The University of Houston will break ground soon on an indoor football practice facility, which hardly seems like a story of economic interest. It turns out practice facilities illustrate a common confusion, even among economists, about costs. As Nobel Prize-winning economist James Buchanan explained in Cost and Choice, goods and services have no cost independent from many choices we make.
Houston is vying for a spot in the Big 12 Conference, which reportedly will expand soon. As a lifelong college football fan who has worked in higher education my whole career, I find conference realignment fascinating. Houston is spending over a quarter of a billion dollars upgrading its athletics facilities to Power 5 conference standards merely to strengthen its Big 12 prospects. A season-opening win over Oklahoma certainly helps make the Cougars look ready for the Big 12 on the field.
Houston’s upgrades include a $20 million indoor practice facility, which caught my attention. When did indoor practice facilities become a necessity? Such facilities are certainly common now in Power 5 conferences; with Florida recently announcing plans, all of the SEC schools will have indoor facilities. But college football was played for decades without indoor practice fields.
Indoor practice facilities contribute to the escalating cost of major college football. Should this be so? Here’s where choice comes in. The facilities are clearly useful, allowing regular practices during inclement weather. But teams have other options, like practicing outdoors if it isn’t raining too hard, or watching film. Currently the Cougars will take buses to the Houston Texans’ indoor facility, which hardly seems like the end of the world. Once a school decides to build a facility, more choices must be made. Is a full 100-yard field needed, or only a 50-yard field? Should the roof be high enough to allow punting? Should the facility be climate controlled?
Choices about dozens of other factors further shape football costs, like the number and salaries of the coaching staff and graduate assistants, the quality of the weight and locker rooms, and so on. No laws of nature tell us exactly what must be used to field a football team. Expenditures can be calculated for the choices actually made, but would differ if other choices were made. Sun Belt conference schools like Troy make different choices than SEC schools, and field teams for much less.
The same principle applies to other goods and services. Take the case of health care, whose “cost” has been rising faster than inflation. Again, incurred costs reflect choices. How frequently should people have checkups? What blood tests should be performed annually? When should colonoscopies, prostate exams, and mammograms be performed? Should mental health care and chiropractors be covered? Costs have been rising, based on the choices we have made.
These choices also reflect values. Houston Coach Tom Herman has used the line “charge it to winning” to justify extra expenses to the university’s athletics director. Administrators’ acceptance of this line reflects value judgments, first that the spending contributes to winning, and second that winning is worth the cost. Similarly, decisions about spending millions of dollars to save, extend, or improve the quality of lives also reflect values.
Too many economists never learned Professor Buchanan’s lesson, and instead believe that THE cost of a hospital stay or operation exists. Consequently they believe if we diligently audit and monitor doctors and hospitals, costs can be controlled. This makes it appear plausible that the government can run Medicare and Medicaid without making choices about health care for us.
Why does the economics of indoor football practice matter? When we change who pays the cost of medical care (or education, or anything else), we also typically change who gets to make decisions, since whoever pays the bills typically calls the shots. Changing who makes decisions changes the values applied. The idea of having others pay for us is inherently attractive. Paying for ourselves, however, is the only way to ensure that the choices reflect our values.
Daniel Sutter is the Charles G. Koch Professor of Economics with the Manuel H. Johnson Center for Political Economy at Troy University and host of Econversations on TrojanVision. The opinions expressed in this column are the author’s alone and do not necessarily reflect the views of Troy University.