Consistency or Heroics: Skewness, Performance, and Earnings on the PGA TOUR

Stephen Shmanske ()

Atlantic Economic Journal, 2007, vol. 35, issue 4, 463-471

Abstract: The structure of the payments in professional golf tournaments is heavily weighted to reward the top performers more handily. On the PGA TOUR, for example, the winner typically receives 18% of the purse, second place receives 10.8%, and so on down to 0.2% for 70th place. This payment structure brings up the possibility that the PGA TOUR is disproportionately rewarding one-time, exceptional performances rather than consistent steady play. To examine the extent of this effect, this paper correlates the 2002 earnings of the top 100 PGA TOUR professional golfers with their average performances, the variance around the averages, and the skewness of the individual distributions of their scores. Mean performance, variance, and skewness are all significantly related to earnings per tournament in the theoretically predicted directions. The research makes connections to and has implications for several topics in the sports economics literature including competitive balance and the hot-hand phenomenon. Additionally, it uncovers a heretofore unappreciated consequence concerning the relationships among the distributions of effort, performance, and remuneration in the tournaments compensation model. Copyright International Atlantic Economic Society 2007

Keywords: Tournaments compensation model; Effort and performance; Economics of golf; Hot-hand phenomenon; Competitive balance; Skewness of performance distribution; J31; L83; C81 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (7)

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DOI: 10.1007/s11293-007-9080-z

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