Economically illiterate newspapers

That your average newspaper is not economically literate will not come as any surprise. I've thought for sometime that newspapers in New Zealand don't serve their readers well when it comes to economics. The New Zealand Herald publishers Matt McCarten, for example, or The Press, John Minto. But I now discover that the problem isn't confined to New Zealand. Mark Koyama at the Oxonomics blog has a great example of the problem from the Guardian newspaper in the UK. Koyama writes

Have a look at this article documenting the "costs" of England, Wales and Scotland failing to qualify for Euro 2008.

For the first time in 14 years, not a single home nation has qualified, leaving Wayne Rooney time for a lavish stag party in Ibiza and the rest of Britain wondering just who to support. It is an absence that is set to prove more than just a sporting embarrassment. Estimates of the cost to the economy of England's failure to qualify rise as high as £2bn.

Koyama then asks the obvious question: What evidence do they have for this? The answer from the Guardian being

The British Retail Consortium estimated that the ultimately doomed run triggered spending of £1.25bn on consumer goods in pubs and clubs, and that missing out on a place in the finals of Euro 2008 will result in a £600m spending downturn. Carlsberg reckons brewers alone will lose £15m in British sales, compared with a tournament featuring England.

But as Koyama points out

Evidently all of the money that would have been spent on beer is going to disappear altogether!

If the money isn't spent on beer then what happens to it? Well the odds are it will be spent on something else, so where does the economic downturn come from? The same amount of money still gets spent.

But it gets worse. Mark Koyama then quotes one Simon Chadwick, professor of sport business and marketing at Coventry University. Chadwick says

For every football tournament that we are not part of there are serious ramifications. When football teams do well there is a buzz and as a consequence people tend to spend more and productivity has to rise to meet that.

Now here is the answer to New Zealand's productivity problems. We need more football tournaments!

I wonder if rugby tournaments would work just as well? Lets have the Super 14 twice a year and induce a productivity explosion!