New York area Super Bowl making an unexpected, quiet ripple in economy

After it was announced that Super Bowl XLVIII was going to played at MetLife Stadium in the New York City area, many thought that it would generate one of the priciest tickets in history.  As of Thursday, Super Bowl tickets are clocking in at a 12-year low. Why is this the case?

It’s not because of the football. For the third time in NFL history, the Super Bowl features the NFL’s best offense in both yards and points (Denver Broncos), against the NFL’s best defense in both yards and points (Seattle Seahawks). 

In this case, it’s all about economics, and the demand for tickets. The “perfect storm” of geographic distance has combined with multiple seasonal polar vortexes to create blizzard over the New York economy surrounding the game. Although the game is sold out, thousands of tickets exist in secondary markets such as StubHub and TicketExchange. This is where economists have followed ticket demand and price.

On Jan. 21^st, lower level tickets were going for $2,800, and by Jan. 24^th, prices were at $1,700. Overall, median ticket prices have dropped down an additional $500 this week. Now, ticket brokers are hoping that the millionaire-filled New York area market will help bail them out and purchase many of the remaining half-priced tickets.

Ticket prices are not the only thing affected by the current situation. New York area hotels are feeling the pinch as well. Many Seattle and Denver fans are choosing not to travel and stay in New York to attend the game, as the risk of having a cross-country flight delayed for multiple days is becoming very likely, given the recent weather conditions. 

Most Super Bowls in recent years have generated revenues in the 4 to 5 hundred million dollar range for the city in which the game is being played. Economists predict that New York will only receive a portion of that kind of profit this year. Although it is unlikely that the NFL will take a financial hit from lower ticket prices, they are likely to rethink the idea of playing the world’s most popular sporting event anywhere cold for quite some time.

Mark Sanders

Sources:

http://nypost.com/2014/01/27/ticket-prices-plummet-weekend-before-super-bowl/

http://www.cbssports.com/nfl/eye-on-football/24425063/super-bowl-xlviii-you-can-see-broncos-seahawks-for-under-1500

President announces executive orders, pleads with business owners

In his State of the Union address, President Obama announced two major executive orders meant to encourage further economic recovery and growth.

The President announced a new commission, to be led by Vice President Biden, to reform the nation’s job-training programs. The President sees this big-government approach as a solution to what economists call structural unemployment. As new technology and outsourcing has sent good-paying jobs overseas, laid-off American workers, who had years of built up human capital in these fields, are left out of work. A federal jobs-training program is an inefficient way to re-train these workers, though. Let the individual states, all with their own unique economies, develop programs which best meet the needs of the industries within their borders. Better yet, create an environment where businesses can grow and prosper free of the constraints of government regulation. The free markets will pair new workers with these thriving businesses, which will be eager to offer on-the-job training.

In yet another executive order, the President raised the minimum wage for federal contractors to $10.10. This minimum wage might be possible for a government that runs a massive deficit and can endlessly print money, but it is a job killer for the private sector. If forced to pay a higher wage, firms will be forced to lay-off and shorten the hours of many of their workers.

The President pleaded with business owners to voluntarily raise wages for their workers, saying that it would ultimately be good for their firms. If raising wages was so good for business, how would business owners, working alongside their employees every day, fail to see this before a politician in D.C.?

 

Jonathan Howe

Economics and Climate Change

The Economist reported the recent polar vortex that hit the east coast “chipped $3 billion off American output.” It’s not earth shattering that weather impacts the economy, whether for the short or the long run. Economists are beginning to study how long term climate change will alter economic activity. While the cold weather is taking its toll temporarily on the US, a slew of studies suggests that heat and poverty are related, and that a hotter climate may reduce economic growth.

New research shows that “for each 1°C rise in the average temperature of a country, its GDP per head is 8.5% lower. Another study of poor countries alone showed that being 1°C warmer in any given year reduces income per head by 1.4%.” While this does not necessarily mean that if the world’s average climate warms that the world’s economic output will fall by 8.5% across the board, it does mean the correlation between heat and the economy needs to be explored further. Several studies show that tropical countries’ GDP growth was slower in the past few years than the global average from 1965-90. Higher temperatures and droughts affect farm yields, which impacts poor to middle income countries who depend on agriculture.

But, it is important to recognize that a hotter climate will not only negatively impact poor countries, as is the common misconception.

As I’ve learned after just two weeks of taking a course on Global Climate Change, the earth’s climate system is incredibly complex. Understanding the interplay of positive and negative feedbacks, reaction timescales, and different components like ice, vegetation, ocean currents and carbon cycles is daunting without humans in the equation. But human life has become inextricably tied to the climate and the impact of our infrastructure and resource extraction and consumption is still difficult to fully understand. However, scientists have made great strides in their empirical understanding of how our economic activity is both changed by the climate and how it in turn plays a role in climate change. Soon, economic policy in countries like ours will have to move closer towards stemming emissions and promoting sustainability in order to prevent a backward slide.

Source:

http://www.economist.com/news/finance-and-economics/21594252-economists-are-getting-grips-impact-climate-change-weather

Test post

This is a test post for winter 2014.  I hope this is replaced soon by a real post from the class.