Daniel Sutter: Taylor Swift and the Coase Theorem
The first North American portion of Taylor Swift’s Eras Tour has wrapped up. Ms. Swift structured ticket sales to help her biggest fans, as opposed to her richest fans, attend. Economics’ famous Coase Theorem suggests that this was not possible. Several steps altered the distribution of tickets. First, the prices of tickets were set (relatively) low, an average of about $200. Second, Ticketmaster could not send tickets directly to the secondary market, where prices are set by supply and demand. Finally, fans got codes for a presale, which crashed the Ticketmaster website last November. These steps should have helped Swifties of modest means get seats. Many more fans can pay $100 than $1,000 for a ticket. But who attended? The Coase Theorem addresses this. Nobel Prize winner Ronald Coase argued that scarce resources and valuable property go to those willing to pay the most regardless of initial ownership. Economic efficiency is based on “willing to pay the most,” so the theorem claims that we have efficient use regardless of initial ownership. The Coase Theorem implies that Ms. Swift could not get her biggest fans into the Eras Tour. Why? With normal Ticket Master practices, high secondary market prices would price0 many fans out. But Coase’s argument suggests that rich fans would buy tickets from the big fans getting presale tickets. Ms. Swift’s measures still would benefit her fans. The Theorem says that initial ownership affects who benefits, not who attends. Loyal fans reselling their $100 for $1,000 would profit, as opposed to Ticket Master or Ms. Swift. The Coase Theorem applies broadly. Many baseball fans think that free agency and no salary cap let big market teams buy the best players. But prior to free agency, big market teams could buy players from small market teams; the Yankees’ historic dominance was mostly before free agency. Free agency lets players benefit, not teams. Like all economic results, the Coase Theorem holds only under certain conditions. For one, those willing to pay the most must find ticket holders and make them offers. Transaction costs, the costs of negotiating and carrying out trades, include the cost of finding the ticket holders. We do not live in a zero-transaction cost world, so the Coase Theorem will not hold perfectly. Many parents might recognize a second condition. Parents might pay $100 or $200 face value to take their kids but not secondary market prices. More importantly, even though they would not buy tickets at secondary market prices, they would not sell $100 tickets for $1,000. Owners can keep their property regardless of how much others might offer them. The amount you must be paid to sell your property is called willingness to accept. In many instances, a person’s willingness to accept considerably exceeds their willingness to pay. The Coase Theorem does not hold with a disparity between these values. Competition also limits Ms. Swift’s ability to help her fans. We saw this during the presale when millions tried purchasing tickets. Ticket brokers competed with fans to get tickets. Such efforts are inevitable when something worth $1,000 sells for $100. Competition is hardly new. If Ms. Swift was touring back when tickets were sold at the box office, fans would have lined up to purchase them. Fans likely would have camped out. The hours (or days) spent camping in the heat (or cold) would have offset part of the value of an inexpensive ticket. And some unlucky fan would have been next in line when the concert sold out. Competition is a fundamental element of human society, biologists might say of life. Our effort to get nice things cheap dissipates the benefits. The best we can do is limit the extent of this competition. Determining how many fans of modest means went to the Eras Tour would be an interesting economic case study. The tour, which continues into 2024, is expected to generate $2 billion in ticket revenue. Regardless of exactly how many tickets were resold, Ms. Swift benefited her fans by foregoing even more revenue from higher ticket prices. 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 and do not necessarily reflect the views of Troy University.
Daniel Sutter: The economic empowerment of women
Everyone should be empowered to craft a life of their choosing. Do the conditions for this differ for men and women? The provocatively titled Why Women Have Better Sex Under Socialism suggests that government must help women. Recent voting patterns suggest that American women increasingly believe this. Professor Kristen Ghodsee of the University of Pennsylvania authored the provocative book. Despite the title, the book builds off her research on women in Bulgaria following the collapse of communism and explores how economic independence affects women and marriage. Economic independence certainly empowers people. And economic dependence is a poor basis for marriage. No woman should feel compelled to stay in a terrible marriage to afford food and shelter. And as Professor Ghodsee observes, men often find marriages based on economic dependence unfulfilling. But is government the path to independence? I contend it is economic freedom which has in America eliminated legal barriers for women in work, contracting, and ownership. Markets emphasize evaluating workers and products based on their merits and performance, not gender. Government can provide transfers and a safety net. Yet dependence on government is still dependence. The Soviet Union illustrates the perils of government “empowerment.” The regime controlled everyone, male and female. Soviet leaders commanded women to work in factories and offices to hasten industrialization. As a by-product, women gained independence from their husbands. But Soviet leaders could have ordered women to stay home and raise children. Professor Ghodsee acknowledges this: “In no country were women’s rights promoted as a project to support women’s individualism and self-actualization.” The professor prefers the entitlements of Scandinavian democratic socialism. Indeed, she even attributes the failures of a pickup artist in Denmark to their economic independence. As an aside, Scandinavian countries are better described as market economies with high levels of government spending. Still, government provision of many life necessities means women need not rely on benefits from a husband’s job. Unmarried women in America seem to embrace this as well. Joel Kotkin and Samuel Abrams report in “The Rise of the Single Woke Female” (SWF) that single adult women voted 68 percent Democratic in 2022. This demographic stemmed the red wave. Undoubtedly abortion impacted 2022 votes but only accelerated the trend. Kotkin and Abrams offer Taylor Swift as an exemplar of SWF. Yet Ms. Swift has succeeded on her talent and drive, not government assistance. With an estimated net worth of $570 million before her Eras Tour, Ms. Swift should presumably vote for low taxes, not a party questioning whether billionaires (whose ranks she will likely soon join) should exist. The SWFs are predominantly urban, college-educated professionals with presumably good-paying jobs and decent benefits. They do not need free stuff from the government, while government policies make their housing, healthcare, and daycare unnecessarily expensive. More economic freedom would seemingly improve their lives. Two factors may explain this left-leaning political orientation. Feminist scholars rarely recognize spontaneous order or the emergence of institutions in society from human action but not human design. An analysis of patriarchy omitting spontaneous order will see a system designed to subjugate women. Government provides relief from an exploitative system. Historical poverty also matters. The Great Enrichment began around 1700 and lifted the average person above the subsistence level for the first time. Social and legal customs maintaining families appear cruel to women in hindsight intentionally but merely reflected harsh economic realities. The Great Enrichment – enabled by economic freedom – has helped liberate women. The complexity of society means that customs and government policies can have unintended and unexpected consequences, sometimes compromising women’s economic independence. Professor Ghodsee identifies one. When women do not work outside the home, they do not contribute to Social Security. Without her own retirement income, a woman may be stuck in a bad marriage. We should address such barriers when identified. Proponents of economic freedom should perhaps also devote more attention to ensuring that all people develop agency to act on freedom. But economic freedom offers the best path to economic independence – from a spouse or the government. 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 and do not necessarily reflect the views of Troy University.
Daniel Sutter: Taylor and Ticketmaster
A fiasco involving tickets for Taylor Swift’s Eras Tour has renewed calls to break up Ticketmaster through anti-trust. While many commentators have weighed in on the website crash, I will discuss Ticketmaster’s alleged monopoly. Is Ticketmaster responsible for high-priced concert tickets? The demand to break up Ticketmaster relates to its 2010 merger with concert promoter Live Nation. The economics model of monopoly holds under three conditions: the existence of a single seller of a product with no close substitutes and with barriers to entry by other sellers. Ticketmaster meets the single seller and barrier conditions, with exclusive booking rights for over 300 venues, including 47 of the 52 Eras Tour shows. (This is for the primary market; many ticket brokers resell in the secondary market.) Preferences for music vary widely, but for the legions of Swifties, there is no close substitute for the one and only Taylor Swift. The monopoly model predicts higher prices than with competition, suggesting Ticketmaster’s responsibility for high prices. And musicians since Pearl Jam in the 1990s have raged against Ticketmaster. Yet Ms. Swift reportedly set the prices of Eras Tour tickets to ensure affordability for her fans (the average price is $215). Ticketmaster makes money off fees for purchase, not the face price, which passes through to the artist, team, or venue. Furthermore, Ms. Swift wanted all tickets sold in the primary market; Ticketmaster normally directs upwards of 90 percent of tickets to the secondary market. Codes for her loyal fans for the presale tried to prevent purchases by ticket brokers. Nonetheless, many bots allegedly helped crash Ticketmaster’s site. Nor are the high prices on the secondary market (up to seven times face value) Ticketmaster’s fault. The secondary market reflects demand and supply, and Eras Tour tickets are ultimately worth however much people will pay. And the fewer tickets reaching the secondary market, the higher the prices. The forces of demand and supply are beyond the control of Ticketmaster or even Taylor Swift. Ticketmaster’s monopoly might have other effects, though. Ticket revenue for the Eras Tour is estimated at $590 million; Ticketmaster will reportedly make $13 million from its fees on sales. Although modest relative to the gate, these fees may be higher than necessary. Judging costs from outside an industry is virtually impossible, but we can gauge profit. Ticketmaster boasts a very healthy 37 percent adjusted operating margin. Monopoly can also lower quality. Poor service hurts a company more when customers can go elsewhere. Fans trying to buy Eras tickets had to deal with Ticketmaster. The company has notoriously poor service, with a Customer Service Scoreboard rating of 25 out of 200, in the “Terrible” category. Customers complain about a lack of transparency regarding fees. Ticketmaster’s monopoly has effects, but its position is due to the exclusive booking contracts granted by venue operators. Economics helps explain this. Suppose you owned a stadium and needed to sell tickets. While hiring ticket sellers is an option, even a busy stadium hosts a relatively small number of events each year with high demand when new events go on sale. This is a good spot for the expertise of a company specializing in selling tickets. When you negotiate with ticket sellers, you will get a better deal from granting exclusive booking rights. Why? Because monopolists can charge higher fees! Profits likely get shared with the venue operators. Breaking up Live Nation Entertainment would not change the dynamic, leading to exclusive contracts. Ticketmaster’s monopoly position likely produces excessive fees and poor customer service. I can offer one option going forward. Most of the stadiums hosting Eras Tour events were built with at least some tax dollars. Instead of going after Ticketmaster, taxpayers could try to limit exclusive booking deals for publicly funded stadiums. 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 and do not necessarily reflect the views of Troy University.
Alabama polling firm tests Taylor Swift’s political influence
Oooh, look what she made you do. According to Vote.org, 28-year-old country-to-pop superstar Taylor Swift swayed more than 65,000 nationwide to sign-up to vote in the 24 hours following her surprise Instagram endorsement of Democrat Phil Bredesen in the Tennessee U.S. Senate race last week. But according to new a new poll released Tuesday by Alabama-based Cygnal, a Republican polling and research firm, Swift’s “big reputation” did little to actually move the needle in the race against Republican Marsha Blackburn. With only 23 days left until the November 6 midterm elections, Cygnal found more than 86 percent of those polled say their vote hasn’t changed, despite 82 percent of respondents indicating they were aware of the endorsement altogether. “Millennial and Gen Z voters are highly aware of the endorsement of the Democrat, but it did little to move their vote preference,” said Matt Hubbard, VP of Research & Analytics at Cygnal. “Swift’s endorsement is providing a boost to get-out-the-vote efforts, but we’re seeing minimal impact on the race.” The statewide survey, conducted October 13-14, of 414 likely general election voters under the age of 35 in Tennessee, shows Democrat Phil Bredesen (50 percent) with a 14-point lead over Republican Marsha Blackburn (36 percent) in this age segment. 10 percent of young voters remain undecided. “Anytime a celebrity endorses a candidate or speaks publicly about their political views, there’s always a risk of alienating fans on the other side of the aisle,” said Brent Buchanan, Cygnal’s President and Founder. “In this case, Swift’s endorsement may lead to ‘Bad Blood’ with her conservative fans.” Respondents that were swayed by Swift’s choice to ‘Speak Now’ were split between the candidates, with 5 percent saying that they would now support Bredesen, and 6 percent indicating they would now vote for Blackburn. The Swiftie Effect “Swifties” or Swift superfans, respondents who attended 4-5 of her concerts, heavily favor Bredesen: 48 percent-26 percent. His lead swells to +52 among concert-goers who’ve attended at least six of Swift’s shows, but the race is tighter among less passionate fans. Respondents who have attended only one of her concerts are evenly split between the two U.S. Senate candidates, with Bredesen polling +1. Swift’s endorsement This was Swift’s first political endorsement. The star has stayed silent on her political views for years. “In the past I’ve been reluctant to publicly voice my political opinions, but due to several events in my life and in the world in the past two years, I feel very differently about that now,” Swift wrote in her Instagram post. “I always have and always will cast my vote based on which candidate will protect and fight for the human rights I believe we all deserve in this country.” It remains to be seen whether this will be the first and last of Swift’s endorsements, or if she’ll do it over and over and over again. Read Swift’s full Instagram endorsement below: View this post on Instagram I’m writing this post about the upcoming midterm elections on November 6th, in which I’ll be voting in the state of Tennessee. In the past I’ve been reluctant to publicly voice my political opinions, but due to several events in my life and in the world in the past two years, I feel very differently about that now. I always have and always will cast my vote based on which candidate will protect and fight for the human rights I believe we all deserve in this country. I believe in the fight for LGBTQ rights, and that any form of discrimination based on sexual orientation or gender is WRONG. I believe that the systemic racism we still see in this country towards people of color is terrifying, sickening and prevalent. I cannot vote for someone who will not be willing to fight for dignity for ALL Americans, no matter their skin color, gender or who they love. Running for Senate in the state of Tennessee is a woman named Marsha Blackburn. As much as I have in the past and would like to continue voting for women in office, I cannot support Marsha Blackburn. Her voting record in Congress appalls and terrifies me. She voted against equal pay for women. She voted against the Reauthorization of the Violence Against Women Act, which attempts to protect women from domestic violence, stalking, and date rape. She believes businesses have a right to refuse service to gay couples. She also believes they should not have the right to marry. These are not MY Tennessee values. I will be voting for Phil Bredesen for Senate and Jim Cooper for House of Representatives. Please, please educate yourself on the candidates running in your state and vote based on who most closely represents your values. For a lot of us, we may never find a candidate or party with whom we agree 100% on every issue, but we have to vote anyway. So many intelligent, thoughtful, self-possessed people have turned 18 in the past two years and now have the right and privilege to make their vote count. But first you need to register, which is quick and easy to do. October 9th is the LAST DAY to register to vote in the state of TN. Go to vote.org and you can find all the info. Happy Voting! 🗳😃🌈 A post shared by Taylor Swift (@taylorswift) on Oct 7, 2018 at 4:33pm PDT
Lin-Manuel Miranda named AP Entertainer of the year
Winning a Pulitzer Prize and a clutch of Tony Awards in a single one year would be enough for anyone. Not Lin-Manuel Miranda. Not in 2016. The “Hamilton” writer-composer picked up those honors and also earned a Golden Globe nomination, won the Edward M. Kennedy Prize for Drama Inspired by American History, wrote music for a top movie, and inspired a best-selling book, a best-selling album of “Hamilton” covers and a popular PBS documentary. A new honor came Wednesday when Miranda bested Beyonce, Adele and Dwayne “The Rock” Johnson, among others, to be named The Associated Press Entertainer of the Year, voted by members of the news cooperative and AP entertainment reporters. “There’s been more than a little good luck in the year itself and the way it’s unfolded,” Miranda said after being told of the honor. “I continue to try to work on the things I’ve always wanted to work on and try to say yes to the opportunities that I’d kick myself forever if I didn’t jump at them.” Miranda joins the list of previous AP Entertainer of the Year winners who in recent years have included Adele, Taylor Swift, Jennifer Lawrence, Lady Gaga, Tina Fey and Betty White. The animated Disney juggernaut “Frozen” captured the prize in 2014, and “Star Wars” won last year. (By the way, Miranda wrote one of the songs in “The Force Awakens.”) When he hosted “Saturday Night Live” in October, he somewhat tongue-in-cheek acknowledged the rarity of having a theater composer as host, saying: “Most of you watching at home have no idea who I am.” They surely must by now. Miranda was virtually everywhere in popular culture this year — stage, film, TV, music and politics, while engaging on social media as he went. Like a lyric he wrote for Alexander Hamilton, it seemed at times that the non-stop Miranda was working as if he was “running out of time.” Julio D. Diaz, of the Pensacola News Journal, said Miranda “made the whole world sing, dance and think. Coupled with using his prestige to become involved in important sociopolitical issues, there was no greater or more important presence in entertainment in 2016.” Among the things Miranda did this year are asking Congress to help dig Puerto Rico out of its debt crisis, getting an honorary doctorate from the University of Pennsylvania, performing at a fundraiser for Hillary Clinton on Broadway, lobbying to stop gun violence in America and teaming up with Jennifer Lopez on the benefit single “Love Make the World Go Round.” He and his musical “Hamilton” won 11 Tony Awards in June, but perhaps his deepest contribution that night was tearfully honoring those killed hours before at an Orlando nightclub with a beautiful sonnet: “Love is love is love is love is love is love is love is love, cannot be killed or swept aside,” he said. “Now fill the world with music, love and pride.” He started the year onstage in the Broadway hit “Hamilton” (which in 2015 had won a Grammy and earned Miranda a MacArthur genius grant) and ended it with a Golden Globe nomination for writing the song “How Far I’ll Go” from “Moana,” which was on top of the box office for three weeks this month, earning $165 million. “I’ve been jumping from thing to thing and what’s been thrilling is to see the projects that happen very quickly kind of exploding side-by-side with the projects I’ve been working on for years,” Miranda said. Though theater fans have long cherished his fluency in both Stephen Sondheim and Tupac, “Hamilton” helped Miranda break into the mainstream in 2016. The groundbreaking, biographical hip-hop show tells the true story of an orphan immigrant from the Caribbean who rises to the highest ranks of American society, told by a young African-American and Latino cast. The cast went to the White House in March to perform songs from the show for the first family and answer questions from school children. A version of the show opened in Chicago in October and a production is slated to land in California next year and in London soon. When the gold-winning U.S. women’s gymnastics team returned from the Rio Olympics, where do you think they wanted to go? “Hamilton,” naturally, which they did in August. The show’s effects were felt across the nation this year, cheered by politicians, stars and rappers alike and even helping shape the debate over the nation’s currency (Hamilton stays on the $10 bill, in part due to Miranda’s show.) But the musical also sparked controversy when the cast delivered a pointed message about diversity to Vice President-elect Mike Pence while he attended a performance in November. President-elect Donald Trump demanded an apology, which did not come. That kerfuffle was part of a “Hamilton”-heavy fall that included an album of celebrity covers and songs called “The Hamilton Mixtape,” as well as a documentary on the show that aired on PBS and attracted more than 3.6 million television viewers. Erin O’Neill of The Marietta Times said Miranda dominated entertainment news this year but, more importantly, “opened a dialogue about government, the founding of our country and the future of politics in America.” There’s more Miranda to come in 2017, including filming Disney’s “Mary Poppins Returns” with Emily Blunt (due out Christmas 2018) and an ambitious TV and film adaptation of the fantasy trilogy “The Kingkiller Chronicle.” “I’m back in a planting mode after a harvest,” Miranda said, laughing. Republished with permission of the Associated Press.
Rio2016, Election2016, PokemonGo top global Twitter trends
The Rio Olympics, the American presidential election and Pokemon Go were the top global trends on Twitter in 2016. The social media site says Rio2016 was the most tweeted-about topic around the world, followed by Election2016 and PokemonGo. Euro2016, Oscars, Brexit, Trump and BlackLivesMatter also made the top 10. A Spanish gamer known as elrubius originated the year’s most popular tweet: It reads “Limonada” (lemonade) and was retweeted more than 1.3 million times. One Direction’s Harry Styles had the second most-repeated post — quoting a Taylor Swift song — with more than 700,000 retweets. A postelection tweet from Hillary Clinton encouraging little girls to recognize their power and seize opportunities was the third most popular of the year with 634,560 retweets. Republished with permission of The Associated Press.
Where politics and music collide. Roby interns tweet Taylor Swift.
Taylor Swift has two concerts in DC next week. The pop star known for engaging fans on social media has a new invite waiting for her on twitter today. Check out the tweet with photo from Rep. Martha Roby‘s interns. Not a bad idea if I do say so myself. FYI, @taylorswift13, my interns say they’re available to give a Capitol tour while you’re in DC next week #1989TourDCpic.twitter.com/C6O3Lpwi1I — Rep. Martha Roby (@RepMarthaRoby) July 10, 2015
