Afternoon roundup

The afternoon's worthies

• Covid tests considered reliable enough to let you board a flight to New Zealand aren't considered reliable enough to be allowed to be imported into the country. We truly are run by Vogons. 


• Glad to hear that Michael Reddell is feeling better. On 7 March he posted that his household had caught Covid but all was well. On 29 March he posted that he'd been unable to maintain concentration for any sustained period: "Reading one 8 page memo bright and early yesterday morning completely did me in for the day." 28 April, he notes things are improving. I'm very glad that things are improving.  


• Parliament is scrambling to put some kind of enforcement regime around its stupid road user charge holiday. I feel bad for NZTA here. I expect they were blindsided on this one, that they told government that all of this was stupid, and they're stuck having to administer it. But I'll have to wait for the OIA results to find out. 


• David Dodge, former Bank of Canada Governor, argues for very large and rapid interest rate hikes. Stimulatory monetary policy in an overheated economy is a bad idea. Meanwhile, Adrian Orr assures us RBNZ has everything in hand and thinks his interest rate increases thus far are courageous. I miss the old Tui Billboard "Yeah, Right" campaigns.


• Darian Woods sings about GDP on this Planet Money episode. Very suitable for NCEA classroom use. Darian was in the same superstar cohort with James Graham (now teaching at Sydney) and Nick Sander (Bank of Canada). Good times. Here's an old RNZ piece on his album with Lucy Botting. 


• Russians supporting the current thing


• The Auditor General's worried about Covid spend. Treasury hasn't seemed really able to keep on top of this spend. And Treasury noted that it only likes the government's new debt ceiling if there's a focus on value-for-money in spending. So we have a new public finance regime that requires more vigilance from Treasury, an not a lot of reason to believe that Treasury is up to the bigger task. 
• Next time we're out near Dunedin, we'll definitely be checking this out for the kids: a 12 year old down there is running her own business, doing horse riding experiences for other kids. 


• A private backer was ready to sponsor Moana Pasifika - but the NZ government prefers to crowd out private investment. 


• Divorce rates are down, but largely on the back of marriage now largely being only chosen by those with strong preferences around being married. 51% of babies born in 2021 had married parents. Yikes.


• The convoluted ownership structures for the proposed amalgamated water entities might not even achieve balance sheet separation.  


• Hard to tell if this is the normal RMA stupidity, or bureaucrats sticking it to Peter Thiel just because. Either way it ain't great. 


• Monetary policy in pandemics. "If the activist policy was appropriate, by year end 2022, inflation will be on the way back down to 2 percent with an unemployment rate remaining near 4 percent. If the nonactivist policy would have been better, inflation would remain near double digits and would recede only with a recession."

Sport and competition for the market

Colby Cosh's latest column would be great fodder for grad classes in Industrial Organisation.

We can think about sporting competition in a few ways. The obvious one is competition within the market. Teams compete against each other to be the best within the league's set of rules.

There's also a weak form of competition against other sports in the overall market for attention. Leagues adjust their rules to maximise profits across the set of teams; if the game isn't fun to watch, people will watch something else. So if the competitive balance gets out of whack, the league might use salary caps or entry drafts to make the game more competitive.

But there doesn't seem to be much competition for the market within a sport. If you want to watch professional hockey in North America, there's the NHL and its set of rules. If you want to watch professional basketball, there's the NBA and its set of rules. Canada and the US run different rules for gridiron football: CFL versus NFL, but it isn't like you can choose one over the other if you want to go out and see a game one day. The city you're in says which league you get to watch.

So we get to Colby's rather fun question. All the leagues have evolved to a stable form of the game with about 30 teams in each league and no interesting rule variants. Baseball gets a designated hitter rule in the American league but not the National league, and that's about it. Why isn't there more competition for the market?

Here's Cosh (go read the whole thing!):

In these league structures as we have come to accept them, teams become local monopolies, with little natural incentive to care for or experiment with their sport. Major league baseball was once the senior level of a healthy, commercially successful universe of ballplaying; now, “baseball” exists mostly to serve a televised spectacle that is 30 businesses in large metropolitan areas. All other play of the game above (or even at) the amateur level is defined by its relationship to those businesses. And this is more or less equally true of the other sports.

Which might be fine if it didn’t have other terrible effects. But the One True Business Model makes all the pro sports extremely conservative and incestuous. And each league is wedded to a single, all-prevailing rule set; even the vestigial divide in baseball that gave one “league” the designated hitter would no longer be tolerated.

Any new idea in rules or playing conditions must either be rejected or accepted wholesale after limited experimentation. (The “minor leagues” in the big four sports are suffered to exist partly for the purpose of trying out new rules, but this only emphasizes their status as subject principalities.) This, in turn, leads to endless tinkering inflicted on every fan simultaneously: witness the strife in American football over how to police pass interference, or the torment all sports have suffered over use of instant replay in officiating.

If you are a fan nostalgic for the game of basketball as it was played before the three-point line existed, or for hockey before the shootout, you have nowhere to turn. But it could be worse: you could be a player whose relevant skills are rendered obsolete by some singular, irreversible change in the rules and corresponding strategic imperatives. What are you going to do, go play in the other NFL?

The worst of it is that even as these cartels stagger toward a perceived single optimum of entertainment value, they can struggle, with equal difficulty, to let go of traditional axioms that are dragging them down. Major league baseball’s increasing transformation into a contest of strikeouts and home runs, with roughly 12 relief pitchers appearing in every game, is the obvious example.

I love all four of these games, but watching them is ever more like visiting a nice relative in an intolerable and dangerous neighbourhood. And, actually, I think there is a great long-term commercial reward for the first one of these major leagues to start seriously reconsidering its own monolithic structure. The most obvious candidate is the National Basketball Association, whose brilliant commissioner, Adam Silver, has put forward a proposal to interrupt the 82-game NBA regular season with a winter tournament.

This isn’t the orgy of destruction for which I long; I prefer to imagine a total anarchistic dissolution whose extreme limits even I cannot see. (What if there were no permanent teams, and everyone in baseball or basketball were a free agent every year? What if the L.A. Dodgers-Kings-Chargers-Lakers were one club that had to play all four sports in a calendar year with a strict 50-man roster?) But at least, dear God, Adam Silver is thinking about the future; he is thinking about attacking the unexamined, boring premises of his game/sport/cartel, which include “having a single ‘regular season’ that is a prelude to a single playoff tournament.”

If we contrast to New Zealand, cricket gives us three forms of the game. Some prefer 20/20, some prefer ODI, and the best people prefer a proper Test. International teams face all three forms of the game. Rugby takes a different tack, with different teams playing rugby union and rugby league, and not much player cross-over between forms.

And so the fun fodder for an IO seminar: Why do we get three forms of cricket within the same league where each team needs to be able to play all three; two forms of rugby played by different teams where there are often franchises of both leagues in the same city (Wellington has both the Lions and the Hurricanes); but, only one form of professional-grade sport in the North American leagues? Is it really plausible that the North American professional leagues have really evolved to the best-possible forms of the game?

I like the thought-experiment of the 50-man combined LA Dodgers-Kings-Chargers-Lakers.

Of Curling and Quinoa

I love this Colby Cosh piece on curling:

The funny thing is that curling, even with money at stake, is formidably immune to most of the ugliness that modernity imposes on sport—the frantic marketing, the soul-killing training, the illicit performance-enhancers, the odiousness of billionaire ownership. Curling is unruinable. It will never be invaded by monsters with overdeveloped right arms. It will never suffer the equivalent of a dunk contest. It will never feature a bench-clearing brawl. Cities will never throw tax dollars at unsightly mega-curling clubs crammed with gift shops and restaurants . . . probably.

That is why metropolitan hipsters are now attracted to curling as a semi-ironic amusement, enjoyed in the incomplete, detached way one consumes quinoa. Curling stones have an attractive clank of rustic authenticity. But to actual rustics like me who grew up with curling, as an Andean peasant grows up with quinoa, it is disconcerting to see an element of one’s Canadianness turned into an affectation.

We have a triad of distinctively Canadian sports: Canadian football, hockey and curling. Football, from its origins to the present, has remained a collegiate game, a game of the ruling class. College kids invented gridiron football; McGill undergrads taught Americans what a “touchdown” was. Today, football is, notoriously, the shortest path to becoming a partner in a law firm, with golf a close second. Peter Lougheed and Rob Ford were football players, rich kids who, in different ways, leveraged the social connectivity of the game.

Hockey is the most popular sport in the triad because it is the game of the Canadian middle class, a game that requires a family to have something of a surplus and, ideally, to live near a town of some size. The typical sponsor for a minor hockey team has always been some kind of small business—a plumber, a restaurant, a trucking company. There are still plenty of kids in families too broke to afford hockey. In Canada, it is the first way one might learn that one is poor.

This is where curling fits in: It is a farmer’s game, a peasant tradition. There are still many villages in the West that cannot afford hockey rinks, but that faithfully lay down two curling sheets in a long, narrow shack every fall. In those towns, an agriculture society’s community investment in two sets of stones will serve all for decades. Where hockey requires every child to have skates and pads and sticks, the traditional equipment for curling amounts to two ordinary household brooms for every four players.

If you cannot use the term "Bonspiel thaw" correctly in a sentence, you're a hipster Johnny-come-lately.

I wonder whether there'd be sufficient interest for a Kiwi Bloggers' Bonspiel down in Nasby sometime this winter. They have 4 sheets and do hire the place out for corporate events. It would likely make for a better blogosphere. Only downside is that they have their own bar, with no BYO. If you can't bring your own whisky...

Let's make everything like the Rugby Sevens?

The NZ Health Promotion Agency released a pretty interesting study earlier this month. They surveyed attendees at a variety of sporting events about their attitudes towards alcohol and the link between alcohol and those specific events; they were interested in whether alcohol sponsorship and promotion affected things.

Here are some of their findings. Now they didn't quite put it this way, but it's all there in the data. I'm giving you the bullet points. But you can go back to source and check it for yourself. All of this is well within the realms of the obvious (to readers here familiar with the Sevens), but perhaps needs spelling out explicitly.

• Attendees at the Rugby Sevens really love drinking at the Sevens. 
• 82% agree or strongly agree that drinking alcohol makes the event more entertaining. 3% disagreed or strongly disagreed.
• 93% agreed or strongly agreed that they attend the Sevens because of the atmosphere.
• Alcohol is an important part of the atmosphere of the Sevens. 77% agreed or strongly agreed that "drinking alcohol at this event is 'just what you do.'" 
• 90% agreed or strongly agreed that the atmosphere at the Sevens makes them feel more like having an alcoholic beverage. 61% agreed or strongly agreed that the atmosphere made them feel like drinking more than they normally drink despite that 62% agreed or strongly agreed that they had heard messages at the event encouraging moderation in drinking. 
• 72% agreed or strongly agreed that they were aware of alcohol promotions at the event; 50% agreed or strongly agreed that sponsor signage and promotion contribute to the atmosphere of the event (23% disagreed or disagreed strongly). 
• Bottom line: drinking and alcohol sponsorship are an important part of the atmosphere at the Sevens, and people go there specifically for that. Banning drinking at the Sevens or banning alcoholic sponsorship at the Sevens would make these attendees worse off.
• Despite all that pro-drinking stuff for the Sevens, alcoholic sponsor messaging was less prominent there than at the other surveyed events, at least as measured by the TV broadcasts. The electronic revolving billboard around the pitch had Speights up 64 times per hour for a total of 5.43 minutes per hour on the TV broadcasts - not all that often. Of 20 hours of broadcast coverage, they found 5% of the content included shots of the crowd drinking (0.4% of the RWC, 9% at the Heineken Open, 29% at the International T20, 23% at ODI); alcoholic billboards were in-frame for 9% of the broadcast (30% of RWC, 53% of Heineken Open, 26% of T20, 24% of ODI). And alcoholic commercials were also less prominent. I don't see data on the visibility of signs at the events for the fans, but it would be surprising were they more prominent at the place where they're so less likely to show up on-camera.

Alcoholic promotion at the Sevens, as measured by the TV broadcasts, seems far less prominent than at other events. Suppose we were to run a simple cross-sectional analysis and we were to blame any drinking on alcoholic sponsorship and promotions. 71% of attendees at the Heineken Open were aware of sponsorship. 72% at the Sevens. And 56% were aware at the T20 and ODI. But only 14% at the Heineken Open agreed that drinking is 'just what you do' there. 77% said drinking is 'just what you do' at the Sevens. And 38% agreed that drinking is 'just what you do' at the T20 and ODI. Does sponsorship cause high levels of drinking at the Sevens, or low levels of drinking at the Heineken Open? If you increased alcohol sponsorship visibility at the cricket to match that at the Sevens or at the Tennis, which one's drinking culture would follow? If you plotted only the Sevens and the Cricket, you could conclude that banning alcohol sponsorship would make the Cricket more like the Sevens!

Fun one: despite a ridiculously loaded question, "I am very concerned with the exposure to alcohol messages for youth at this event", just over 50% disagreed or strongly disagreed. 

Bottom line: the event most seen as a piss-up has sponsorship-awareness no different from that at the Heinekein Open and has far less visible drinking and alcoholic sponsorship on TV coverage than do the other sporting events surveyed. The relatively sedate tennis and cricket matches have more obvious sponsorship, but less drinking culture. 

It is very hard to see any evidence from this HPA survey suggestive of that you do any good by banning alcohol sponsorship at sporting events. It looks instead like you'd worsen the environment at the Sevens as judged by those who attend it. The Heinekein Open provides a more family-friendly environment despite high measures of alcohol sponsorship because it's that kind of event; the Sevens are rather less family-friendly not because of alcohol sponsorship (which was pretty low for TV-viewers) but because it's that kind of event. 

Sporting Costs

This weekend's addition to the social cost of sport in New Zealand:

Motocross riders pushed themselves "to the max" at the annual Michael Godfrey Memorial Motocross this weekend, with nine riders having to be flown to Christchurch Hospital with injuries.

The 29th Michael Godfrey memorial event was held on Saturday and yesterday at Omihi, attracting 300 riders from around the country.

Nine riders had to be taken to Christchurch Hospital by the Westpac rescue helicopter.

All were treated for moderate injuries, ranging from concussion to limb fractures.

Race director Graeme Allan said it was ''an amazing weekend''.

''We had an incredibly strong depth of talent there. It's just the strongest team we've ever had.''

He said the number of injuries was not surprising given it was a ''national-calibre event''. [emphasis added]

The Accident Compensation Commission charges levies on employers that are adjusted by the employer's industry and history of workplace accidents [the Employer's Account], a 1.7% levy on all earnings* [the Earner's Account], levies on car registration,** and a separate levy on petrol. Finally, the government kicks in a bit for those not in employment. It looks like normal sporting injuries are covered out of the earners' or non-earners' accounts, depending on the employment status of the injured person; injuries to professional athletes as part of their job would come from the Employer's Account.***

What does this all add up to?

Figures released under the Official Information Act show that ACC paid out $56 million for rugby-related claims in the past financial year, making it the costliest sport for injuries.

The Wellington region generated $5m worth of rugby injuries.

The total cost to ACC for sport-related claims in the 2010-11 financial year was $333,995,252, of which $29,356,295 was paid out for injuries in Wellington.

Some of that will be injuries to professional athletes and would consequently come out of their paid levy on earnings. A professional rugby player's employer pays pays a 6.46% ACC levy on payroll, but with discounts of up to 58.7% if the employer agrees to self-fund some workplace accident costs. " For comparison purposes, central bankers pay 0.09% and universities pay 0.14%, both with similar access to the discount plan above-linked.

I'd be curious how the total above spilt between professional and amateur athletes; while the article gives the top-costing broad sporting categories, it didn't split those by whether they came out of employers' or earners' levies. Few of this weekend's motorcyclists would have been riding as part of their jobs, so they'd likely have had rides in the Westpac chopper paid by ACC out of the Earner's or Non-Earner's accounts.

A few points:

• While underpricing of sporting risk will yield some distortions in risk-taking in sport and in choice of sport, ACC here mostly funds a transfer from those who don't participate in sport to those who do.
• It doesn't seem like it would be ridiculously hard to knock out a sizeable portion of those transfers by having sporting clubs and major sporting events like the motocross race treated as quasi-employers for ACC purposes, assessing a fixed per-club levy with experience-rated premiums that varied with the type of sport.  
• But, there are many other sports for which it would be almost impossible to charge (bouldering, rock climbing, swimming, skateboarding...). Assessing levies on easy-to-levy sports and not on others might induce minor distortions in choice of sport.
• There are some sporting events that would likely die under actuarially fair pricing. It would be efficient that they cease, but the political costs could be high. The Motocross rally's spokesman indicated that the incurred injuries were on par with those he expected. An actuarially fair premium then would have been somewhere around the cost of the incurred expenses. If flying nine injured motorcyclists from Omihi to Christchurch on the emergency chopper and treating all of their injuries came in at less than $45k, I'd be reasonably impressed; $45k in insurance cost would be $150 per rider for the event. Some amateur rugby clubs that would probably also shut down under fair insurance pricing. 
• It's not easy to tell outside of a market system what risks would explicitly be priced within a market system. Socialising risks means a lot of private behaviours get seen as imposing social costs. Whether a risk gets priced seems more to do with popularity and acceptability than underlying characteristics.

* Maximum individual levy $1934 - no ACC levy is charged on earnings over $113,768. 

** About $200 per vehicle, but not adjusted by driver accident history or correlates of vehicle riskiness other than broad classes like "petrol vehicle" and "motorcycle over 600cc". John Small pointed to some problems in risk pricing across ACC vehicle classes a couple of years ago.

*** Injuries to Motocross drivers *might* come out of the Motor Vehicle Levy, if the dirtbikes are registered and if ACC deemed that to be road accident rather than sporting event. In that case, it's largely a transfer from road motorcyclists to dirt bike enthusiasts.