Thaler on Soccer
My colleague Richard Thaler writes about his recent experience at economics conferences:
Over the last month, one question seemed to be on everyone’s mind at the economic conferences I attended in Europe: How did referees miss a goal that England scored against Germany in their World Cup match?
It is certainly my experience as well that European economists are soccer fans first and foremost.? Economics is a distant second when it comes to what they care about.? When my former colleague Pierre-Andre Chiappori would introduce me to French economists, he would start by saying I won the Clark Medal, or I was editor of a fancy journal or some such thing.? The French economists would congratulate me politely, but without any real sort of recognition.? Then Pierre-Andre would say that I was a co-author with him on a paper about penalty kicks in soccer.?? Suddenly, they would erupt into effusive praise, often hugging or even kissing me in gratitude for that paper.
Inspired by these European dinner conversations, Thaler wrote his New York Times Economic Scene column this week about reforming the way that soccer is refereed, drawing parallels between optimal regulation of financial markets and optimal regulation on the soccer pitch.? His main point: both referees and regulators are highly fallible, so the key to getting good regulation depends heavily on making the job of the regulator easier by picking good, simple rules.