nep-spo 2011-05-14 papers

on Sports and Economics

Issue of 2011‒05‒14
two papers chosen by
Joao Carlos Correia Leitao
University of Beira Interior and Technical University of Lisbon

Returns to Education in Professional Football By Böheim, René; Lackner, Mario
The Role of Skill Versus Luck in Poker: Evidence from the World Series of Poker By Steven D. Levitt; Thomas J. Miles

Returns to Education in Professional Football

By:	Böheim, René (University of Linz); Lackner, Mario (University of Linz)
Abstract:	After three years in the National Collegiate Athletic Association (NCAA), collegiate football players face a trade-off between spending more time in the NCAA and pursuing a career in the National Football League (NFL) by declaring for the draft. We analyze the starting salaries and signing bonuses for 1,673 rookies in the NFL, who entered the league between 2001 and 2009 through the NFL draft. We instrument the endogenous decision to enter the professional market with a player's month of birth. A player's true talent is only imperfectly observed and the instrument provides a causal link between time at college and subsequent salaries in the NFL through the relative age effect. Our estimates suggest that a player enjoys a 6% higher starting salary in the NFL, and a 15% higher first-year signing bonus, for each year with the college team. On average, a rookie is estimated to earn $131,000 more in his rookie season, if he enters the NFL one year later. Our analysis of a typical labor market in professional sports shows that the returns to education in sports are sizeable and surprisingly similar to returns to formal education. The results of our analysis provide information for the players who are deciding about declaring for the draft, however, also colleges and the teams in the NFL may find the results of interest.
Keywords:	ability bias, returns to education, NFL, labor markets in sports
JEL:	J31
Date:	2011–04
URL:	http://d.repec.org/n?u=RePEc:iza:izadps:dp5665&r=spo

The Role of Skill Versus Luck in Poker: Evidence from the World Series of Poker

By:	Steven D. Levitt; Thomas J. Miles
Abstract:	In determining the legality of online poker – a multibillion dollar industry – courts have relied heavily on the issue of whether or not poker is a game of skill. Using newly available data, we analyze that question by examining the performance in the 2010 World Series of Poker of a group of poker players identified as being highly skilled prior to the start of the events. Those players identified a priori as being highly skilled achieved an average return on investment of over 30 percent, compared to a -15 percent for all other players. This large gap in returns is strong evidence in support of the idea that poker is a game of skill.
JEL:	K23 K42
Date:	2011–05
URL:	http://d.repec.org/n?u=RePEc:nbr:nberwo:17023&r=spo

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