A Stitch in Haste

Marginal Revolution:

New York City...is considering building a $1.4 billion stadium to bring the Jets back across the river from New Jersey, where they share quarters with the Giants. New York city and state would ante up $300 million each even though NFL football teams only play eight home games a year. Are communities crazy to do this kind of thing?

Not necessarily, according to economists Jerry Carlino and Ed Coulson, whose highly readable recent paper on the subject tries to take account of the intangible value people derive from sports teams. "We found that once quality of life benefits are included in the calculus," they write, "the seemingly large public expenditure on new stadiums appears to be a good investment for cities and their residents." The authors liken having an NFL team to having an old-growth forest--it's something people enjoy even if they never visit. This is to say nothing of the pleasure and unity they derive from rooting, discussing, etc.

Yes, you read that correctly: the very fact that many people will not use the stadium is a perfectly valid reason to make them pay for it through public subsidies. Or, if you prefer: it is perfectly permissible for the government to impose a "fan tax," even on those who never actually attend, or even watch, a game (i.e., who are not "fans").

It's interesting that one of the sections in the Carlino and Coulson paper is titled "External Benefits to the Rescue." Rescue from what, exactly? Of course, from the real-world economics of such projects, which never live up to the economic hype.

Welcome to modern academic economics -- now you have an idea why I fled it for the (relative) sanity of Wall Street and the law.

Professional football is not the space program, and spectator sports are not a public good (they are perfectly excludable). Just because something is big doesn't mean it has to be publicly provided -- think "Empire State Building," "airliners" or "Lord of the Rings."

If the stadium has to rely on such ephemeral, de minimus selling points as "increased rooting," then that's a pretty clear sign that the project, qua public undertaking, is destined to be a dud. And as for the "intangible" benefits of increased "rooting," how about its very tangible costs (e.g., lost productivity at the water cooler every Monday morning; empty law school classes in October)? And Los Angeles and Detroit might have something to add about whether "extra rooting" is a good thing.

(SIDEBAR: As a libertarian, I certainly would defend the stadium qua private undertaking: If the Jets or anyone else can raise the money to build their stadium without public subsidies, then let them build it -- regardless of any local NIMBY whiners.)

Meanwhile, for their silly math, Carlino and Coulson get an official A Stitch in Haste "Goomba Goom!"

UPDATE: Great minds think alike -- the good folks at Reason's Out of Control (not to be confused with Reason's Hit and Run) uncover more pseudo-economics trying to justify light rail in a think tank's report:

Academics are taking note too. Rail, they say, lends itself to socializing. "A mode of transportation like a train is much more of a social mode than a car," said one. "When you are in a train, you have to interact with other people."

Reason's response is comparable to mine. A short must-read in conjunction with this post.

For Discussion: How might the Broken Window Fallacy also be at work here?

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Maybe We'll Be Really Fortunate and Mount St. Helens Will Erupt
Why Subsidize Student Loans?
Government-Provided Broadband: Um, Why?
Anybody But Bloomberg: NYC and the Olympics

(Cross-linked at Outside the Beltway.)