I have just enjoyed watching the Chicago Cubs win a World Series game. In economic terms, it produced “utility” for me, a highfaluting way of saying it made me feel better, more satisfied, happier. But that is only part of the economics in this venerable national ritual. Consider how the following economic concepts are manifest in these games.
Collective goods: Most things that satisfy our needs are “private” and “individual” goods. The comfy pajamas I wear belong to me and not you. Their use is “rival.” If I have them on it is physically impossible for you to be wearing them.
Other goods, including ball games, concerts, tornado warnings and national defense are “collective goods.” Many people can consume them at the same time. Up to some point, such as the number of seats in a hall or stadium, consumption is “non-rival. “
Last Saturday night we enjoyed a performance of Camelot. The fact that my family was having a good time did not mean that a few hundred other people in the dinner theater had less pleasure. The same is true for Cubs or Indians fans physically at a Series game. Indeed, for sports, the overall spectator experience often is better when the venue is packed compared to it being half full. Some of the satisfaction from a game comes from watching skilled athletes. And some comes sharing the excitement with other fans.
On TV, a baseball game is completely non-rival. My wife and I get the same enjoyment whether we are two out of a million or 10 million or 100 million viewers. Adding more viewers does not reduce anyone’s pleasure.
Similarly, having many people hear a tornado siren does not reduce the ability of each individual within earshot to get a warning. But a tornado siren differs from a sports game as a collective good. Public sirens are “non-excludable.” One cannot easily block the sound from those who do not pay for it. But one can keep people out of a stadium unless they buy tickets. The league can refuse to let anyone televise the game unless they pay substantial fees. So those putting on the game can get compensation for their effort, unlike someone who voluntarily erects a private tornado warning system. So sports events, plays and concerts remain “private goods” that markets produce efficiently. Non-excludable tornado warnings and other public safety measures are “public goods” that only are produced in efficient quantities if government takes action to make that happen.
Watching a World Series game on broadcast TV does not cost us any money. We just have to put up with commercials. Advertising rates for commercials during a World Series are high enough that this is a profit-maximizing strategy for whichever network buys television rights. But in some other cases, it may be more profitable to run an event on a premium cable channel or via some sort of pay-per-view medium. In that case my wife and I would be among the excluded. This already is the case for he baseball playoffs.
Technology changes the equation. When I was a kid, one had to sit through every commercial. But with a digital video recorder, we can start taping before we start watching and then fast-forward through commercials. The fact that viewers can do this means that broadcast rights are less valuable because the proportion of people actually exposed to the ads is smaller than in the past.
Marginal Utility: What about the experience itself of watching a game? In general, the addition to one’s satisfaction decreases as one consumes additional units of a good. That is, when hungry, the first sip of a strawberry malt increases your level of satisfaction. So does the second, though this satisfaction increase, or “marginal utility,” is at least a bit less than that from the first sip. Ditto for the third and fourth. As you consume the malt, your satisfaction continues to rise, but in smaller and smaller steps. At some point you say, “well, that’s enough.” You are full and eating more would make you feel worse rather than better.
That pattern is usual, and at one level applies to World Series through the years. For New York Yankees fans, who’ve seen their team play in many a World Series game, the marginal satisfaction from winning a league pennant is positive, but not huge. For Twins fans, the event is far rarer and the increment in satisfaction probably greater. For Cubs fans, who have waited 71 years to even be in the Series and 108 years to win one, the marginal utility of any success, whether winning the pennant, winning an individual game or perhaps winning the series, carries a greater increment in satisfaction. Likewise for fans of the Cleveland Indians, whose championship drought goes back to 1948.
Marginal utility is complex however. On the simplest assumptions, interest in successive games in a series would wane. That certainly happened to us as the Olympics went on. It was exciting to see the first events, but after several days of one more rowing contest or beach volleyball game was not thrilling. But the dynamics of a best-of-seven tournament is different. If the lead changes, if it goes from four games to five to six and then to seven, excitement mounts and satisfaction from additional games rises. It is the tournament as a whole rather than the game that is the relevant unit of consumption. A cliffhanger seven-game series is more satisfying that a four-game sweep — even for jaded Yankees fans.
Preferences: Demand for goods and services depends on preferences, which are very idiosyncratic. I prefer strawberry and my friend chocolate. I like symphonic music and he country and western. I root for the Twins and my high school classmate for the Blue Jays. Within any specific individual, there are orderings of preferences. I prefer strawberry to chocolate and chocolate to cherry. From this we can also conclude I prefer strawberry to cherry.
The order of preferences varies with circumstances. I root for the Twins against any other team, but if we get to a series in which the Yankees are playing, I root for whichever team opposes them. This year, the Cubs seems the romantic favorite for neutral fans, despite the Indians’ similar drought. Seeing an underdog win produces more satisfaction for me than watching a team of superb athletes sweep all before them as so often before. But others get most happiness from the absolute best play, regardless of by whom.
For a good like baseball that is collective at a national level, something like a thrilling World Series can, at least at the margin, change national well-being. A hard-fought series that goes to seven games will leave us happier than a four game sweep would have. I lived in Brazil for a couple years leading up to their unprecedented third World Cup in Soccer in 1970. That victory did really make Brazil a happier place for weeks.
Unfortunately, we cannot measure happiness. Yes, Nepal has tried to institute a “Gross National Happiness” index to supplement Gross Domestic Product. And yes, some psychologist-economists like Nobel laureate Daniel Kahneman argue that satisfaction can indeed be measured. But on a practical level there is no way to measure the collective satisfaction of our nation’s people or compare it with different outcomes. But happiness is real and important even if it cannot be measured.