The Economic Value of Popularity: Evidence from Superstars in the National Basketball Association

50 Pages Posted: 19 Mar 2020

See all articles by Scott Kaplan

Scott Kaplan

University of California, Berkeley - Department of Agricultural & Resource Economics

Date Written: February 24, 2020

Abstract

Many industries are impacted by "superstars," where a select few individuals add tremendous economic value. This paper estimates fan willingness-to-pay for superstars in the National Basketball Association, and, in particular, distinguishes between demand for player skill versus player popularity. Using microdata from an online secondary ticket marketplace and plausibly exogenous player absence announcements, I find 4-16% ($7-$42) reductions in prices when superstars are announced to miss games. Additionally, LeBron James and Stephen Curry exhibit even larger impacts when isolating away game absences--21% ($75) per ticket for LeBron and 18% ($55) per ticket for Curry. The results suggest popularity is a more significant determinant of willingness-to-pay than skill, and in line with previous literature on superstars, popularity predicts price impacts convexly. This paper provides a novel methodology to estimate superstar value, and has implications for players, leagues, franchises, and ticket companies.

Keywords: superstar, popularity, National Basketball Association, secondary ticket marketplace, difference-in-differences, event study

JEL Classification: D01, Z20, J44, L83, C55, C33

Suggested Citation

Kaplan, Scott, The Economic Value of Popularity: Evidence from Superstars in the National Basketball Association (February 24, 2020). Available at SSRN: https://ssrn.com/abstract=3543686 or http://dx.doi.org/10.2139/ssrn.3543686

Scott Kaplan (Contact Author)

University of California, Berkeley - Department of Agricultural & Resource Economics ( email )

Berkeley, CA 94720
United States

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