Trying to understand why your centre-forward chooses to shoot from a tight angle rather than squaring to a team mate in space, or why a club would choose to spend millions on an unknown (to many) striker from overseas is not really what Amos Tversky and Daniel Kahneman had in mind when defining the theory of Behavioural Economics.
Up until the 1980’s, standard economic thinking was dominated by the idea of the “Rational Economic Man”, a theory first expounded by Adam Smith in his 1776 work, The Wealth of Nations. He said that businesses, and thus winding forward by two hundred years, football clubs, will charge as high a price as possible for admission, not caring whether fans can actually afford to come or not. If fan A is priced out of the market, then he will be replaced by Fan B, with his half and half scarf on. But that isn’t Smith went on to suggest that, defacto, most fans are actually fickle and thus make decisions of whether to attend was based on costs and the benefit they may derive – i.e how much will it cost them and will the team win?
Tversky and Kahneman realised during their research that football fans were not as Smith had described as being “rational” but were irrational beings who would follow their side through thick and thin, spending ridiculous sums of money for any pieces of plastic tat with a logo on. Countless marriages have been ruined over the last hundred years because football fans love their teams more than their partners. Fans attend games week in, week out, in some cases already knowing in their heart of hearts that they will witness an abysmal performance and have a great day out spoilt by ninety minutes of football. They act in an irrational manner which is the basis of the Theory of Behavioural Economics.
It isn’t known if the two Israeli professors of psychology at The Hebrew University in Jerusalem were regulars at The Teddy Stadium in the city but if the did used to pop down in between lectures then they would have noted that the behaviour, attitude and outlook of the fans was very unpredictable when the circumstances were uncertain. If a team isn’t doing well then in most instances attendances will fall away. If the “product” on offer isn’t up to the normal standard (think here about the English League Cup and major teams fielding weakened teams) then demand for tickets falls. Whilst Dave may be the most fanatical Everton fan in the world, would he still want to attend a game at Goodison Park if he knew that the club and the manager took it so seriously that they were going to play a team of youngsters who had never had a sniff of first team action before?
Last season after Christmas the crowds at The Dripping Pan started to drop. The team wasn’t playing well, games were being shifted to midweek, consequently impacting on the ability of away fans, and some home fans, getting to the game from work and bad weather made Holby City and Masterchef a better, and cheaper alternative. Being Fans faced a decision as to whether they would come and see us draw or lose on a Tuesday night or stay at home and watch the TV. With the outcome relatively predictable, football fans act rationally, deciding to stay at home in the warm, earning browny points from their partner and kidding themselves they are having a better evening, whilst secretly checking the action on Twitter every few minutes.
But give fans some good news like a new signing which increases the odds, albeit slightly, of a win and fans will manage to leave work early to travel to the middle of nowhere on a Tuesday night to support the team.
Tversky and Kahneman hypothesised that fans will travel hundreds of miles, in the middle of nowhere and involving a 5 mile trip to the nearest station because they have some decent pubs and the team have a good record there but will shun a more local trip to a ground where the team haven’t won in years, the best players are injured and there are no pubs within 3 miles of the ground.
In summary, football fans when faced with making a decision where the outcomes are uncertain do not think about the facts rationally in terms of “how much will it cost me to watch us play away game at Margate?”. They think about the chance to visit a new ground, a decent pub, great football food and the opportunity to give a goal keeper some friendly stick. This, in summary, means that fans are not 100% rational, which we all knew anyway and could have saved Tversky and Kahneman a hell of a lot of research work.
And that, ladies and gentlemen, is the theory of Behavioural Economics.