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The Determinants of Annual Earnings for PGA Players Under the New PGA’s FedEx Cup System

Author

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  • Ohn, Jonathan K.
  • Bealing, William
  • Waeger, Dan

Abstract

There have been numerous studies that examined the earnings determination of Major League Baseball (MLB) and National Football League (NFL) professional athletes, but relatively little attention has been paid to the earnings determination of professional golfers. The important difference between the two is: the earnings of MLB and NFL athletes are determined by past and expected future performance, while the earnings of professional golfers depend strictly on their current performance. In this paper, we reexamine the structure and determination of the PGA golfers’ tour earnings in the new era, which started with the introduction of the FedEx Cup Championship in 2007. We use two determination models – the first with a set of traditional skill variables, and the second with the skill variables along with two additional variables which reflect the monetary and psychological effect of a player’s timely performance at the majors, and the measure of a player’s consistency and persistency throughout the regular season. Overall, the second model appears to be a superior model, explaining the earnings determination of PGA players better.

Suggested Citation

  • Ohn, Jonathan K. & Bealing, William & Waeger, Dan, 2012. "The Determinants of Annual Earnings for PGA Players Under the New PGA’s FedEx Cup System," Review of Applied Economics, Review of Applied Economics, vol. 8(1).
  • Handle: RePEc:ags:reapec:143466
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    File URL: http://purl.umn.edu/143466
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    References listed on IDEAS

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    1. Orszag, Jonathan M., 1994. "A new look at incentive effects and golf tournaments," Economics Letters, Elsevier, vol. 46(1), pages 77-88, September.
    2. Paul M. Sommers & Noel Quinton, 1982. "Pay and Performance in Major League Baseball: The Case of the First Family of Free Agents," Journal of Human Resources, University of Wisconsin Press, vol. 17(3), pages 426-436.
    3. Ehrenberg, Ronald G & Bognanno, Michael L, 1990. "Do Tournaments Have Incentive Effects?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1307-1324, December.
    4. Scully, Gerald W, 1974. "Pay and Performance in Major League Baseball," American Economic Review, American Economic Association, vol. 64(6), pages 915-930, December.
    5. Cade Massey & Richard Thaler, 2005. "Overconfidence vs. Market Efficiency in the National Football League," NBER Working Papers 11270, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Determination of Professional Golfers’ Earnings; Performance Variables; Earnings-Efficiency; Institutional and Behavioral Economics; Public Economics; Research Methods/ Statistical Methods; Teaching/Communication/Extension/Profession; J3; J7; M5;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • M5 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics

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