Skills, Performance, and Earnings in the Tournament Compensation Model

Stephen Shmanske
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Stephen Shmanske: California State University, East Bay

Journal of Sports Economics, 2008, vol. 9, issue 6, 644-662

Abstract: Previous research on professional golf has estimated reduced-form models in which earnings are a function of skills measured as year-long averages. Using individual, tournament-level data, this article makes three improvements. First, the use of tournament-level data removes measurement error in the skills by adjusting the data for tournament-level idiosyncrasies such as the effect of altitude on driving distance. Second, the collection of microdata allows one to examine variance and skewness of the skills distributions in addition to just the mean. And third, the article estimates a structural model in which golfers use their skills to perform well in competitions by shooting low scores at one level, while those score distributions underlie the tournament earnings of the golfers at the other level. Tighter estimates of the coefficients are resolved and the overall adjusted R 2 improves from 0.36 to more than 0.90.

Keywords: economics of golf; economics of sports; tournament compensation model; skewness in earnings functions; production theory; measurement error (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:jospec:v:9:y:2008:i:6:p:644-662

DOI: 10.1177/1527002508317469

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