Now that the Colts have won the Super Bowl, the real interesting question can be debated: What is the effect of the Colts winning the Super Bowl on the local economy of Indianapolis?
This debate started with a paper by Dennis Coates and Brad Humphreys published in 2002 in the Journal of Sports Economics. Coates and Humphreys conclude that the Super Bowl winning city ends up with a higher real per capita income of about $140. Neither hosting the Super Bowl, nor hosting NBA or MLB playoff games have a statistically significant effect on that cities’ real per capita income. To sports economists, the lack of an economic impact from sports is a fairly common finding and has become a standard lesson we teach to our undergrads in our Economics of Sports class.
But higher real per capita income for the city that wins the Super Bowl – who ordered that? Coates and Humphreys are left to explain the result, and one suggestion is that workers in the city that wins the Super Bowl work harder (have higher productivity). This seems counter-intuitive – wouldn’t fans take off some either to go to the ticket tape parade or converse with there co-workers about various aspects of the game?
To make a debate interesting we need another side. Along comes Victor Mattheson, who published a study in 2005 (again in the Journal of Sports Economics). Matheson examined changes in per capita income for cities winning the Super Bowl and finds that the results are not statistically significant at the 5% level, nor is the economic effect (between $50 and $60) as great. Matheson concludes that his findings suggest that the Coates and Humphreys results “…was purely an anomaly”.
One should note that the Matheson’s model is not exactly identical to the Coates and Humphreys model. For example, Matheson’s model seeks to predict the change in income in a city. In contrast, Coates & Humphreys looks at what predicts the level of income in a city. Given the differences in modeling approaches, it is not surprising that the models offer different results.
Of course we want to know who is right. It turns out that I am friends with all three authors. So although I suspect one of these articles is more “right” than the other, I am not anxious to reveal my preferences.
For those interested in reading the articles and deciding for themselves, here are the full citations.
Coates, Dennis & Brad Humphreys. 2002. “The Economic Impact of Postseason Play in Professional Sports”, Journal of Sports Economics, 3(3):291-299.
Matheson, Victor. 2005. “Contrary Evidence on the Economic Effect of the Super Bowl on the Victorious City”, Journal of Sports Economics, 6(4):420-428.
– Stacey
Wages of Wins Journal 
Okapi
February 21, 2007
If we generalize from this article– http://www.spiegel.de/international/0,1518,467714,00.html –there will be an increase in aggregate income for the city (though not necessarily per capita), with a lag of 15-20 years, as a consequence of the Super Bowl win.
Stacey
February 22, 2007
Okapi,
Good one!
Although one night may not be enough to yield similar increases in income as a month long tournament such as the World Cup.
I wonder if there are similar results for host countries that perform above expected in the Olympics or cities that have Stanley Cup, NBA or MLB champions?
Okapi
February 23, 2007
Relatedly, there’s empirical evidence of a country’s stock market performance being affected by a World Cup win/loss– http://mahalanobis.twoday.net/stories/2028549
(Not that the conclusions of this World Cup paper should be taken too literally … But in a purely conceptual sense I guess you could assume market efficiency / ignore time-varying risk premiums and say roughly that the stock market gain/loss corresponds w/ a discounting of expected future change in per capita incomes. )