Sport, drugs and economics

Posted on July 24, 2012

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Dr Lenten: Anti-doping policy in sport lags dreadfully behind behaviour of athletes

La Trobe’s Liam Lenten has brought an interesting economics idea into sport – advocating a superannuation-style scheme to deter the use of performance enhancing drugs among athletes.

And he has taken ideas from sport to help teach economics, producing a fascinating series of videos which include football, soccer and Olympic analogies to explain common economic concepts.

With controversies about drugs in cycling and the world’s eyes on the Olympic Games, a more workable deterrent than current penalties is sorely needed to restore public confidence in elite sport.

And ongoing global financial ructions – from the GFC to LIBOR – mean we all need a greater level of economic literacy if we are to protect our investments or make sense of the evening news.

Dr Lenten is a senior lecturer in sports economics and researcher in the School of Economics. He says suspensions and penalties such as fines have failed to stem the tide of performance-enhancing drugs in sport over the last 50 years.

‘Compared to the behaviour of professional athletes and their entourages, policy has lagged dreadfully behind. A fundamental economic problem with current penalties meted out to athletes is that while they serve as a deterrent, they’re not the same deterrent for all,’ he says.

The opportunity cost of a three-year suspension is far lower for a veteran aged 33 than a promising 21-year old, making the athlete more likely to dope. This is reflected by data on who actually gets caught.’

Superannuation carrot

His solution is to create a balance between the ‘stick and carrot’– the carrot being a ‘nest egg’, a superannuation-style scheme funded by athletes foregoing a percentage of their prize money and endorsements.

‘This money should be placed into a managed trust fund, and distributed after a defined post-retirement period, but only if athletes preserve a perfectly clean career record. If they’re caught doping, they lose it.’

Another advantage of such a scheme, he says, is that given anecdotal evidence that professional athletes are often highly profligate with their wealth during their career ‘a little bit of financial management might serve to make them better off as well as drug free’.

‘Despite sensible economic reasoning, such a proposal must be acceptable to all stakeholders, including the athletes themselves, leaving ahead the challenge of convincing them of this policy’s merits, given natural resistance to change.’

Lear more here in La Trobe’s  ‘Big Fat Ideas’ video

Sport helps teach economics

Dr Lenten’s just-released six-part video series titled ‘Some Sports Economics’, below, is a highly innovative and engaging way to learn more about economics.

‘There is no doubt,’ he says ‘that trying to fathom economic theory is hard without applying it to real life situations. Sport is a fun way of doing economics and takes the greyness out of the equation.

‘Since many of my undergraduate students appreciate sports, but sometimes fail to grasp fundamental economic concepts in textbooks, I hope that by giving them a frame of reference that better appeals to their sensibilities, this series can make a significant contribution to teaching and learning in the discipline.’

The range of sport-related case studies he uses include Caribbean Cup soccer, the FIFA World Cup, the Olympics, Jamaican runner Usain Bolt, NBL and NRL attendances as well as media sports broadcast rights and AFL stadium food.

The videos, says Dr Lenten, are also potentially within the grasp of senior secondary school students and the general public provided they are into sport and understand the background the examples.

Watch ‘Some Sports Economics with Liam Lenten, below:

See other episodes here

See also: The Sports University