Archive for July 28th, 2021

When the stadium goes silent: How crowds affect the performance of discriminated groups

July 28, 2021

Mauro Caselli, Paolo Falco and Gianpiero Mattera in this voxeu research show that when there are no spectators in football matches, African players do well:

Racism in football returned to the headlines recently following racial abuse of England players on social media after the final of the UEFA European Championship. How does the harassment of supporters affect discriminated athletes? Using the COVID-19 lockdown as a natural experiment, this column compares the performance of individual football players in the Italian Serie A with and without fans at the stadium. The evidence shows that players of African origin, who are most frequently targeted by racist abuse, perform better in the absence of supporters.

Our results fit a broader framework that stretches beyond the world of sports, whereby individuals who belong to historically discriminated groups perform worse than their peers when the task takes place in an environment in which discriminatory behaviour occurs manifestly. More generally, the analysis fits within an ever-growing literature documenting the role of racial discrimination in driving labour market disparities (e.g. Deschamps and De Sousa 2015, Lang and Spitzer 2020, Aizer et al. 2020, Bayer and Charles 2018). Furthermore, since the research shows that discriminated players do better in the absence of fans while no other groups do worse, the evidence suggests that racial harassment leads to an overall decrease in productivity and efficiency. The issue has also begun to attract the attention of the media and new statistics on the issue have circulated after the release of the working paper, corroborating the findings (e.g. The Economist 2021).

Finally, it is worth pointing out that the results are particularly striking because they concern elite athletes, who are the best in their profession and typically enjoy high earnings as well as enviable social status. Further investigation would be necessary to test the impact of racism on the performance of athletes in lower-ranked leagues, and especially among youth, where one can imagine the impacts of discrimination being even more significant and harmful.

The conclusion of the study is that racism can do economic harm to the football industry. Football, like other sports, thrives on fans from all over the world seeking to watch and emulate extraordinary players who perform beyond the normal. When a significant share of players cannot express their full potential, the ‘beautiful game’ becomes less beautiful and less appealing.

Damning from so called developed world.

Reforming the US macroprudential regulatory architecture

July 28, 2021

US financial system may be neighbor’s envy especially before the 2008 crisis but its regulatory system is owner’s envy. It is a mess with multiple regulators and chaos. How US financial system grew despite such poor regulatory structure is something worth looking. There are some who will argue size is one thing but efficiency is another. US financial system grew in size tracking the economy but its efficiency has followed the regulatory system.

Kathryn Judge and Anil Kashyap in this voxeu article suggest a way forward to reform the macropru regulatory structure of US. The post is based on this yet another report on reforming the US system.

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