By Paul Walker 30/07/2015


This is a question asked by Jeff Cisyk and Pascal Courty in a new column at VoxEU.org.

That performance-enhancing drugs are used and that this use is a controversial issue has been clear since competitive sports first began. You could argue that drugs are just another way of improving performance, like better training methods or improved nutrition, so what’s the problem? The Cisyk and Courty column argues that of the three major rationales for regulation – athletes’ health, fairness, and audience losses – the damage to audiences is the most convincing rationale for regulation. The evidence they discuss shows that doping causes measurable economic damage. Teams and leagues competing for audience attention may not internalise all externalities associated with doping, and they face a time-inconsistency problem when they discover it.

Doping has been a controversial issue since competitive sports first began. There is even evidence of drug use by ancient Greek and Roman athletes. The first modern regulation of doping was instated in 1928. Since then, bans on performance-enhancing drug have received constant attention in the media. While most people believe doping should be regulated, few agree on why, where to draw the line, and how to manage enforcement.

  • The main rationale offered by the medical community and some sports experts and ethics scholars is that constraining doping is necessary to protect the health of athletes.

However, many sports themselves are inherently dangerous. Taken literally, the protection argument would call for pro-safety interventions that go beyond regulating such drugs. This would not be supported by most people.

  • Others argue that sports competition requires a level playing field.

However, doping is just another technology to improve performance and there are rules to deal with what contestants can and cannot do to win.

  • A final rationale is that doping harms the public.

Broadly interpreted, this means that doping imposes a negative externality. A sport generally involves many stakeholders (athletes, teams, league, broader sports organisations, sponsors, and the public) who have vested interests in organised competitions. Fans commit to a sport and make specific investments to support a team. When doing so, they care about the quality of future events and may suffer a negative externality if they value the sport less when athletes do not comply with doping rules.

With prevailing large stakes, athletes and teams benefit from doping if it increases the chance of winning. A league may also benefit if doping increases the entertainment value; that is, as long as the public does not find out. The economic rationale for regulating drug-use rests on the assumption that fans value a sport less when athletes use them.

But is such an assumption reasonable?

The research that Cisyk and Courty discuss is the first work that offers definitive evidence that the demand for a sports event is negatively affected by news about drug use. The evidence is based on ticket sales (rather than random respondents interviewed in surveys) and measures actual demand responses instead of consumer opinions. A basic rule of economics is, take notice of what people actually do rather than what they say they will do.

Cisyk and Courty  leverage the 2005 introduction by Major League baseball of a new set of random tests for drug use. Under this new policy, a positive test is immediately announced publicly and the player is removed from the team. This policy yields unique data for investigating the impact of drugs violations on attendance.

Obviously if the public really cares about drug use, you would expect a decrease in attendance following a suspension and what we see in the data is such a decrease. Interestingly, there is no decline in attendance for injury announcements.

So a reason to enforce doping regulation is to protect consumer interest. But who should regulate doping? Cisyk and Courty comment,

Teams lack motivation to align with the public interest. The same holds for leagues. The incentives to self-regulate and honour the interests of fans are limited. Again, this is because leagues compete for audience attention and they may not internalise all externalities associated with doping. Leagues also face a time-inconsistency problem when they discover that doping takes place. Our work demonstrates that doping reduces fan interest, and players, teams, and leagues may not fully internalise these losses.