Igan, Deniz and Pinheiro, Marcelo and Smith, John (2011): "White men can't jump," but would you bet on it?
Download (765kB) | Preview
We identify an otherwise efficient market in which racial stereotypes affect market outcomes. In this market, there are well-defined prices, well-defined outcomes, a finite time horizon, and readily available information. The market appears to efficiently process the available information, with the exception of the race of the participants. We examine data on point spreads for NBA games over the 15 seasons from 1993-94 to 2007-08. We find evidence that the racial composition of the team is related to the size of the spread and their performance against the spread. Specifically, we find that a more black team tends to face a larger point spread and that these teams perform worse against the spread. It is possible that this effect is driven by the bookmakers setting a biased point spread or driven by excessive betting on the more black team. Using a different data set containing the movement of the spread, we do not find a relationship between the movement of the spread and the racial composition of the team. As a result, we favor the explanation that the bookmakers set a biased point spread.
|Item Type:||MPRA Paper|
|Original Title:||"White men can't jump," but would you bet on it?|
|Keywords:||Stereotypes; Point spread; Market efficiency|
|Subjects:||D - Microeconomics > D0 - General > D03 - Behavioral Microeconomics: Underlying Principles
J - Labor and Demographic Economics > J1 - Demographic Economics > J15 - Economics of Minorities, Races, Indigenous Peoples, and Immigrants ; Non-labor Discrimination
G - Financial Economics > G0 - General > G00 - General
|Depositing User:||John Smith|
|Date Deposited:||12. Jun 2011 15:19|
|Last Modified:||23. Aug 2015 18:49|
Arrow, Kenneth J., 1973, "The Theory of Discrimination." in Orley Ashenfelter and Albert Rees, eds. Discrimination in Labor Markets. Princeton, N.J.: Princeton University Press, pp. 3-33.
Avery, Christopher and Chevalier, Judith, 1999, "Identifying Investor Sentiment from Price Paths: The Case of Football Betting", Journal of Business, Vol. 72, No. 4, pp. 493-521.
Becker, Gary, 1957, The Economics of Discrimination. Chicago: University of Chicago Press.
Biernat, Monica and Manis, Melvin, 1994, "Shifting Standards and Stereotype-Based Judgments," Journal of Personality and Social Psychology, Vol. 66, No. 1, pp. 5-20.
Braun, Sebastian and Kvasnicka, Michael, 2008, "Against All Odds? -- National Sentiment and Wagering on European Football", working paper, Ruhr-Universitat Bochum #42.
Brown, William O. and Sauer, Raymond D., 1993, "Fundamentals or Noise? Evidence from the Professional Basketball Betting Market", Journal of Finance, Vol. 48, No. 4 (Sep., 1993), pp. 1193-1209.
Camerer, Colin F., 1989, "Does the Basketball Market Believe in the `Hot Hand'?", American Economic Review, Vol. 79, No. 5 (Dec., 1989), pp. 1257-1261.
Cheryan, S. and Bodenhausen, G. V., 2000, "When Positive Stereotypes Threaten Intellectual Performance: The Psychological Hazards of Model Minority Status", Psychological Science, Vol. 11, No. 5, pp. 399-402.
Entine, Jon, 2000, Taboo: Why Black Atheletes Dominate Sports And Why We Are Afraid To Talk About It, Public Affairs, New York.
Freeman, Mike, 2010, http://www.cbsnews.com/stories/2010/03/25/sportsline/main6332033.shtml
Forrest, David and Simmons, Robert, 2005, "Efficiency of the Odds in English Professional Football Matches", in L. Vaughan Williams (ed.) Information Efficiency in Financial and Betting Markets. Cambridge: Cambridge University Press.
Forrest, David and Simmons, Robert, 2008, "Sentiment in the Betting Market on Spanish Football", Applied Economics, Vol. 40, pp. 119-126.
Gandar, John M., Dare, William H. , Brown, Craig R. and Zuber Richard A., 1998, "Informed Traders and Price Variations in the Betting Market for Professional Basketball Games", Journal of Finance, Vol. 53, No. 1 (Feb., 1998), pp. 385-401.
George, Nelson, 1992, Elevating the Game, HarperCollins Publishers.
Golec, Joseph and Tamarkin, Maurry, 1991, "The Degree of Inefficiency in the Football Betting Market," Journal of Financial Economics, Vol. 30, pp. 311-323.
Grey, Philip K. and Grey, Stephen F., 1997, "Testing Market Efficiency: Evidence From The NFL Sports Betting Market, Journal of Finance, Vol. 52, No. 4, pp. 1725-1737.
Hall, Ronald E., 2002, "The bell curve: Implications for the performance of black/white athletes," Social Science Journal, Vol. 39, No. 1, pp. 113-118.
Kahn, Lawrence M., 2006, "Race, Performance, Pay and Retention among National Basketball Association Head Coaches", Journal of Sports Economics, Vol. 7, No. 2, pp. 119-149.
Kanazawa, Mark T. and Funk Jonas P., 2001, "Racial Discrimination in Professional Basketball: Evidence from Nielsen Ratings", Economic Inquiry, Vol. 39, No. 4, pp. 599-608.
Kuypers, T., 2000, "Information Efficiency: An Empirical Study of a Fixed Odds Betting Market," Applied Economics, Vol. 32, pp. 1353-1363.
Larsen, Tim, Price, Joe and Wolfers,Justin, 2008, "Racial Bias in the NBA: Implications in Betting Markets", Journal of Quantitative Analysis in Sports, Vol. 4, No. 2, pp. 1-19.
Levitt, Steven D., 2004, "Why are Gambling Markets Organised so Differently from Financial Markets?" Economic Journal, Vol. 114, No. 495, pp. 223-246.
Ogden, David C., 2004, "The Welcome Theory: An approach to studying African American Youth Interest and Involvement in Baseball," NINE: A Journal of Baseball History and Culture, Vol. 12, No. 2, pp. 114-122.
Parsons, Christopher A., Sulaeman, Johan, Yates, Michael C. and Hamermesh, Daniel S., 2011, "Strike Three: Discrimination, Incentives and Evaluation,", forthcoming American Economic Review.
Paul, Rodney J. and Weinbach, Andrew P., 2010, "NFL Bettor Biases and Price Setting: Further Tests of the Levitt Hypothesis of Sportsbook Behavior", forthcoming in Applied Economics Letters.
Phelps, Edmund S., 1972, "The Statistical Theory of Racism and Sexism," American Economic Review, Vol. 62, pp. 659-61.
Price, Joseph and Wolfers, Justin, 2010, "Racial Discrimination among NBA Referees", Quarterly Journal of Economics, 125(4), pp. 1859-1887
Price, Joseph, Lefgren, Lars and Tappen, Henry, 2009, "Interracial Workplace Cooperation: Evidence from the NBA", working paper, National Bureau of Economic Research.
Sailes, G., 1996, "An Investigation of Campus Stereotypes: The Myth of the Black Athletic Superiority and the Dumb Jock Stereotype." In R. E. Lapchick (Ed.) Sport in Society: Equal Opportunity or Business as Usual? Sage, Thousand Oaks CA, pp. 193-202.
Sauer, Raymond D., 1998, "The Economics of Wagering Markets", Journal of Economic Literature, Vol. 36, No. 4, pp. 2021-2064.
Sauer, Raymond D., Brajer, Vic, Ferris, Stephen P., and Marr, M. Wayne, 1988, "Hold Your Bets: Another Look at the Efficiency of the Gambling Market for National Football League Games", Journal of Political Economy, Vol. 96, pp. 206--13.
Schollaert, Paul T., and Smith, Donald H., 1987, "Team Racial Composition and Sports Attendance", Sociological Quarterly, Vol. 28, pp.71-87.
Snowberg, Erik and Wolfers, Justin, 2010, "Explaining the Favorite-Longshot Bias: Is it Risk-Love or Misperceptions?" Journal of Political Economy, 118(4), pp. 723-746.
Stone, Jeff, Perry, Zachary W., and Darley, John M., 1997, "'White Men Can't Jump': Evidence for the Perceptual Confirmation of Racial Stereotypes Following a Basketball Game," Basic and Applied Social Psychology, Vol. 19, No. 3, pp. 291-306.
Stone, Jeff, Lynch, Christian I., Sjomeling, Mike and Darley, John M., 1999, "Stereotype Threat Effects on Black and White Athletic Performance," Journal of Personality and Social Psychology, Vol. 77, No. 6, pp. 1213-1227.
Wolfers, Justin, 2006a, "Diagnosing Discrimination: Stock Returns and CEO Gender", Journal of the European Economic Association, Vol. 4, No. 2-3, pp. 531-541.
Wolfers, Justin, 2006b, "Point Shaving: Corruption in NCAA Basketball", American Economic Review, Vol. 96, No. 2 (May, 2006), pp. 279-283.