Does It Pay to Be Unethical? The Case of Performance Enhancing Drugs in Mlb

Louis J. Pantuosco

The American Economist, 2011, vol. 56, issue 2, 58-68

Abstract: The question of “does it pay to be unethical?†is investigated within the framework of Major League Baseball (MLB). The issue of gaining a competitive advantage by operating outside of the rules is first addressed from a marginal benefit and marginal costs perspective. Then, using career data compiled in the 2005 season, regression analysis is performed to estimate the affect of steroids on player salaries. The analysis focuses on whether players are encouraged financially to consume performance enhancing drugs (PEDs). The results reveal a positive relationship between PEDs and salaries. While this result is interesting, the interpretation of the PEDs' specific impact on salaries is difficult to estimate. In separate regressions, slugging average and PEDs were positively correlated, as were PEDs and allstar appearance. With these benefits in mind, it is no wonder why unmonitored players engaged in the steroid epidemic in the late 1990s and early 2000s.

Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:sae:amerec:v:56:y:2011:i:2:p:58-68

DOI: 10.1177/056943451105600208

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