Among the sports-related economic nonsense that gets tossed about in the media are calculations of “lost productivity” associated with things like the NCAA Men’s Basketball Tournament. Here’s the latest instance, on one of the great days in Australian horse racing, the Melbourne Cup:
The survey, by recruitment firm Ranstad, found that almost half the employees it surveyed took more than three-and-a-half hours off work on Melbourne Cup Day.
Australian Bureau of Statistics figures indicated about 11.2 million people were currently in full-time work in Australia, earning on average $31.40 an hour.
“If our results are representative of Australian businesses, we could be losing about $1 billion in the afternoon of the Cup,” Ranstad chief executive Deb Loveridge said in a statement.
The figures are based on the survey’s calculations that there are about 31 million hours in lost productivity on Cup Day.
The problem with these calculations is that we don’t live to work, we work to live better! Economic theory interprets the $1 billion in lost output associated with the Melbourne Cup as a lower bound on the value that Australians place on the occasion. Otherwise they wouldn’t choose to forgo work and take in the races. Economics may be referred to as the “dismal science,” but in this case a proper understanding of economics reveals that the alleged cost, or loss, or what have you, gives us a sense of how valuable the Melbourne Cup is to the many people who take time away from work to enjoy it.
If you read the newspaper story, it seems that the creator of the figure, Ms. Loveridge, gets the idea that the benefits exceed the costs. But selling papers requires a negative spin I suppose, hence the title of the piece: “The race that costs the nation.” Ugh!
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