Market Madness recap

To: Market Madness Tournament Players & Bookies
From:   Allen R. Sanderson, Department of Economics
In re: The 16 Teams in Retrospect
Date: October 6, 2009

Dear Friends (or BFF—Best Former Friends),

Thanks to all of you who played Market Madness over the past few weeks. I hope you had some intellectual (aka University of Chicago) fun in the process and perhaps even learned something, or that it stirred some interest in you to read more about your least-favorite team or industry. It was fun for me to collaborate with the Magazine’s editor and her colleagues on this project.

In thinking about, and explaining, the discrepancies between alumni/friend voting and my own ex-ante completion of the brackets and explanations, I offer the following comments:

First, there is what I would call a sample selection bias. That is, I have no information on the “voting public” in this case. We know, for example, that gender differences exist in terms of political leanings, views about competitive versus cooperative behaviors, etc. Furthermore, students sort themselves into College majors that reflect, in part, their political and societal preferences. (At Chicago, about 59 percent of students take at least one economics class, and that experience may well influence their choices here.) Inasmuch as I/we did not sort by other factors, there is no way of knowing how representative—and representative of what—the tallies are.

In part, I am sure that the divergence of your picks from mine reflects the opinion of economists in general versus the general public—even a well-informed public. Whether the topic is gasoline prices, immigration, outsourcing, the level of U.S. foreign aid, tax policies, or international trade, economists simply think differently than the representative American about what constitutes the truth. (In addition, academic economists tend to be far less liberal than their social-scientist and humanities colleagues.)

We will have a good test of this assertion and observation in January 2010: the American Economic Association, the principal “parent company” for academic and real-world economists, holds its annual meeting—around 8,000 members attend, this year in Atlanta. The official in charge of putting together sessions and complementary activities was intrigued about our tournament and asked for the Magazine’s permission to reprint the brackets and my somewhat flip team descriptions in the conference program. So in the spring we should have good data from those professionals to compare with the voting patterns of University of Chicago alumni. We will get that AEA data for you later in 2010.

I would be willing to wager part of the University’s endowment that most economists, picking from the 16 original factors given in Market Madness, would have the Moral Hazards pitted against the Foreclosures in the final game.

Sincerely,
Allen Sanderson

October 6, 2009