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Incentives Matter: Sports Edition – Econlib

In this episode, EconTalk host Russ Roberts welcomed Roger Noll, a distinguished American economist and emeritus professor of economics at Stanford University. One of Noll’s many research interests is the economics of sports and entertainment.

Roberts and Noll discuss the economics of all things sports, ranging from the financial output of football, baseball, and basketball arenas, the labor market of free agency in Major League Baseball (MLB), and finally, to the heightened intensity of youth sports. The episode questions the structure of both new and traditional values in sports while Noll and Roberts shed light on the incentives which dictate the action of various parties involved in the world of sports.

We hope you’ll use the prompts below to share your thoughts in the comments. or start you own conversation offline:



1- Roberts and Noll agree that some parents have an end in mind which is built on the hope that their kids will advance to higher levels and economic gains as they promote their children’s involvement in sports. The odds of moving beyond high school sports to a potential payout are stacked against children, but I do agree with Noll that the level of organization and seriousness in youth sports has intensified.

Do parents have a rational motivation or hope that their children will reach a scholarship or professional level in their sport? How common is this sentiment, and how can Noll’s point on the anomaly of Jeremy Lin be applied to the case?


2- Baseball has an interesting dynamic between several reputable statistics determining value and the unpredictability inherent in the game’s difficulty. Roberts and Noll discuss the always evolving strategy of general managers, and how small market teams can compete even when the odds are in favor of franchises with a much higher expenditure.

How does the measurability of expected value paired with random outcomes in baseball play a role in management decision making and competitive balance in the MLB?


3- Economists would predict that the introduction of a normal labor market (free agency in the MLB) would lead to competitive imbalance within the sport, but Roberts and Noll agree that free agency has increased competitive balance. MLB owners must hope for savvy general managers who gamble more successfully than not, but many teams, like the Mets, with more spending power than others, still underperform. Even with a predictive database of statistical measurables, there is a knowledge problem along with other independent variables for managers in drafting, signing, or trading players.

What is the ideal strategy for general managers to have in running an MLB franchise, and how should spending power influence strategy?


4- Roberts and Noll point to the improbabilities of sports which contribute to their immense popularity. This season, Major League Baseball has more buzz. Rule changes, like the pitch-clock and bigger bases, are each producing more action, removing stagnant periods which may have lessened the entertainment value of the sport for some fans in the past.

How have rule changes increased baseball’s popularity and its ‘it’ factor as an unpredictable spectacle showcasing the highest level of athletic competition?


5- Noll argues for more player influence on Major League Baseball’s performance-enhancing drug policies, where the chief influencer of policymaking considers the prisoner’s dilemma: which drugs will be used to get ahead and leave other players in the dust?

Following Noll and Roberts’ discussion of Barry Bonds’ impending Hall of Fame induction, how could the player’s point of view be more rational in enacting a fair drug program in the MLB?


Brennan Beausir is a student at Wabash College studying Philosophy, Politics, and Economics and is a 2023 Summer Scholar at Liberty Fund.

Rayna Prime

Rayna Prime

Rayna Prime Editor