Wednesday, June 18, 2008

Does the NBA have an Officials Problem?

The NBA finals are now finished and a hearty congratulations to the Boston Celtics for winning the NBA championship this year. Tooting our own horn, we predicted this before the beginning of the season, although we took the Dallas Mavericks instead of the Los Angels Lakers.

How could we have been wrong about the Western Conference team? Could it be due to irregularities by NBA officials? I personally do not think so, but it does give me an excuse to write about some curious behavior by a select few NBA officials in the last decade.

First in 1998, several NBA officials plead guilty to tax evasion by downgrading their first-class tickets for coach tickets and not reporting this as income. Since the league gave the officials the first-class tickets for travel any money received is income. Not reporting this income is tax evasion.

Second - Justin Wolfers - an economist at the University of Pennsylvania and Joe Price a graduate student at Cornell University - wrote a paper on NBA officials and the rate of fouls they call on players by the players race in 2007. What they found in a nutshell is that NBA officials call a disproportionate higher number of fouls on players of a different race. The research was so newsworthy that it made the front page of the New York Times.

The NBA called the Wolfers-Price paper "sloppy and ludicrous." David Stern was quoted saying racism "doesn't exist in the NBA." To refute the Wolfers-Price research the NBA cited their own study claiming the Wolfers-Price paper was wrong. Yet once the NBA's own study was open to review, the statistical results supported the Wolfers-Price conclusions.

As an economist, what I found to be the most interesting aspect of the paper is that individuals that are scrutinized by the league, the media and fans still have a tendency to make calls that are disproportionately biased based on race, which economists called taste-based discrimination as opposed to overt discrimination. This suggests that while race relations are making strides, there is still much that the human race must do to erase racism. A great article on what if the paper is correct should be read by anyone seriously interested in this topic.

No sooner did the Wolfers-Price controversy die down did NBA official (Tim Donaghy) plead guilty to felony charges for taking cash payoffs from gamblers and betting on games he officiated. Then earlier this month Donaghy alleged the league and some NBA officials conspired to extend some NBA playoff series in 2002 and 2005. So egregious was the officiating in Game 6 of the 2002 Lakers-Kings series that Ralph Nader wrote a letter to David Stern complaining about the officiating. NBA Commissioner Stern again has refuted any wrong doing by NBA officials - except for Donaghy. Donaghy also claims the league discouraged officials from calling technical fouls on star players to increase TV ratings and revenues.

If there is a systematic problem what should be done? Some have advocated that NBA officials be separate from the league.

I think ultimately NBA (and other league) officials need incentives that promote better officiating. Here's where economics can lend a hand. If the league and the players union were to allow officials to be separate from the league, then a performance measure could be produced and publicly released so that the officials performance could be viewed as openly as the NBA player - via the players basketball statistics. Then each party could evaluate the performance of the official and have a good idea of their game-by-game performance. As of now, the league tells us their officials are heavily scrutinized, but the public is unaware of the results as are the owners, coaches and players.

My solution would help at avoiding any game-fixing by officials, but not do much for the first two problems. The first problem could be corrected by only provided coach sets to NBA officials, the taste discrimination is a much more difficult issue to fix.

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