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Economics Happy Hour Podcast

Economics Happy Hour Podcast

著者： Matt & Jadrian
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 A podcast & newsletter about two economists who love talking about all things economics.

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  • Economics and Sports Betting

    Economics and Sports Betting
    2025/07/13
    Dive into the economic concepts that have helped with the recent explosion of sports betting in the United States. Explore how sportsbooks set odds, the role of information in creating an edge, and why betting markets share some similarities with prediction markets. We briefly unpack the effects of the 2018 repeal of PASPA and discuss how technology has transformed gambling behavior. This week’s conversation highlights both the fun and complexity of modern sports betting.In this episode, we discuss:* How sports betting odds are set and why sportsbooks aim to balance bets.* Why some bettors can gain an edge and how information affects outcomes.* The economics behind parlays, money lines, and house margins.* How the 2018 Supreme Court ruling changed the legal landscape.* And a whole lot more!Catch up on some old episodes:You can also listen to us on Google Podcasts, TuneIn Radio, and Apple Podcasts. If one of these is your go-to podcast service, be sure to rate us and subscribe! Watch this episode on YouTube:Some show notes:We recorded this week’s episode right before Game 7 of the NBA Finals and right after recording our episode on Bobby Bonilla Day. We decided to stick with the sports theme, but our drinks have changed. Eric opted for a glass of water to combat the heatwave sweeping across most of the U.S. at the time, while Jadrian went with Best Day Brewing’s Sea Salt and Lime non-alcoholic cerveza. Matt snagged a Gorb Hazy IPA from Oliphant Brewing on his recent trip to Minnesota.Over the past few years, the amount of ad space dedicated to gambling sites has increased dramatically. That’s due in part to the repeal of PASPA in 2018, which made it easier for states to legalize sports gambling. We brought on our friend Eric Dunaway from Wabash College to help provide some insight into how the sports gambling industry ballooned from underground operations and Nevada-only betting to nationwide, app-based access that includes bets as small as a dollar. Sports gambling is different from traditional gambling in a variety of ways, but perhaps the most interesting to economists is that the outcome of the game is not based on probabilities like traditional casino games. Because of how often blackjack hands are played or roulette wheels are spun, it’s a lot easier to estimate the expected win probability for any given bet. That’s not possible with sports games because we only ever see one observation. As a result, sportsbooks are more interested in “setting lines” rather than trying to predict the outcome of a game. Eavesdrop on some sports gamblers, and there’s no doubt you’ll hear them reference a money line: the initial distinction between favorites and underdogs. Even one of the simplest bets is structured in a way that ensures a profit for the casinos by baking in a “vig” regardless of the outcome. While house edges are fixed in games like roulette, sports betting allows for subjective analysis and the potential for informed bettors to gain an edge.The second half of this week’s episode focused on the behavioral economics aspects of sports gambling, including how fans may bet emotionally on their teams and the ways sportsbooks use boosts and promotions to attract money. Sportsbooks rely on more than just math; they also leverage psychology. Many apps use flashy celebration graphics and real-time win tracking to create a sense of excitement, while quietly downplaying losses. These design choices can make betting feel more like a game than a financial risk. Perhaps more concerning, sportsbooks are now partnering with some universities to present gambling as a way to support college athletics. While framed as sponsorship, we’re not entirely sure it’s appropriate to normalize betting among young adults with blurred lines between supporting your school and engaging in risky financial behavior. Perhaps the one plus side of the rapid growth in sports gambling is that we have a lot of young people passionate about statistics. Let’s hope that passion extends to more responsible financial decisions.This week’s pop culture references:In Back to the Future Part II, the antagonist steals the Time Machine and delivers a sports almanac to his younger self in 1955. With decades of future game outcomes in hand, he builds a gambling empire by always betting with perfect information. The scene ties directly into this episode’s theme: if you know more than the market, even slightly, you can win big.In Casino, Robert De Niro plays a handicapper who works for the mob, helping them set accurate betting lines on sports events before eventually taking over a casino. His role shows how valuable expert analysis and insider knowledge can be when money is on the line. Matt highlights Nate Silver’s new book, On the Edge, where Silver reflects on his own attempt to become a professional NBA gambler. Despite his strong background in statistics and data, he admits he struggled to profit consistently. ...
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    46 分
  • Bobby Bonilla Day and the Value of Annuities

    Bobby Bonilla Day and the Value of Annuities
    2025/06/26
    In this episode, we explore the economic concepts behind Bobby Bonilla Day, when the former MLB player annually receives a $1.19 million check from the Mets even though he hasn’t been on the roster since 1999. We unpack how deferred compensation works and whether the Mets’ decision makes financial sense. We dive into annuities, interest rates, and the assumptions that shape financial decisions. Using behavioral economics and finance concepts, we ask: Was this a smart move for The Mets and for Bonilla, and what lessons can we take from it?In this episode, we discuss:* Why the Mets agreed to pay Bobby Bonilla for 25 years instead of a lump sum* The role Bernie Madoff’s scheme played in the Mets’ financial decisions* What makes annuities appealing for athletes and retirees* The behavioral economics behind protecting money from ourselves* And a whole lot more!Catch up on some old episodes:You can also listen to us on Google Podcasts, TuneIn Radio, and Apple Podcasts. If one of these is your go-to podcast service, be sure to rate us and subscribe! Watch this episode on YouTube:Some show notes:There’s a heatwave across the United States, so all of today’s beverages were nice and cold. Matt enjoyed a Moscow Mule to beat the heat, and Jadrian cleared out his fridge with an Almost Famous Pickle Beer from East End Brewing. We’re joined this week by Eric Dunaway from Wabash College to talk about today’s topic. He’s opted for a Mountain Dew Summer Freeze Zero Sugar. Long-time listeners may remember Eric from a few years ago when he joined us to talk about the economics of poker.Bobby Bonilla Day is more than a quirky sports headline; it's an ideal chance to talk about annuities and deferred compensation. Let’s lay out the story first. It’s 2000, and the New York Mets owe Bonilla $5.9 million. Instead of paying him outright, they get Bonilla to agree to defer his payment for 10 years and then pay him $1.19 million annually from 2011 to 2035. That arrangement totals nearly $30 million, far more than the original sum. Why would the Mets do this?The logic at the time was based on interest rates and investment expectations. The Mets assumed they could earn 12% on their other investments, which was much more than the 8% implied by Bonilla’s annuity. Unfortunately, their confidence came from Bernie Madoff’s fraudulent returns. When that Ponzi scheme collapsed, so did the rationale behind the deal. The Mets tried to fold Bonilla’s contract into their Madoff litigation, but a judge dismissed the attempt.The deal highlights why annuities are valuable. Bonilla secured a guaranteed stream of income, starting at age 47 and continuing until he’s 72. This protects against the risk of outliving savings or making poor investment choices, especially relevant given how often athletes struggle financially post-retirement. From a personal finance standpoint, Bonilla’s deal has aged well.But for the Mets, who didn’t earn the returns they were expecting, why not just buy out the rest of the annuity and be done with it? One possible explanation is that the yearly payment is small relative to their total payroll, and the team’s current owner is a billionaire. It’s likely just easier for both sides to let the payments continue and reap the benefits of yearly publicity.This week’s pop culture references:We leaned into the baseball theme with a discussion of our favorite baseball movies. Because we’re good economists, we need to mention Moneyball, but that isn’t our favorite baseball movie. Eric and Matt both picked Major League, while Jadrian went with A League of Their Own. The episode also featured some pop culture tie-ins to the financial side of the story. Matt recommended Black Edge, a book about Mets owner Steve Cohen, and The Wizard of Lies, which dives into the life and scandal of Bernie Madoff, both key figures in the backdrop of the Bobby Bonilla contract. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit econhappyhour.substack.com
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    38 分
  • Economics of Study Abroad

    Economics of Study Abroad
    2025/06/05
    Matt and Jadrian explore several aspects of studying abroad. These include the economic benefits students gain, how study abroad programs differ from a typical vacation, and why these experiences often have a lasting impact on students. Their conversation includes insights from their own experiences as students and faculty leading trips overseas. They also examine the financial and educational considerations that shape access to these programs.In this episode, we discuss:* Why study abroad isn’t just an extended vacation * How cultural immersion challenges students and promotes maturity * The role of faculty in balancing structure with independence * Study abroad as a tool for career skills and job interviews * And a whole lot more!Catch up on some old episodes:You can also listen to us on Google Podcasts, TuneIn Radio, and Apple Podcasts. If one of these is your go-to podcast service, be sure to rate us and subscribe! Watch this episode on YouTube:Some show notes:Jadrian is back from the CTREE economics teaching conference and already deep into planning sessions for JET SET 2025, which will take place in St. Louis, Missouri. Meanwhile, Matt just wrapped up an experimental auction workshop at Michigan State. It's been a packed week (as usual), making this the perfect time to pause and catch up. With the sun out, Jadrian reached for an Electro Lime Circa de Cerveza from Best Day Brewing—a non-alcoholic Mexican-style lager with sea salt and lime. Matt stuck to his IPA roots with a Founders Mortal Bloom Hazy IPA.With Jadrian heading to England next week, we took the opportunity to talk about the value of studying abroad for both students and the faculty who lead them. We kicked off the episode with some personal reflections on our experience: Jadrian reflecting on his time as a student in Mexico, and Matt sharing his experience running a semester-long program in the UK.Study abroad isn’t like a typical family vacation. It pushes students to adapt quickly, often outside their comfort zones. Navigating cultural differences, language barriers, and unfamiliar logistics can be challenging, but those same stressors create space for meaningful growth. When done well, the experience becomes a powerful learning opportunity.One important decision students face when considering studying abroad is how long they want to be away. Jadrian has led week-long programs that pack in a lot over a short time, but those don’t leave much room for students to explore independently. In contrast, semester-long programs offer more flexibility and unstructured time to experience a place more fully.The tradeoff, of course, is cost. Shorter trips are usually far more affordable than multi-month programs. Still, no matter the length, some of the most valuable moments happen when students are left to navigate on their own, whether it’s figuring out local transit or working through challenges with a travel partner.Those challenges can feel intimidating in the moment, but they often pay off in the years that follow. Both Jadrian and Matt see study abroad as a transformative experience, and one that also helps students stand out professionally. It gives them real, lived examples to draw on during job interviews, especially for questions about conflict resolution or navigating unfamiliar situations. Just as importantly, it signals to employers that the student is willing to take risks and step outside their comfort zone to engage with new cultures.Finally, it's worth recognizing the economic impact on host countries. Study abroad students aren’t just paying tuition, they’re also participating in the local economy in other meaningful ways. They rent apartments, buy train tickets, eat out, and shop like short-term residents. While we’ve questioned the economic impact of quick tourism events, like weekend concerts, these longer study abroad programs bring sustained spending. In many ways, it’s like adding a small group of temporary locals, which can be a real benefit for the communities that host them.This week’s pop culture references:Jadrian stayed on theme this week with a clip from Eurotrip, where a group of American travelers are amazed at how far their money goes abroad. It's a fun example of purchasing power parity—the idea that the same amount of money can buy more (or less) depending on the country you’re in.Matt highlighted the new Paramount+ series Landman, which follows a struggling landman working for M-Tex Oil in the oil boomtowns of West Texas. The show offers a look at the people behind oil exploration and touches on several economic themes. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit econhappyhour.substack.com
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    50 分

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