Political Entrepreneurs

The Economic Engine of Political Change

Incentives and Flagrant Fouls in Pro Basketball

May 20th, 2013 by Edward Lopez

Competitive sport is a microcosm for understanding human affairs. Both in life and in sports, the rules of the game largely shape the incentives that people have for how to play the game. When the rules change (either formally as through legislation, or informally as through common practice) peoples’ incentives also change, and a different outcome will be observed–for better or worse. Chapter 1 of Madmen opens with the story of college basketball being saved by adopting the shot clock rule in the 1980’s.

Now that the N.B.A. playoffs are in full swing, the “flagrant foul” rule provides another insightful example. A flagrant foul occurs when a defender uses greater than necessary physical contact to interrupt a shot. For example, at left you can see Dwight Howard of the Los Angeles Lakers using unnecessary force against Kenneth Faried of the Denver Nuggets on December 26, 2012.

Flagrant fouls are usually (not always) looked down upon as unsportsmanlike, gratuitous, and generally bad behavior. Sports Illustrated sums up the serious punishments that a flagrant foul can trigger:

“Howard was ejected with 5:02 left in the third quarter in the Lakers’ 126-114 loss to the Nuggets on Wednesday night. He was called for a flagrant foul 2 when he jammed his hand in Faried’s face as the Denver forward drove the lane. Faried tumbled to the floor, but shook off the fall to stay in the game.”

While Howard was more recently ejected from the Lakers’ Game 4 loss to the San Antonio Spurs, who swept the Lakers in the first round of this year’s playoffs, this flagrant foul was no isolated incident. Flagrant fouls have reportedly been on the rise in recent years, prompting the league to instruct referees to increase enforcement. This year’s MVP, LeBron James of the Miami Heat, complained last month that he was frustrated by the number of flagrant fouls that opponents inflict on him.

The role of incentives:

While some people are upset by the recent frequency of flagrant fouls, it’s important to understand the role of player incentives as shaped by the rules of the game.

For example, before the 2002 season the N.B.A. rules committee wanted to increase the pace of the game to increase fan interest. So the rules committee decided to reduce from 10 seconds to 8 the amount of time the offense has to advance the ball past half court. The committee also relaxed the so-called “illegal defense” rule, a move that was designed to increase three-point shooting by letting defenders play closer to the basket.

The tweaks had their intended effect. Both the number of perimeter shots and total scoring increased the following year, to the delight of most fans. But the change of rules created some unintended consequences, too. The league noticed an increase in the number of flagrant fouls. League vice president Stu Jackson told the Associated Press in 2002,

we think a lot of it is due to the fact that the lane is open and defenses are further away, and when defenders are contesting they’re coming from further away and they’re coming harder.

Rules, incentives, outcomes. On this blog, as in Madmen, we argue that the same relationship holds in human affairs.

What other incentives explain player misbehavior?

This interesting academic paper* puts our overall argument to the test. The paper shows that misbehavior occurs more frequently among super star players than among the rank-and-file. Here is the argument. First, super star players have fewer substitutes than do rank-and-file players. Second, a proxy for substitutability is a player’s salary, in particular his salary relative to other players. Third, teams and fans may tolerate more misbehavior by super stars measured in this way:

A player’s salary, relative to that of others on his team or in the league generally, may be at least partially indicative of how easily other available players may substitute for him; thus, teams and fans may put up with more misbehavior from the top paid players on a team because of a lack of good alternatives. This lack of substitutability may be derived from the fact that the market for very highly skilled players is usually quite thin, or from the fact that fans associate their team closely with particular “star” players, and cannot easily switch their loyalties to new players. If players enjoy misbehavior (or find it costly to repress), top paid players may then engage in more misbehavior.

Due to data availability, the test is conducted on technical fouls (definition), a close cousin of flagrant fouls (a search of the economics literature reveals no empirical papers on flagrant fouls), and the author controls for factors like personal preferences, peer effects, immaturity (age), and fame-seeking. At the end of the day, relative salary does matter to player misbehavior: the highest paid player on each team will typically receive seven percent more technical fouls than the next highest paid player. In other words, when fans and teams have fewer substitutes for your talent,  you can get away with more misbehavior.

One omission from the paper is the point that the letter of the law matters only conditional on the level of enforcement. NBA referees are people too (just like lawyers, judges, and police in human affairs), and they might enforce the rules differently on super star players than on the rank-and-file. This could create an unwritten rule that referees are expected to call flagrant fouls when super stars are the victims more than against rank-and-file players. This in turn could explain why LeBron James has complained about  the matter and why the league wants referees to increase enforcement. The world awaits the next empirical paper that tests for this…

 

*Note: The paper is by an economist at Clemson University, Todd D. Kendall, “Celebrity Misbehavior in the N.B.A.” Journal of Sports Economics, [ungated version here].

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.189, ch.7)

The most successful entrepreneurs know what they do well, they know the market and the opportunities within it, and they choose those activities that create the most value. This is true in economic as well as political markets.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.178, ch.7)

[W]hen the right elements come together at the right time and place and overwhelm the status quo, it is because special people make it happen. We call them political entrepreneurs.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.176. ch.7)

While we started this book with Danny Biasone saving basketball, we end it with Norman Borlaug saving a billion lives. These stories are not that different. Both faced vested interests, which were reinforced by popular beliefs that things should be a certain way—that is, until a better idea came along.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.174, ch.6)

Because there was a general belief that homeownership was a good thing, politicians found the public with open arms.... Everybody was winning—except Alfred Marshall, whose supply and demand curves were difficult to see through the haze of excitement at the time, and except Friedrich Hayek, whose competition as a discovery procedure was befuddled... In short, once politicians started getting credit for homeownership rates, the housing market was doomed.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.166, ch.6)

Everyone responded rationally to the incentives before them. In short, the rules that guided homeownership changed over time, which in turn changed the incentives of these actors. And bad things happened.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.153, ch.6)

They understood the economics. The ideas had already won in ... the regulatory agency itself. All that remained to be overcome were some vested interests and a handful of madmen in authority.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.146, ch.6)

If the idea for auctions of spectrum use rights had been part of the public debate since at least 1959, why didn’t the relevant institutions change sooner? What interests stood in the way?

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.121, ch.5)

When an academic scribbler comes up with a new idea, it has to resonate well with widely shared beliefs, which in turn must overcome the vested interests at the table. Many forces come together to explain political change, even though it may seem like coincidence of time and place.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.120, ch.5)

It’s the rules of the political game that deserve our focus, not politicians’ personalities or party affiliations.

Madmen, Intellectuals, & Academic Scribblers

The Economic Engine of Political Change

Buy the Book
From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.119, ch.5)

In short, ideas are a type of higher-order capital in society. Like a society that is poor in capital and therefore produces little consumer value, a society that is poor in ideas and institutions will have bad incentives and therefore few of the desirable outcomes that people want.

©2018 Wayne A Leighton & Edward López • Web Design by Barrel Strength