Entertainment utility from skill and thrill (Current Version)
This paper uses revealed preference methods to estimate demand for non-instrumental information in entertainment. I do this by examining the "thrill" associated with the trajectory of an event, which includes both suspense and surprise, and the "skill" of performers in an event. I apply the theory presented in Ely et al. (2015, JPE) to conduct an empirical analysis that examines the effect of thrill on consumer attention. I extend the Ely et al. (2015, JPE) framework by examining spectator preferences for characteristics of the performers themselves, which I call "skill." I use game-specific, high-temporal frequency television ratings data from the National Basketball Association (NBA) to measure spectator responses to skill and thrill. First, I find that a doubling of skill present in a game leads to an approximately 11% increase in initial viewer turnout, while the expected thrill of a game has no statistically significant impact. Next, I show that thrill during a game increases viewership by 7-30%, while a doubling of skill on the court during a specific portion of a game leads to a 1.9-2.4% increase in viewership, depending on specification. Interestingly, I find a negative interactive effect between suspense and skill, suggesting that heightened suspense leads to differentially higher viewership with lower skill on the court. The findings suggest that skill of information-conveying agents primarily impacts viewership on the extensive margin (across games), while thrill is highly time-dependent and primarily impacts viewership on the intensive margin (within games). These findings have important implications for entertainment media companies, including leagues and television broadcasters, and advertisers.
Estimating worldwide benefits from improved bananas resistant to Fusarium Tropical Race 4
Working paper available upon request.
In this paper, we assess the economic welfare implications of developing and introducing a genetically improved crop for an emerging plant disease. We estimate the effect of Fusarium oxysporum f.sp. cubense Tropical race 4 (FocTR4) on global banana production. Our model incorporates both the dynamics of the disease spread as well as the diffusion of a solution to determine the impact of a time lag between technology emergence and adoption on the expected welfare of various stakeholders. We simulate welfare losses by country for bananas under different scenarios of disease spread and solution adoption. The results suggest that while consumers are the major losers from Fusarium Wilt (TR4), heterogeneity across countries dictates the distributional impacts among producers. We find that producers in unaffected and mildly affected countries can potentially lose from diffusion of the solution, while producers in early adopting and severely affected countries gain. Our findings suggest the distribution of benefits and costs across stakeholders from adoption may play a major role in the push to seek R&D and acceptance of a solution.
Leveling the paying field: The distributional impact of salary caps on player compensation
Working paper available upon request.
How does a salary cap impact (i) superstar compensation and (ii) the distribution of player compensation across a league? Using ticket price data from the NBA, I estimate player market values based on observed talent and compare them to their observed salaries. First, I find that players receive a significantly smaller share of league revenues than the sum of their market values. Next, the ratio of actual to expected salary is 1-21% for the most talented players, primarily resulting from a maximum contract threshold. This results in the top 20th percentile of talented players subsidizing the bottom 80%. The findings have important implications for the structure of compensation in professional sports leagues as well as bargaining among players and between players and team governors.
Works in Progress
Evaluation of the sugar-sweetened beverage tax in Oakland, United States, 2015-2019: A quasi-experimental and cost-effectiveness study
Environmental regulation, market structure, and intellectual property
(with David Zilberman).
Welfare impact of adopting a high-yield cocoa tree in West African countries
Are consumers willing to pay to avoid price uncertainty? Evidence from the vehicle leasing market