A Few Insights on Institutions and Sports

One of the reasons I love sports is the opportunity they provide to see how formal and informal institutions and norms interact to create outcomes, often surprising.  When athletics and economic thinking intersect, I’m a happy man.

An excellent article on Grantland by Brian Phillips got me thinking again about the incentives in college basketball.  Small changes in formal rules and small changes in the informal enforcement of those rules can lead to pretty big consequences.  In the case of college basketball it’s resulted in a far more painful viewing experience.  Watch some of the tournament games this year and you’ll see what I mean.  Basketball is a game of runs and big emotional momentum swings over a series of plays.  Yet instead of fast paced scoring streaks I’ve mostly witnessed a baseball-like process of a play or two followed by long pauses for TV or coaches timeouts or free-throws, followed by another play or two.

There are several possible changes that could improve the experience.  Economists Ed Lopez and Wayne Leighton in their phenomenal book, Madmen, Intellectuals, and Academic Scribblers discuss the origin of the shot clock.  The game was in a similar place.  The best teams were known to get a small lead and then pass the ball for several minutes at a time to run out the clock.  A sensible strategy but a horrible spectator sport.  The introduction of the shot clock dramatically improved the experience.

The shot clock is an example of a new formal rule.  Mike Munger and Russ Roberts talk about not just formal but informal rules and norms in sports in one of my favorite EconTalk episodes.  We tend to assume the order around us, in the world as in sports, is the result of formal rules and enforcement, but more often there is a far more powerful substrate of informal norms and expectations with their own unique enforcement mechanisms.  Fights in hockey, or fake fights in baseball are great examples, as is the social approbation faced by teams who run up the score at the end of an inevitable victory in football, or those who continue to foul the opposing team when trailing by double-digits in the waning seconds of a basketball game.

What I like about the Grantland article is that it touches on formal and informal institutions in its analysis of what’s happening to college basketball.  It’s not only the number of timeouts allowed and the defensive rules (formal), it’s also the way refs choose to call fouls and coaches choose to reign in improvisation by players (informal).  The article went further than this.  It had some profound insight into something even more fundamental than formal and informal institutions.  It touched on the beliefs of fans, players, coaches, officials, and everyone involved.  It’s not only the rules written on paper, or the unwritten rules in our heads that create these outcomes.  The beliefs we have about the game and the rules create the context within which all these institutions must operate.  Beliefs are the ultimate binding constraint on what kind of institutions can exist.

In the case of college basketball, Phillips argues that we all know deep down it’s a professional affair the goal of which is entertainment, yet none of us wants to admit this to ourselves or publicly.  We wrap it in the cloak of character building, preparation for life, team-work, and a lot of old-timey notions about young men getting exercise for their bodies to compliment the mental exercise of a college education.  It’s not that sports don’t do these things or offer no life lessons.  Far from it.  It’s that the primary goal of sports is to make money like any other enterprise, and in our society the great lie we all pretend to believe is that self-interest is inferior to altruism as a motive (even though the beneficial outcomes of self-interested behavior far exceed all the altruism in human history).  We have to keep up the fiction that college athletics is not primarily a moneymaking entertainment enterprise.

Lots to think about on this topic, but I think the insights about the role of our beliefs (and the contradictory nature of our stated vs. revealed preferences) in shaping institutions which shape incentives which result in outcomes is powerful.  For the future of sports and society as a whole.

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