Friday, April 13, 2007

Research of the Week

Below is an abstract from an article that appeared in the May 2007 edition of the Journal of Sports Economics. What's interesting about it is that in calculating economic value a lot of things are considered--social peace, hooliganism, etc.--but what's not talked about are the media. Sports are valuable because of the media (team values, rights fees, etc.), but they also create a positive media value (content, jobs, advertising, etc.). A better question might be--if the media suddenly vanished would sports have any economic value at all?

The Total Economic Value of Sporting Events Theory and Practice
Eric Barget, University of Poitiers
Jean-Jacques Gouguet, University of Limoges

The production and consumption of the sporting event generates not only positive externalities (social peace and social links, etc.), butalso negative ones (hooliganism and doping, etc.). Therefore, it is necessary to try to internalize these external effects and determine the total economic value of the sporting event, which would measure the real net social utility created. On this basis, it would be possible to decide whether sporting events deserve to be subsidised—and at whatlevel. More than the general principle that the economic calculation can provide to make a decision, such a determination of the total economic value of a sporting event poses formidable methodological problems. In the case study presented, the authors believe they have reduced many of the biases attached to the travel costs method and contingent valuation method. However, faced with the shortcomings of the cost/benefit method (even when expanded), it is nowadays recommended to resort to a deliberative approach with a view to providing some help in making a decision.


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