Liam Speight

Tuesday, October 12, 2022

1100321

Prof. Martin

Pear Writing Assignment

The Pursuit of Happiness: Efficiency and Equity

Cocktail party economics is a phenomenal book which has allowed me to learn much more

about economics. The book dives into important economic topics such as supply and demand,

comparative advantage, emotions in economics, scarcity and much more. One of the more

interesting chapters is chapter 9 which covers “The Pursuit of Happiness: Efficiency and Equity”.

This chapter talks about the many issues that efficiency and equity in economics can cause.

Sports teams are a great example of how efficiency and equity can be a massive problem.

Athletes tend to make more than most people in the entire world and a lot of these athletes don't

even get playing time in their respective sport, only the biggest athletes in the world get to play

on the biggest stage. This has become a massive problem regarding male and female sports,

as female athletes have come out saying that they are paid far less than male athletes despite

playing the same sports in most cases. The question remains, should female athletes receive

the same amount as male athletes and if so, is it feasibly possible?

Chapter one of Cocktail party economics talks about scarcity. Scarcity means to have too

much demand to keep up with your supply, this is a major problem for many businesses

including sports teams. This can happen within organizations, with players refusing to play

another season with their respective team simply because they wish to receive more money.

This has happened repeatedly in recent years with female athletes requesting more money

because they believe they deserve to earn as much as men do in those sports. This could also
be attributed to why sports tickets have gone up so much in price, teams need to be able to pay

all of their players which is very hard to do when they are all requesting to be paid more.

Professional sports leagues have introduced the concept of a “Maximum salary cap”, this has

been seen in nearly every major sport league and was first introduced into the national

basketball association (NBA) in 1999 being described as “A prominent feature of the 1999

Collective Bargaining Agreement (CBA) between National Basketball Association's (NBA)

owners and players was the imposition of a maximum player salary.” (Kelly M. Hastings and

Frank Stephenson, March, 2014, The NBA’s Maximum Player Salary and the Distribution of

Player Rents, https://www.econstor.eu/bitstream/10419/167775/1/821366742.pdf). This was

introduced to make a fairer way for lower tier teams to compete instead of all the biggest teams

being able to pay all of the best players. The addition of salary caps has made it much easier for

teams to keep up with the demand for its players' salary. While this seems fair for male athletes,

the salary cap for a maximum contract of a WNBA player is $190,550 each season, while the

NBA is around 25 percent of the teams salary cap usually amounting to around 30 million

dollars a season. (Christian Jope, July 2019, NBA vs WNBA: Revenue, Salaries, Viewership,

Attendance and Ratings, https://www.wsn.com/nba/nba-vs-wnba/). The average NBA salary is

$8,264,922.40 while the average WNBA salary is only $73,738.90. (Elle Baker, 2019-2020, “A

Comparison of NBA and WNBA Player Salaries",

https://coles.kennesaw.edu/econopp/docs/Baker-Elle.pdf). With such a large difference in

salary, it is understandable why female athletes in the WNBA would want to receive more

money but scarcity suggests that the WNBAs revenue of 60 million can’t compete with the

NBAs revenue of 7.4 billion. The difference in revenue unfortunately makes it very difficult for

WNBA teams to pay their players anywhere close to what NBA players are paid on their teams.

Chapter two talks about where emotions and economics collide. This chapter is very

interesting to me as it describes the value, we as a society hold in regards to economics and

ethics. The ethics of the sports industry could be questioned when there is a clear wage gap in

female vs male athletes but also with athletes and normal people as well. This chapter mentions

that “The market tells the truth. You may or may not like that truth but it doesn’t change how the

real world works.” (Adomait, Maranta, March 15, 2011, “Cocktail Party Economics”). This is an

interesting view on how economics is truly related in our world in so many different ways.

Athletes work hard just like other people but they make more money due to the fact that the

market is in more demand for the entertainment provided by professional players. The same

can be said in regards to the male vs female athletes wage gap although it begs the question, is

this ethically fair? The answer to that question is easy, it is not. This still leaves the owners of

women's sports teams in a tough spot because although it is not fair, they don't pay their

athletes as much as their male counterparts, “the market tells the truth.” (Adomait, Maranta,

March 15, 2011, “Cocktail Party Economics”). Chapter two talks about sports as a business and

an interesting point is made in regard to athletes' skill being only half of the value they hold. The

other half is really the marketability and fan base they bring to the sport (Adomait, Maranta,

March 15, 2011, “Cocktail Party Economics”). As a basketball fan myself, I've always looked up

to athletes such as Lebron James not only for his ability in basketball but as a person. The

things Lebron does outside of basketball is equally as important as within basketball such as his

charities, campaigns with sports brands such as Nike or even with the soft drink sprite. The

value of an athlete is determined for how well they can be marketed to the public and as a

whole star such as Lebron or Michael Jordan are people who young men aspire to be like.

Recent years have shown a tremendous growth in female sports especially in tennis, where

Serena Williams has taken over and become one of the most popular female athletes in the

world. Serena is a perfect example of a star athlete as she has not only dominated the sport of

tennis but has become a celebrity in her own right appearing in commercials for Gatorade, Nike

and many more. She has become a hero for women showing women across the world that they

can be just as successful as men in the world of sports.

 In conclusion, the scarcity of women athletes in the WNBA in comparison to the NBA is a

major issue which will require the efforts of many to improve the issue of payroll in the WNBA.

The inequality between both leagues is evident as athletes from both leagues work extremely

hard to be the best in their respective sport. The WNBA has to increase profits in the league to

help their players receive a fairer salary but the players must also work to become more

marketable to bring more eyes to the league.