Welcome to Some Sports Economics, a six-part video series explaining economic concepts through sport, by La Trobe University senior lecturer, Liam Lenten.
Liam says: “I am motivated to better explain basic microeconomic concepts – in such a way to appeal more to the sensibilities of my third-year undergraduate students. That is, using a frame of reference that they can easily relate to, in a more naturalist approach. This video series is the culmination of these initial efforts.
"I hope that by making them available on The Conversation, members of the general public can also benefit by gaining a new appreciation of the dismal science. I trust that these videos can play a small role in convincing you, too, that economics is about so much more than just interest rates and current account deficits.”
In this first video, Liam explains the link between the concept of perverse incentives and the 1994 Caribbean Cup match between Barbados and Grenada.
You can watch Liam explain the video:
Or read through the transcript below.
Hi, I’m Liam Lenten…your host! Sport is full of apparent anomalies. We’ll raise a handful of them in this video series. But usually there’s an economic reason why we observe what we observe. Each of these six videos will introduce an economic concept (which you may or may not know) and will also introduce a tool by which the concept will be applied – all in an effort to explain these anomalies.
And what better way to commence the series than by way of the concept of incentives (in this case, perverse) and strategies in economics, and also the policies used as the tools to optimise outcomes.
Now, you would think a basic winning tactic in the round-ball version of football would be to kick the ball between the posts. Your opponent’s posts, that is.
However, the 1994 Caribbean Cup involved a first-round match between Barbados and Grenada, in which Barbados needed to win the match by two clear goals to advance to the knockout-stage. Even winning the match by merely one goal would see Grenada advance instead.
Simple enough so far, but the governing body of the tournament stipulated a very quirky rule (supposed to reward teams for winning close matches, but laden with potential for perverse incentives) that drawn games would proceed to extra-time, in which goals would count double. And, by virtue of addition of sudden-death, there could be only one. This supposedly simple rule created a horribly weird match.
With less than ten minutes remaining in regulation time, Barbados led 2-0 (exactly the lead they required) and began to play very defensively, as one might expect. However, in the 83rd minute, Grenada pulled one back, making the score 2-1 (enough to send them through instead). Barbados once again proceeded to attack, but was thwarted at every turn. With only three minutes left, the Barbados players contemplated their options.
To advance, they still needed to score an extra goal allowing them to win by two, but they had another less obvious option afforded to them by virtue of the idiosyncratic rule mentioned earlier, which (you might have guessed by now) they chose instead – they scored a deliberate own-goal, levelling the game at 2-2 intended to send the game to extra-time, where they would have an additional 30 minutes to score, and because of that rule yet again, one goal (counting as two) would be enough to kill the contest immediately in their favour.
This is not even yet the most peculiar phase of the match. Now, Grenada (initial shock abating) realised that what they needed to do next was score a goal—at either end—to, on one hand win the game, or on the other lose by one but at least avoid extra-time – both of these means would be equally sufficient to achieve the ends, and so the Grenada players turned around from the re-start and headed for their own net. From here, the comedy really intensified as the Barbadians had anticipated this move and half their players rushed forward to defend the Grenada goal—while the other half stayed back to defend their own (successfully, might I add) until the end of injury time.
Ultimately, Barbadian ingenuity was rewarded, as one of their strikers scored the winning goal four minutes into extra-time, sending Barbados through to the following phase. It’s worth noting that no penalties were handed down by FIFA to the Barbados Federation on the grounds that they were genuinely trying to achieve the best outcome in the overall context of the tournament. As expected, the Grenadians were not amused – manager James Clarkson was furious. “I feel cheated; the person who came up with these rules must be a candidate for the madhouse”.
For those with an interest in the World Game, your “assignment” is to go on-line and find out as much as you can about an infamous 1982 FIFA World Cup match between Austria and the then West Germany, which produced more than an hour of tacitly collusive goalless football (not to mention utterly boring) and see if you can understand the perverse incentives at play in that case. Needless to say, policies were altered thereafter to ensure that the final pair of first round matches in the same group, would be played simultaneously to help circumvent such incidents in future.
Anyway, all this sounds the warning of the Law of unintended consequences. Governments have to be mindful of these possible perverse incentives in formulating all sorts of policy, from taxation to health to education. Yes, this stuff is undeniably important to the bigger-picture of governance and society.