Sunday, August 16, 2015

Al Davis Memorial Prize in Economics

Just build it, Baby! 

Thomas Lee of the San Francisco Chronicle begs to differ;
If the Royal Swedish Academy of Sciences offered a Nobel Prize in Voodoo Economics, it would go to an author of an economic impact study.
Because, as Lee correctly observes, those studies are almost always ignoring opportunity costs--the foregone opportunities the city could have spent the same money on, that have Keynesian-like multiplier effects of their own. Which is first year economics.
“Anyone can do an analysis about anything,” said Donald Coursey, an economist and professor of public policy at the University of Chicago. “There is almost never any accountability, whether (the predicted benefits) played out or not.”
And in the case of aging Oakland Coliseum where both the NFL Raiders and MLB Athletics play, the supposed economic benefits to the wider community have been, at best, non-existent. Possibly even negative.
So why do we keep falling for this stuff? Because economic impact analyses are not really about economics — they are about psychology. They make us feel better about the choices we make as a society, and they tell us a lot about our priorities.
Of course, there is accountability if the people building the stadium are spending their own (or their investor group's) money. Which, as it happens, is what is proposed for a new facility for the NBA champion Golden State Warriors. On our own dime, Baby!

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