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If you play well they will come-and vice versa: bidirectional causality in major-league baseball

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  • Ira Horowitz

    (University of Florida, FL, USA)

Abstract

The Granger-causality test is applied to the annual attendance and win-percentage data for 29 major-league teams. It is shown that bidirectional causality exists for these teams and that there are some essential differences between the original 10 of 16 franchises that comprised the majors in 1903 and the six that relocated between 1953 and 1961. Some differences and some similarities are also seen in the parameter estimates for both blocs of teams, the relocated teams, and seven long-lived expansion franchises. Finally, the parameter estimates are manipulated to yield noise-free equilibrium estimates for both attendance and performance. In tandem, these two sets of estimates provide fodder for speculation as to the futures of each of the extant 23 franchises considered here. Copyright © 2007 John Wiley & Sons, Ltd.

Suggested Citation

  • Ira Horowitz, 2007. "If you play well they will come-and vice versa: bidirectional causality in major-league baseball," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 28(2), pages 93-105.
  • Handle: RePEc:wly:mgtdec:v:28:y:2007:i:2:p:93-105
    DOI: 10.1002/mde.1308
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    References listed on IDEAS

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    1. Stephen Hall & Stefan Szymanski & Andrew S. Zimbalist, 2002. "Testing Causality Between Team Performance and Payroll," Journal of Sports Economics, , vol. 3(2), pages 149-168, May.
    2. Dennis Coates & Thane Harrison, 2004. "Baseball Strikes and the Demand for Attendance," UMBC Economics Department Working Papers 04-101, UMBC Department of Economics.
    3. Martin B. Schmidt & David J. Berri, 2004. "The Impact of Labor Strikes on Consumer Demand: An Application to Professional Sports," American Economic Review, American Economic Association, vol. 94(1), pages 344-357, March.
    4. Whitney, James D, 1988. "Winning Games versus Winning Championships: The Economics of Fan Interest and Team Performance," Economic Inquiry, Western Economic Association International, vol. 26(4), pages 703-724, October.
    5. Daniel R. Marburger, 1997. "Optimal ticket pricing for performance goods," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 18(5), pages 375-381.
    6. John Thornton, 2001. "Population Growth and Economic Growth: Long-Run Evidence from Latin America," Southern Economic Journal, Southern Economic Association, vol. 68(2), pages 464-468, October.
    7. Nicholas Apergis, 2000. "Black Market Rates and Official Rates in Armenia: Evidence from Causality Tests in Alternative Regimes," Eastern Economic Journal, Eastern Economic Association, vol. 26(3), pages 335-344, Summer.
    8. S. M. Dobson & J. A. Goddard, 1998. "Performance and revenue in professional league football: evidence from Granger causality tests," Applied Economics, Taylor & Francis Journals, vol. 30(12), pages 1641-1651.
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