Kurt W. Rotthoff

Time on Camera: An Additional Explanation of NASCAR Tournaments

National Association for Stock Car Auto Racing’s (NASCAR) monetary reward structure uses a linear payout for races, with a nonlinear payout for the season long tournament. The authors suggest that the season long nonlinear payout is magnified by taking into consideration the value of sponsorship time on camera and sponsor mentions during a race on TV. Given the importance of corporate sponsorship in NASCAR, the authors suggest that performance in a race provides additional benefits that are not captured in the monetary payout.

Structural Breaks in the Game: The Case of Major League Baseball

Comparing talent across time is difficult as productivity changes. To compare talent across time we utilize Major League baseball data from 1871-2010 and time series techniques to determine if the mean and standard deviation of five performance measures are stationary and if structural breaks exist. We identify two structural breaks in the mean slugging percentage: in 1921, the free swinging era of Babe Ruth, and in 1992, the steroid era. Given that productivity changes over time, we develop a simple benchmark technique to compare talent over time and identify superstars. Applications of this measure outside of baseball are also suggested. Key Words: Benchmarking, Major League Baseball, Technology Changes, Structural BreaksTo search for eras in a sports league, we utilize time series tests with structural breaks to identify eras in Major League Baseball performance. Using data from 1871-2010, the mean and standard deviation of four different performance measures are examined to test if deterministic or stochastic trends and structural breaks are present. Throughout, we identify breaks endogenously from the data. Perhaps most notable among our findings, we identify a deterministic trend in the mean slugging percentage in 1921 and 1992, which coincides with the early years of the free swinging (Babe Ruth) era and the modern steroid era, respectively.

The Economic Impact and Civic Pride Effects of Sports Teams and Mega‐Events: Do The Public and the Professionals Agree?

Often sports leagues, organising committees, and team owners justify the use of public funds to build sports stadiums by the perceived economic impacts and civic pride generated by the teams or mega-events. Since the 1980s many economic studies have examined the economic impact and civic pride created by professional sports teams. Most of the economic literature finds sports teams or mega-events have little or no economic impact, but there are mixed findings on the magnitude of civic pride. Overall, most of the economic literature suggests that the benefits created by sports teams or events do not outweigh the cost of public subsidies provided. We conduct a survey of public opinion on US residents’ perceptions of economic impacts and civic pride benefits from mega-events such as the Super Bowl and the Winter Olympics. Our study asks the question: Do residents believe that mega-events and sports teams generate positive economic impacts and civic pride or not? We find that, like economists, the public doubts that public funding of mega-events is a good idea.

Economic Growth and Obesity: Findings of an Obesity Kuznets Curve

Simon Kuznets’ (1955) hypothesis that as a country develops, a natural cycle develops where inequality first increases, then decreases, has become known at the Kuznets curve. This pattern has also been applied to the environment, an ‘Environmental Kuznets curve’, showing that as development occurs, pollution first increase; then decreases because people value clean air. We expand the Kuznets curve to an ‘Obesity Kuznets curve’; as incomes rise, resources become available to buy more food. As such, people consume more calories and obesity rates increase. However, as incomes continue to rise, personal health becomes a more valued asset and people decrease their obesity levels (increasing their health levels). We find evidence of an Obesity Kuznets curve for white females. In addition we find that as income inequality increases obesity rates fall.

Surveying the Literature and the People: The Economic Impact of Sports Teams and Civic Pride

Often sports leagues, organizing committees, and team owners justify the use of public funds used to build sports stadiums by the perceived economic impacts and civic pride generated by the team or mega event. Since the 1980s, there have been many economic studies looking at the economic impact and civic pride created by professional sports teams. Most of the economic literature finds that there is little or no economic impact from sports teams or mega-events, however there are mixed findings on the magnitude of civic pride. Overall, most of the economic literature suggests that the benefits created by sports teams or events do not outweigh the cost of public subsidies provided. We perform a survey of public opinion on U.S resident’s perception of economic impacts and civic pride benefits from mega events such as the Super Bowl and the Winter Olympics. Our study asks the question: Do residents believe that mega events and sports teams create economic impact and civic pride or not? We find that, like economists, the public is skeptical that public funding of mega events is a good idea.

Structural Breaks in the Game

To search for eras in a sports league, we utilize time-series tests with structural breaks in Major League Baseball performance. Using data from 1871-2010, the mean and standard deviation of four different performance measures are examined. Throughout, rather than assume that a break point is known a priori, we identify breaks endogenously from the data. Perhaps most notable among our findings, we identify a deterministic trend in mean slugging percentage with breaks in 1921 and 1992. Interestingly, these years closely coincide with the early years of the free-swinging (Babe Ruth) era and the modern steroid era, respectively.

How Market Makers Affect Efficiency; Evidence Markets are Becoming Less Efficient

Stock exchanges around the world have integrated a hybrid trading system. This has added anonymity for traders, making it harder for market makers to match large continuous trades, leading to an increase in volatility and a decrease in informational efficiency. This occurs because less information is contained in the price of a stock at any given time. Using a relative difference-in-difference estimation I find that as the hybrid market was adopted market volatility increased (for both the NYSE and LSE) relative to an electronic market. Although the use of a hybrid market may increase transaction speed, it decreases informational efficiency.

Stock Analysts Efficiency in a Tournament Structure: The Impact of Analysts Picking a Winner and a Loser

A financial analyst who can give accurate return predictions is highly valued. This study uses a unique data set comparing CNBC’s Fast Money’s ‘March Madness’ stock picks as a proxy for analysts’ stock return predictions. With this data, set up as a tournament, the analysts pick both a winner and a loser. With the tournament structure, I find that these analysts have no superior ability to pick the winning stock in terms of frequency. However, I do find that taking a long/short portfolio of their picks yields an abnormal return.

The Incentives Leading Up to the 2008 Financial Crisis

There are many events that led up to the financial crisis of 2008. This study looks at the political policies in place before the crisis happened. Focusing on the decade and a half prior to the crisis, the incentives in the financial industry led to risk mitigation. This response to mitigate risk explains, at least in part, a reason why there was a boom in the Collateralised Debt Obligations (CDO) and Mortgage-Backed Securities (MBS) markets in the years leading up to the crisis.

Class Size, Learning, and Knowledge Decay

Students may suffer from learning loss between the spring and fall semesters, an experience often called ‘summer learning loss’ or ‘knowledge decay.’ Although many studies examine knowledge decay in K-12, only a few examine college students. This study expands the literature by examining whether varying class sizes aggravate or dampen the loss of knowledge. We utilize a dataset on college students to analyze how class size affects knowledge decay using paired prerequisite and follow-on courses. We find that when a student takes larger prerequisite classes waiting longer to take the follow-on course raises grades. This finding is consistent with the hypothesis that students learn less in larger class sections, leaving them with less knowledge to decay. The analysis also provides novel estimates of the relationship between class size and learning: holding the number of terms between courses constant, students enrolled in larger prerequisite classes earn similar grades in subsequent courses.