Thursday, March 31, 2016

A Response to Andy Schwarz on NCAA Economics

Andy Schwarz, a well-known sports economist, has taken the time to respond to my post on the expected professional salaries of top level college basketball players. While traveling in Japan, Andy typed out a 3,500-word response on his phone to my 700-word post, so I guess I hit a nerve.

Before responding, let me first say that I am really appreciative of anyone who takes the time to respond substantively to a colleague's work. The interaction can help to make everyone smarter and it's even better when it is done out in public. I am aware that the NCAA Wars are heated and prone to hyperbole, so I will point to but not reply in kind to Andy's use of terms like "propaganda" and "noise" to describe my work.

The NCAA Wars have been ongoing for long enough that the various camps recite their positions like a script for a play, sometimes without taking the time to realize that there are more than two possible positions on the issues. Let me lay out my cards on the table. I have written on many occasions on this blog (and in my forthcoming book) that I believe the following:
  • college athletes already get compensation;
  • in some cases that compensation is significant;
  • there is a strong case to be made for that compensation to be increased;
  • there are multiple channels through which compensation occurs;
  • athletes should have a stronger voice;
  • college athletes have large and latent political power;
  • some of the rhetoric used in the name of athletes is way over the top;
  • we should be able to simultaneously accept all of the points above.
Schwartz has written a very long post which mostly responds to issues that he says are implied by my post, but which I do not actually claim. Fair enough, but that is not really a response, but more of a recitation of a script. Here I will simply focus on what I take to be Andy's main objection to my suggestion that big-time college basketball offers economic benefits to the athlete.

Here is the nub of Andy's objection:
If you want to claim you are measuring what the “opportunity to play” at one of these schools is actually worth, you have to compare the earnings of the players who went to those schools with the earnings they’d have gotten if they hadn’t.  For example, Karl-Anthony Towns was the first player drafted in the 2015 draft and as a result received a little over $5.7 million.  In Pielke’s world, Kentucky gets credit for $5.7 million of that, and Towns himself zero.  But if you want to know what value Kentucky “provided” you have to net out what Towns would have made attending another school, or skipping school completely like Brandon Jennings did.
Andy is completely wrong when he claims that "In Pielke’s world, Kentucky gets credit for $5.7 million of that, and Towns himself zero." I addressed this explicitly:
One question that came up about my analysis is whether playing in college (in the top programs) causes the athlete to receive high salaries in the NBA. In other words, is there some latent value of attending college that is reflected in the earnings power of the athletes that should be ascribed to the college experience. This is not a debate unique to athletics, of course. Students attending Harvard Business School make more money, on average, than students who attend Colorado's Leeds Business School. What role does Harvard play in causing that higher income?

I'm not sure this issue matter much either. If we assume that college players only get a marginal benefit from playing for one of these schools - say 5% value added -- then this would still be $170k to $260k in value, which is still a lot. A few commenters suggested that playing college basketball at elite programs adds no value whatsoever. I don't find such claims, absent evidence, compelling at all. If your son was offered a basketball scholarship to Kentucky or Podunk State U, where would you recommend that he go?
I think that there are probably several legitimate ways to allocate the value of attending Kentucky to play basketball. What I am 100% sure of is that Kentucky deserves a valuation more than zero. I am also 100% certain that the benefits of going to Kentucky (at the top of my list) are larger than those resulting from going to Memphis (bottom of my list). Andy even acknowledges this when he writes: "if you’re trying to maximize your future NBA income, choose Kentucky."

Despite the many words, I don't think Andy and I actually disagree that much. Andy's broader complaint appears to be that the fact that big-time college players have enormous economic paydays related to their college playing might be used by his political opponents. He writes:
This is not to say Pielke’s calculation of the value is correct or incorrect. . .  If a calculation only has meaning when misinterpreted by lay, then the arithmetic becomes propaganda and no amount of disclaimers that it’s not intended as such will negate the fact that that’s how it will be used.
Anyone who knows my professional background will also know that I have zero tolerance of shout-downs because of concern that an analysis will be used (or misused) by someone's political opponents.  Yes, it's true I've had the president's science advisor come after me and I've been investigated by Congress for my research. So I'm not really too concerned about shaping my work to facilitate this or that political agenda. Andy comes really close to asking me to do just that.

We can (and should) have an open an wide ranging debate over college athletics. That debate should encourage differences of opinion, multiple approaches to data analysis and, above all, respect for the fact that there are various legitimate positions here.

One of those positions is that, on average, big-time college athletes have big-time paydays in pro sports. All the economics and politics in the world won't change that.


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