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Friday, March 10, 2006

March madness

It's spring break, but I have to finish a conference paper that I promised months ago. It's due in just over a week.

Nonetheless, I'm bound to watch my share of college basketball over the next 10 days. It's March Madness! Right?

Well, the New York Times had a very disturbing story about college hoops Wednesday in the Business pages. This might just cause you to turn the channel to something else.
Justin Wolfers, an economist at the University of Pennsylvania...calls himself part of a new generation of forensic economists — researchers who sift through data to look for patterns of cheating that otherwise go unnoticed. The best-selling book "Freakonomics" by Stephen J. Dubner and Steven D. Levitt is based partly on this kind of work....

Mr. Wolfers has collected the results of nearly every college basketball game over the last 16 years. In a surprisingly large number of them, it turns out that heavy favorites just miss covering the spread. He considered a number of other explanations, but he thinks there is only one that can explain the pattern. Point shaving appears to be occurring in about 5 percent of all games with large spreads.
A few years ago, this method was used to learn that mutual fund traders were backdating their trades. Wall Street scoffed, but Eliot Spitzer made his name attacking the industry.

The article quotes a former college basketball player from a 1990s article in Sports Illustrated. The guy admitted that he fixed games in exactly the way Wolfers describes. Gamblers profited by betting on his team not to cover the large spread. Still unconvinced?'s Mr. Wolfers's smoking gun: this slacking off seems to happen only when a game is decided by something close to the point spread. Heavy favorites actually blow away the spread just as often as everyone else. But they win by barely more than the spread a lot less often than slight favorites do.

There is a strange dearth of games in which 12-point favorites win by, say, 13 or 16 points. And there are a lot of games that they win by 11 points or slightly less. There is just no good explanation for this.

"You shouldn't have what's happening on the court reflecting what's happening in Las Vegas," Mr. Wolfers said. "And that's exactly what's happening."
In a recent NCAA poll, 1.5% of players admitted that they knew of at least one teammate "who took money for playing poorly." Warning: that's an NCAA powerpoint presentation.

It also reveals that over 2% of college basketball players have "been asked to affect the outcome of a game" and 1.2% of players say a teammate asked "for help in affecting game."

Chew on that while you watch the NCAA tournament. Few of the tournament games involve large point spreads, but most of the teams in the tourney got there because they were good teams that were already heavily favored versus many of the opponents on their schedules.

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