Comments on economics, mystery fiction, drama, and art.

Friday, May 27, 2005

The Persistence of Dreams

Last night, I attended a baseball game featuring the Gary RailCats and the Edmonton Cracker Cats of the independent Northern League. The teams in this league do not have working arrangements with major league baseball teams, and the players are under contract solely to the team for which they play.

Players in this league are pursuing a dream. Some of them have never played in "organized baseball"--they never signed a contract (or, if they did, they failed to make the cut for a minor league team). Occasionally, a player on an independent team has been drafted, but failed (or refused) to sign--J.D. Drew is an example. Or a player might be hanging on, staying in shape, and hoping to make it back the the majors (Darryl Strawberry did this, and Ricky Henderson has done it more than once. Last year, Wes Chamberlain played for the RailCats).

My prior was that most of the players who do not fit into the categories in the previous question would be young--18 to 25, maybe. What surprised me was the age composition of the (22-player) RailCats roster. Two of the players are 23-24. Two or three are in their 30s (the oldest is 32). The rest are 25-29. That's 17 or 18 players in their mid-to-late 20s. And, for some of them, their first professional experience has been in the last two years.

These players are working for almost no money. The teams have a payroll cap of $95,000 for their rosters. Granted, the seasons are short--three months of play, with 2-3 weeks of spring training (in May) before. So the average monthly player salary (calling it 3.5 months) is a little over $1200--about $4300 for the season.

Almost certainly these players have alternative employment that would pay them more (the implicit hourly wage, assuming an 8 hour day and 22 work days per month, is $7.00). These young men are, in effect, paying--giving up income--in order to play, not just minor league, but lower-than-minor-league, baseball. How much? Based on the player bios about 15 of the players had attended college. According the the Census Bureau, the mean annual earnings of males ages 25 - 29, with some college, in 2003, was about $30,000. I don't know what these players can earn during the off-season, but it's surely less than they could earn if they were full-year workers. But just focusing on what they five up during the 3.5 months they commit to playing baseball, they are giving up about $4400 per playing season to pursue this dream.

Not a choice I would make. But, clearly, a choice these men are not only willing to make, one they are eager to make.

Thursday, May 05, 2005


I'm about 2/3 of the way through Steven Leavitt's Freakonomics, which has been selling remarkably well. I have to say I'm disappointed. The single most interesting bit so far is the chapter on the distribution of income within the crack industry. The rest of the book (so far) seems to be warmed-over empirics, without much in the way of a firm theoretical base...along the lines of data-mining followed by a quick-and-dirty rationalization.

Even the chapter on the cocaine industry fails, I think, in that it does not do a very good job of explaining tournament theory and showing its application more broadly. In fact, there's no entry in the index for "tournament." The discussion that can loosely be related to tournament theory covers about 3 pages (104 - 106), and very sketchily.

While Freakonomics is certainly entertaining (so far), it's not a book that most of us inside the profession will learn anything from, and it's so superficial that I doubt that even a reasonably well-schooled undergraduate economics major will either.

If the book has a virtue, it's in pointing out that economic questions and issues are, literally, almost everywhere.

Monday, May 02, 2005

Restrictive covenants and competiton

The Chicago Tribune reports on what is apparently a fairly common practice by super market and pharmacy chains, bothin Illinois and nationwide. When these chains close a store (on porpoerty they own), they apparently frequently write a restrictive covenant into the deed, prohibiting the use of the property as a grocery store (or pharmacy, as the case may be). Recently, Dominick's closed a 20-year-old store on the southwest side of Chicago. A small local chain wanted to buy the property for use as a grocery store, but the restrictive covenant prohibited that use. Clearly, this is an attempt by chains to reduce--or prevent--competition.

The economics of this seem pretty clear to me. If the location cannot support a grocery store, the restrictive covenant is unnecessary. Potential competitors will fail. If the location is viable, then the restriction reduces soical welfare by restricting competion, and by limiting the property rights of new owners. So prohibiting such restrictions should, I think, enhance welfare. Such a prohibition seems to me to be protecting property rights in a general sense, although the individual gorcery/pharmacy chain will, presumably, be made worse of.