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 “nonrival.”
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On TV, a baseball game is completely nonrival. My wife and I get the same enjoyment whether we are two out of a million or 10 million or 100 million. Adding more viewers does not reduce anyone’s pleasure.
Similarly, having additional people hear a tornado siren does not reduce the ability of the first ones to get a warning. But a tornado siren differs from a sports game. Public sirens are “nonexcludable.” 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. A league can refuse to let anyone televise the game unless they pay substantial fees. Sports events, plays and concerts remain “private goods” that markets produce efficiently.
Watching a baseball 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.
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. As you consume the malt, your satisfaction continues to rise, but in smaller and smaller steps. At some point you say, “That’s enough.” You are full, and eating more would make you feel worse, not better.
That pattern is usual, and at one level applies to World Series. For New York Yankees fans, who see their team play in a series frequently, the marginal satisfaction from winning a league pennant is positive, but not huge. 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 succes carries a greater increment in satisfaction.
Preferences: Demand for goods and services depends on preferences, which are idiosyncratic. I prefer strawberry and my friend chocolate. You root for the Indians, your friend roots for the Cubs. 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, unless the Indians are your home team, how can you not have a warm spot in your heart for the Cubs? Seeing an underdog win produces more satisfaction for me than watching a team of superb athletes sweep all before them as so often before.
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. I lived in Brazil for a couple of years leading up to their unprecedented third World Cup in soccer in 1970. That victory made 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.
Yet happiness is real and important, even if it cannot be measured.
St. Paul economist and writer Edward Lotterman can be reached at email@example.com.