In an interview on Economics is Fun

Let’s go through your books. The first is from 2011, Big-Time Sports in American Universities. Tell me about it and how it fits into the “economics is fun” theme.

It’s fun because large numbers of people in this country, myself, to a small extent, included, enjoy sports. The second thing is that the US is unique in that the training grounds for professional athletes are, and have increasingly become, universities. No other country in the world has universities that also train professional athletes. What’s the economics of this? Who pays for it? What about the labour market for college athletes?

Here’s the thing that intrigued me most, and I learned it from Charlie Clotfelter’s book. (I should stress, he is a buddy of mine.) I hadn’t thought about this, but when you, as an alumnus, give money to a university in order to get good seats at football games, it’s a gift to a university and therefore it’s tax-deductible. So if I were to give $5,000 to UT Austin for football tickets – which I can assure you I don’t do for a whole variety of reasons – I’d be getting the federal government to pay about $1,600 of that, because of the tax deduction. So, in a very real sense, the federal government and you, the average taxpayer, are subsidising big-time sports in American universities. I had not thought about that, and it struck me as outrageous. As I wrote on the back of the book: “A fascinating, insightful discussion of the arms race that is big-time intercollegiate athletics … The convincing, novel demonstration of the role of tax subsidies in supporting these operations should raise every reader’s blood pressure.” It certainly raised mine.

It’s also interesting how different sports and different schools attract more or less money. For example, at Clotfelter’s school, Duke, the football stadium is empty and you can basically get a ticket for free. But in basketball Duke is a powerhouse, and in order to get a seat you have to contribute about $7,000. At the University of Texas, we have so much money you’ve got to contribute for all the sports, but football much more so, if you want decent seats. The athletic system in the universities is just a bizarre thing, and this was the best explanation I ever saw of what drives it.

Is Clotfelter an economist?

Yes, Charlie is a professor of economics at Duke. He was also vice chancellor and vice provost at Duke, so he has an administrative sense of how universities are run. He was more involved in that than most professors would be.