the Andrew Symonds incident in Sydney arguably turned the entire series against India in Australia’s favour. I could even excuse Doug Bollinger for his infamous dummy spit in Adelaide a couple of summers later against the West Indies when the system was still in its infancy, but by now there is no longer any excuse for such irrationality.

What is not in dispute is that the DRS has significantly reduced the incidents of incorrect umpiring decisions being allowed to effectively stand, relative to the previous status quo. This is also true in tennis, yet the consensus is that it works perfectly well in that sport. This helps tell the economist in me that there is very little, if anything at all, wrong with the system itself in cricket. But try telling that to various print and broadcast journalists.

Many local scribes over the weekend into today have sadly succumbed to the temptation to pander to the masses of their readership. Since Australian fans want to have our spleen vented in one united voice right now (among other ways) by reading what we want to hear – that “we woz robbed” – sports writers have a strong incentive to serve up precisely that, even if it misses the entire point.

As an economist, of ultimate policy-related importance is that what the DRS did was to re-assign some (albeit small) proportion of decision-making power from the umpires to the players themselves. But what is being ignored in the DRS discourse is the commensurate responsibility that comes with that power.

Sure, Aleem Dar’s third-day call on Stuart Broad was indeed a howler, and that wasn’t the only injustice served up by the men in white during this Test either. But why is it that no-one seems to be willing to give Australian captain Michael Clarke and his men the unconditional lambasting they deserve for willfully squandering their unsuccessful challenges like a bunch of drunken sailors on tour?

An argument here might be to say that (former Australian wicket-keeper Adam Gilchrist’s views on walking aside) professional athletes cannot be trusted for complete honesty anyway. So why bother holding them to account like we have always done to the umpires?

However, this argument is weak at best. In fact, if I were Stuart Broad, I too would have defiantly stood my ground. What’s more, rather than looking sheepish about it, I would have backed it up by giving the Australian players a right old bollocking – or perhaps sledging – telling them (in laymen’s terms) that if they were not so systematically and profligately quick on the trigger with their challenges, I’d be back in the pavilion by now…so suck it up, laddies!

Even more worrying was that the harsh lessons from the third innings of the match were not heeded in the final innings, when Australia once again exhausted their challenges early on (though they had already benefited once from one correct challenge). Imagine if Brad Haddin had not actually nicked the ball, yet were incorrectly shown the index finger.

Economics, particularly on the micro side, is about decision-making. I am yet to meet a cricket-loving microeconomist who thinks the DRS is anything but a solid system with an appropriate treatment given to incentives and strategy.

It is just a pity that the Australian cricketers have not yet woken up to their responsibility of mastering the art of rationality around it, and that commentators and writers have not yet learned to correctly apportion the fair share of the blame on the players for the so-called injustices that can still arise under the system.

Appearance on ‘Stay Tuned’

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I appeared on the ABC3 teen-oriented music program Stay Tuned on September 14, discussing fame in the music industry.

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Liam Lenten on the teen-music variety show “Stay Tuned” on ABC3 (season 2, episode 17), using elements of his study (with Jordi McKenzie, University of Sydney) on determinants of JJJ Hottest 100 success, to help hosts Joel Phillips and Nicole Singh answer the question: “Who is the Most Famous Person in the Music Industry?”.

Recent Appearance on ABC Brisbane News

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I recently appeared on the ABC nightly Brisbane News (6 September), talking about bidding for NRL State of Origin hosting rights.

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ABC1 (Brisbane) Nightly News Bulletin: Liam Lenten offers opinion on reports of ARL decision to sell hosting rights of one State of Origin game every two years to highest bidder (even if not Sydney or Brisbane).

Not Everyone Wins when Interest Rates Fall

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[Archived from: The Conversation, 1 May 2012]

In the likely event that the Reserve Bank Board chooses to ease the target cash rate by 25 (or even 50) basis points later today, it is almost guaranteed that all of the major daily newspapers around the nation will provide an overwhelmingly glowing assessment of the Board’s monetary policy decision on behalf of the Aussie battlers, who will breathe a collective sigh of relief.

Indeed, we may be treated to headlines reporting a cut analogous to “RBA Christmas Cheer”, the likes of which we saw after the last rate fall in December last year (also in the same month of 2008, 2001 and 1998); we may even see cartoons depicting Glenn Stevens as and the other Board members in a very flattering light.

The tendency of media outlets, print and otherwise, to almost unambiguously characterise interest rate decreases as good and increases as bad ensues irrespective of whether such a decision is truly the best call to maintain inflation within the target band and ensure full-employment in the medium-term.

However, not everyone will be celebrating, should it comes to pass as predicted. We need only to refer to the basics of credit markets for this to become apparent – contrary to popular belief; interest rate cuts (likewise increases) create both winners and losers.

Specifically, when banks pass on a rate cut to their customers, it benefits borrowers – even those with a smaller amount of savings. However, it is to the detriment to net savers, whose returns on those savings fall. Could it be that most columnists fall into the former category?

As for the argument that a fall in market interest rates is supposed to be good for future economic activity, the danger is that market rates may already be lower than the optimal levels for medium-to-longer term growth. If so, the current injection of economic activity produces heavier recessionary pressures later, not to mention the threats of inflation and economic volatility.

The disclaimer is that in reminding readers of this, I am someone who would like to own their own property but, for the time being, feels having been frozen out of the home ownership market by significant past price rises fuelled by more aggressive (but arguably less-creditworthy) borrowers. Hence, one falls into the net saver category.

As schadenfreudian as it may sound, I would personally love to see a rate rise this afternoon, followed by further hikes in the coming months, until defaults in credit markets clear out all the suckers who should not have outbid me in each of those auctions in the first instance. Then, property prices will return to levels consistent with the underlying fundamentals.

The lament that one feels about the asymmetric media coverage is that it seems to pander predominantly to the significant proportion of their readership that are net borrowers, and increasingly so: the 2006 census revealed that 64.8% of all private dwellings in Australia were owner-occupied, down slightly from 66.4% in 1996.

More strikingly, the proportion of these properties owned outright declined significantly over that decade, from approximately 62% to 51%, which in turn means that more homeowners have mortgages. The impending release of data from the most recent census in August last year will shed further light on this emerging trend.

The balance of power may be starting to change, however, with the ranks of self-funded retirees set to expand in the coming years, as the baby boomers begin to retire in greater numbers, combined with a higher propensity to save for retirement by successive generations of workers.

Should demographic change eventually bring about such redistribution in media consumption influence from borrowers to savers, then media providers may think twice about how they spin their coverage of interest rate changes and monetary policy generally.

In the meanwhile, net savers should to be reminded that they can exert their influence by sending letters to the editor of their favourite newspaper, demanding that the reporting of such issues be more objective to both sides of the balance sheet.

UPDATE: The Reserve Bank of Australia has cut Australia’s official cash rate by a larger-than-expected 50 basis points, to 3.75%.