Finding a Way Around the Rules
Source Newsroom: Wake Forest University
From sand wedge to cellphones to stock sales: restrictions often have unexpected outcomes
Newswise — Winston-Salem, N.C. - New research by Wake Forest University sports economist Todd McFall shows restricting improving technology does not always have the expected outcome. His study suggests that understanding how people react to regulations can aid in policy-making.
After a ban on superior high-spin golf club grooves implemented at the beginning of the 2010 golf season, McFall decided to compare golfers’ performances before and after the technology was prohibited. Without clubs to promote spin and increase accuracy, particularly around the green, it might be expected that scores would go up. The opposite happened. The number of shots taken to complete a hole decreased from a variety of yardages and locations on a course. The differences were statistically significant when golfers played from fairways, light rough and sand traps.
“Following the technology ban, golfers employed more cautious strategies that in many cases improved their scores substantially by increasing the likelihood their ball would reach the green,” McFall says. “Players changed their behavior by choosing to play more conservatively. After the technology ban, they were no longer playing darts with their shots to the green. Instead, they compensated by being satisfied with just getting on the green more often, thus giving them better control of the ball for their next shot.”
The idea for his research has its roots in a 1970s study related to mandatory seatbelt use and safety. The Peltzman effect, named after economist Sam Peltzman, hypothesizes that people tend to react to a safety regulation by increasing other risky or “offsetting” behavior. After the institution of mandatory seatbelt laws, Peltzman found that people tended to drive more recklessly. Regulations meant to protect car occupants from the consequences of bad driving actually seemed to encourage bad driving.
McFall’s research is the first to look at offsetting behavior from an opposite approach, when an improving technology is prohibited rather than required.
Other examples where this research might have policy-making applications is the National Transportation Safety Board’s recommendations to ban drivers from using hands-free cell phone devices, including wireless headsets, and proposed legislation limiting computer-modeled stock market transactions.
“Economics is like water going down a hill,” says McFall. “Regulation is like a rock that forces water around it. Like the water finding a way around a rock, people will find a way around the regulation. So, understanding the relationship between people’s risk tolerance and responses to technological change can aid in policy-making decisions in a number of settings.”
“Pandora’s groove: analyzing the effect of the U-grove ban on PGA Tour golfers’ performances and strategies” was published in Applied Economics Letters. For his research, McFall had access to the PGA Tour’s ShotLink database, which contains a record of every shot a professional player takes on the tour.