Academic journal article Contemporary Economic Policy

Willingness to Pay for Amateur Sport and Recreation Programs

Academic journal article Contemporary Economic Policy

Willingness to Pay for Amateur Sport and Recreation Programs

Article excerpt

A contingent valuation method (CVM) survey in Alberta, Canada, allows estimation of the household willingness to pay (WTP) for enhancements in the province's extensive sport and recreation programs. The estimated annual WTP of $18 per household for small enhancements in the programs far exceeds the estimated WTP of households in the United States to avoid the loss of major league sports teams, as determined in previous CVM studies. Those opposed to gambling, which helps to fund the Alberta programs, are more likely to favor using income taxes to finance expansions. (JEL H41, L83)


In recent years, economists have begun using contingent valuation method (CVM) surveys to estimate the value of public goods produced by sports and to determine what factors influence individual willingness to pay (WTP) for sports public goods. They have estimated the WTP for public goods resulting from the construction of a new basketball arena for a Division I power in National Collegiate Athletic Association basketball and from the construction of a stadium to attract a minor league baseball team to a small city (Johnson and Whitehead, 2000); the WTP for public goods generated by a National Hockey League (NHL) team (Johnson, Groothuis, and Whitehead, 2001); and the WTP to keep a National Football League team and to build an arena to attract a National Basketball Association team (Johnson, Mondello, and Whitehead, 2007). In all cases, the WTP fell far short of the subsidies required to build an arena or a stadium in order to keep or attract a team. Coupled with the widely held consensus that sports stadiums and teams result in negligible effects on employment, tax revenues, and income (Baade and Dye, 1990; Baim, 1994; Coates and Humphreys, 2000, 2003; Hudson, 1999; Humphreys, 2001; Rosentraub, 1997), the CVM studies reinforce the conclusion that the subsidies given to most major league teams, stadiums, and arenas do not improve economic efficiency.

The published CVM studies of sports public goods have all focused on WTP for professional or major-college spectator sports, all of which are subject to monopolistic restrictions on supply. The emphasis on big-time spectator sports has obscured the fact that governments also subsidize many other sporting activities, including amateur athletics and recreation programs. Funding sources also extend beyond the conventional taxes posited in the hypothetical scenarios in the earlier CVM studies, including revenues from sources such as gambling. (1)

While amateur sporting activities do not confer major league status on their communities, they may nevertheless instill civic pride. Participation in organized sport and recreation activities may strengthen community bonds by helping people meet fellow citizens they would otherwise not easily meet (Putnam, 2000). The option to participate in a variety of sport and recreation activities may enhance the quality of life in a community even for people who choose not to exercise the option. An example would be the sporting culture associated with cities such as Melbourne, Australia. In addition, the existence of organized sports activities may produce positive externalities by keeping adolescents under adult supervision and off the street and potentially foster qualities such as sportsmanship, teamwork, and leadership. It may also improve the health and well-being of participants and reduce health-care costs.

This paper extends in two important dimensions the literature on the valuation of sports public goods. First, while previous studies have focused on professional spectator sports, the current paper looks at local, amateur, participatory sport and recreation programs in Canada, where opportunities to participate may provide public goods benefits to communities and the funding for which has traditionally come from public sources. Second, the paper incorporates moral norms and the theory of planned behavior (TPB) into a contingent valuation method study, thus extending the methodology of earlier studies. …

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