Are Professional Athletes Overpaid? The Case of National Basketball Association

Student: Kozyrin Anton

Supervisor:

Educational Programme: Joint HSE-NES Undergraduate Program in Economics (Bachelor)

Final Grade: 8

Year of Graduation: 2017

Professional athletes are known for their controversially large salaries, largely perceived as unfair. I define ‘fair wage,’ in accordance with neoclassical economics, equal to the Marginal Revenue Product of a worker. Using data on team financial and basketball statistics through the seasons 2007-2016 I estimate the marginal revenue of a single win to the team. I then use panel data on players’ salaries and their personal contributions to team wins to estimate the marginal change in salary the player receives from adding a win to team record, keeping in mind that current wins only affect future salaries. My findings suggest that players are in fact being underpaid compared to their Marginal Revenue Product, with star players suffering from underpayment the most

Full text (added May 15, 2017)

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