Superstar effects in the PBA
Date
2006-04-05
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Abstract
In this paper, we investigate wage determination among the professional basketball players of the Philippine Basketball Association (PBA). Rosen's theory of superstar, wherein few people in any chosen field command huge earnings and dominate the activities in which they engage in, is examined. The observed skewness in the distribution of earnings is analyzed using Rosen's assumption of the imperfect substitution feature of preference and joint consumption technology. This skewness in the earnings distribution refers to the argument that small differences in talent or ability translate to large earnings differential among the basketball players. Rosen's definition of superstar is slightly modified to incorporate Adler's theory of superstar phenomenon where consumption requires knowledge. In this study, superstar status is defined in two ways: the first is in terms of the superiority of playing skills as measured by the various performance indicators of individual players, while the second is in terms of non-talent factors which falls under the category of X-factor. Data on 2001 individual earnings and personal characteristics of basketball players in the seasons prior 2001 was used. The superstar effect as how Rosen defined it was not found in earnings after controlling for a large set of personal characteristics, individual performance indicators and other team- specific variables. What is found evident in the study is Adler's theory: regardless of whether a player possesses greater talent or not, a player would snowball into a star because of 'luck' or possession of factors other than talent.
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Philippine basketball, PBA, Basketball association, Basketball, PBA superstar