Mario Rizzo points out that economists may be tempted to make too much of Tiger Woods.
UCLA economist Matthew Kahn says that there is a “natural experiment” of the power of the income effect in Tiger Woods’s troubles (HT Greg Mankiw). The fall in income from endorsements should result in Tiger Woods playing more golf tournaments. The relative price (or wage) from the latter source remains unchanged while his income falls. If leisure is a normal good, then less income means less leisure and hence more tournaments.
Possibly. But it is not a test of the labour supply theory. Why not? Economics makes predictions about markets and not individual behaviour. This is a mistake often made by behavioural economists. They (and some of their neoclassical brethren) think that the individual hypothesized in the models is a “representative individual.”
This is quite wrong. As the economist Fritz Machlup argued years ago, the individual here is an imaginary puppet whose only task is to generate predictions about market behaviour. (In today’s intellectual landscape we might modify that to include predictions about aggregations of individuals in non-market contexts.)
So whatever Tiger Woods does there has been no “natural experiment” and no test of Jacob Mincer’s labour economics. We can keep Tiger Woods out of the economics books and leave him in the gossip pages.
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