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Skills, Performance, and Earnings in the Tournament Compensation Model

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  • Stephen Shmanske

    (California State University, East Bay)

Abstract

Previous research on professional golf has estimated reduced-form models in which earnings are a function of skills measured as year-long averages. Using individual, tournament-level data, this article makes three improvements. First, the use of tournament-level data removes measurement error in the skills by adjusting the data for tournament-level idiosyncrasies such as the effect of altitude on driving distance. Second, the collection of microdata allows one to examine variance and skewness of the skills distributions in addition to just the mean. And third, the article estimates a structural model in which golfers use their skills to perform well in competitions by shooting low scores at one level, while those score distributions underlie the tournament earnings of the golfers at the other level. Tighter estimates of the coefficients are resolved and the overall adjusted R 2 improves from 0.36 to more than 0.90.

Suggested Citation

  • Stephen Shmanske, 2008. "Skills, Performance, and Earnings in the Tournament Compensation Model," Journal of Sports Economics, , vol. 9(6), pages 644-662, December.
    • Handle: RePEc:sae:jospec:v:9:y:2008:i:6:p:644-662
    DOI: 10.1177/1527002508317469
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    References listed on IDEAS

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    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Stephen Shmanske, 2007. "Consistency or Heroics: Skewness, Performance, and Earnings on the PGA TOUR," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 35(4), pages 463-471, December.
    3. Ronald L. Moy & Thomas Liaw, 1998. "Determinants of Professional Golf Tournament Earnings," The American Economist, Sage Publications, vol. 42(1), pages 65-70, March.
    4. Scott J. Callan & Janet M. Thomas, 2007. "Modeling the Determinants of a Professional Golfer's Tournament Earnings," Journal of Sports Economics, , vol. 8(4), pages 394-411, August.
    5. Donald L. Alexander & William Kern, 2005. "Drive for Show and Putt for Dough?," Journal of Sports Economics, , vol. 6(1), pages 46-60, February.
    6. Gerald W. Scully, 2002. "The Distribution of Performance and Earnings in a Prize Economy," Journal of Sports Economics, , vol. 3(3), pages 235-245, August.
    7. Peter Nero, 2001. "Relative Salary Efficiency of Pga Tour Golfers," The American Economist, Sage Publications, vol. 45(2), pages 51-56, October.
    8. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, vol. 71(5), pages 845-858, December.
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    Cited by:

    1. Michael Lewis & Yeujun Yoon, 2018. "An Empirical Examination of the Development and Impact of Star Power in Major League Baseball," Journal of Sports Economics, , vol. 19(2), pages 155-187, February.
    2. Mark Broadie, 2012. "Assessing Golfer Performance on the PGA TOUR," Interfaces, INFORMS, vol. 42(2), pages 146-165, April.
    3. Stephen Shmanske, 2013. "Gender and skill convergence in professional golf," Chapters, in: Eva Marikova Leeds & Michael A. Leeds (ed.), Handbook on the Economics of Women in Sports, chapter 4, pages 73-91, Edward Elgar Publishing.

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