The Law and Economics of the Doping Scandals
posted by Dave Hoffman
Peter Singer has written a usefully provocative essay, “Why Not Let Doping Close the Gene Gap,” in which he questions the conventional wisdom on steroids’ moral harmfulness. Singer points out that prohibiting doping puts those with inferior genes at a disadvantage, and that the current line between that which sports leagues prohibit and that which they do not is hard to defend. Thus, why not permit athletes to take drugs, whether or not those drugs harm them.
Singer’s arguments are (as they often are) hard to cabin. If steroids, why not artificial legs, lungs, hands, eyes. Though, if not steroids, why caffeine, IVs, Gatorade, and pickle juice. I was left feeling kind of stuck in a swamp, and so I thought, as I often try to do when confronted by a vexing legal problem, WWPD? What would Posner do?
We could ask him, but he’s a busy guy. So, let’s see if we can gin up a back-of-the-envelope look at the law and economics of sports doping.
Starting at the back-end, the classic L&E approach to crime is Becker’s. The model implies that imprisoning players for using steroids is inefficient, of course. But also wealth minimizing are techniques that suspend players from the game when caught doping. Instead, we should give players something like a “right to dope,” but “tax” them through fines for using performance enhancing substances. (Heck, you could make a fine schedule, starting at $5 for Gatorade, $15 for a misting machine on the sidelines; $50 for a cortisone injection before a game; all the way up to $1,000,000 for uppers.) In this way, we’d get an optimal amount of steroid use, as individual players calculate the increased value (to them) of increased performance, when taking into account the fine.
Fines should be increased as the probability of detection decreases. Since well-publicized detection regimes seem to increase fan happiness and thus player earning potential, a naïve analysis would suggest that we have a relatively low fine schedule coupled with very tough enforcement. Thus, the NFL is efficient and the MLB is not. Not surprising: the NFL is a well-run business; the MLB is still relying on its eyes.
As I said, a naïve analysis. The problem is that we assumed that the criminalization of steroid use (or, more appropriately, its regulation by our quasi-governmental licensing entity, the league) is efficient. Readers will perceive that the economic approach sketched above, by removing moral considerations from line-drawing, exposes the irrationality of condemning steroids in the first instance.
The social harms from steroids are relatively few: users (athletes) have potentially shorter careers and reduced life expectancies; fans lose interest in the game when they believe it is tainted, reducing team revenue; general malaise, and possibly reduced economic growth, in cities affected by doping; and an increased chance of amateurs, including minors, using steroids. The social benefits from steroids are: increased abilities by using players, resulting in dramatic increases in personal popularity and earning potential; increased revenue and happiness in cities with teams that have doped by where the doping is not exposed; more physical activity occasioned by individuals trying to ape players’ success.
Thus, almost all of steroids’ social ills seem to be caused by monitoring. (This is like and unlike the economic case against prohibiting psychotropic drugs in severity and scope.) The lone exception is players’ health effects, but this cost can be discounted. Players presumably will calculate the cost to them of steroid use, weigh it against future earning potential, and make efficient decisions. Some might be concerned about a potential race-to-the-bottom here, where all players would be forced to take steroids to compete, especially those who in an imperfectly policed market would prefer to be steroid free. However, this concern is misplaced. Players can stop the downward roll toward a lemons market by warranting that they are drug free, enforced by a private organization, or perhaps even the league itself. Maybe there is a market for this — it isn’t implausible, considering that players who live clean lives off-the-field can already reap better merchandising opportunities than those who do not.
All the other costs, including the “bad halo” effect on amateurs, would disappear if we didn’t know what players were doing. Like, say, the 1993 Phillies. I was happy then. Am I happier now? Not even close. Thus, the NFL’s current policy is inefficient, unless you think that what is really going on is unmonitored drug use in colleges and high schools. The MLB’s current policy is even worse, as it couples high visibility with low efficacy. The only really efficient policy was the MLB’s circa, say, 1970 or so, when everything was practically on the table. And the NHL’s until two years ago. (Yes, this analysis assumes that hockey remains a major league sport. It isn’t, I know. But were the Flyers to suddenly take a championship, I reserve the right to delete this paragraph.)
Hee. Well, as you probably can see, I think economics has surprisingly little that is useful to say about whether given acts should be criminalized, or not. Indeed, I think that this normative hole has held back economic analysis’ influence on the criminal justice system. If you can’t give an account of what should be unlawful, tinkering with remedies will remain a sideshow act.
So this is the challenge for our readers, who are undoubtedly more sophisticated than I about economic theory. Can you articulate an economic case for prohibiting steroid use? Or permitting it? Is there a useful way to think about actions that create economic harms only when exposed and discussed? (Also in this category: adultery, possibly instances of sales-inducing puffery, and – maybe – wiretapping?)
August 23, 2007 at 12:01 am
Posted in: Behavioral Law and Economics, Corporate Law, Economic Analysis of Law, Employment Law, Humor
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Responses (4)
Kristian - August 23, 2007 at 9:18 am
“The social benefits from steroids are: increased abilities by using players, resulting in dramatic increases in personal popularity and earning potential; increased revenue and happiness in cities with teams that have doped by where the doping is not exposed; more physical activity occasioned by individuals trying to ape players’ success.”
I would hesitate to call those benefits ’social’. Arguably, sports is a zero-sum game: the one athlete’s (supperter’s) gain is the other’s loss.
Randy Picker - August 23, 2007 at 9:38 am
Yes, I make a version of the zero-sum argument in a blog post (and Chicago Tribune op-ed) yesterday: see http://uchicagolaw.typepad.com/faculty/2007/08/what-are-the-li.html
TJ - August 23, 2007 at 5:29 pm
Dave, you are leaving out a critical social cost of doping — fan disutility incurred by too high a standard of play. You seem to assume that fans will automatically be happier if all players are doped–if we did no monitoring of any limits. That is not true. Fans are happier when their team is relatively more successful–cheats and get away with it, but if everybody is doping, the overall level of utility is likely to go down. There is an optimal level of average ability and optimal level of variance–we would not want to watch a bunch of equally skilled cyborgs compete. Presumably the NFL and MLB would like to enforce this.
The economic problem with doping therefore is that it alters the ideal baseline that the central organization would like to implement. If MLB concludes that fans as a group would like gatoraded players but not doped players, doping frustrates MLB’s ability to implement its policy.
You then raise the possibility that we can have segregated leagues. The “dope” league and the “clean” league. This would allow competition to determine the optimal level of performance that fans actually desire. But the “clean” league needs enforcement. In a world of segregated leagues, the best strategy that may be attempted would be to be a secret-doper in the “clean” league where the player has a relative advantage compared to everyone else.
greglas - August 24, 2007 at 2:11 pm
Does the manufactured illusion of progress constitute utility? (I admit to being somewhat willfully baffled by how econo-thinking applies to games and entertainment.)
Doping athletes is undoubtedly bad for the health of athletes in the aggregate. Those who lose to cheaters undoubtedly feel cheated. But if doping were sanctioned under the rules, with athletes constantly breaking records for strength and speed, the public might “benefit” insofar as record-breaking of that sort leads to increased public interest and ticket sales. (Someone commented to this effect on Randy’s blog.)
To an econo-thinker, I guess the thing to do is ask whether the health losses to athletes (and even more would-be athletes) are outweighed by the social benefits expressed via the increased ticket sales.
While I really don’t think that way at all personally, it isn’t clear to me that the public finds “doped” record-breaking to be a form of economic disutility — or at least I’m not convinced that they’d be able to make that perception of disutility expressed through consumer preferences.
… Personally, I’m rather disenchanted with the industry of spectator sports. I’d rather encourage amateurs to get away from fixating on the sports professionals on their television and to get out into their local parks competing themselves. But that’s just me.
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