You Bet There's a Difference!
21 September 2006
Editor, The New Yorker
Dear Editor:
James Surowiecki rhetorically asks "How much difference is there, after all, between betting on the future price of wheat . . . and betting on the performance of a baseball team?" ("Wagers of Sin," Sept. 25). Answer: a lot.
Persons who bet on sports do not affect the outcomes of the events they bet on (at least not legally). In stark contrast, investors and speculators improve market performance. Someone who buys wheat expecting its price to rise withdraws wheat from the market when wheat is relatively abundant (now) and returns it to the market when wheat is relatively scarce (later). Likewise, someone who sells wheat short causes more wheat to be supplied to the market when wheat's supply is relatively scarce (now) by reducing its supply when wheat is relatively abundant (later).
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Editor, The New Yorker
Dear Editor:
James Surowiecki rhetorically asks "How much difference is there, after all, between betting on the future price of wheat . . . and betting on the performance of a baseball team?" ("Wagers of Sin," Sept. 25). Answer: a lot.
Persons who bet on sports do not affect the outcomes of the events they bet on (at least not legally). In stark contrast, investors and speculators improve market performance. Someone who buys wheat expecting its price to rise withdraws wheat from the market when wheat is relatively abundant (now) and returns it to the market when wheat is relatively scarce (later). Likewise, someone who sells wheat short causes more wheat to be supplied to the market when wheat's supply is relatively scarce (now) by reducing its supply when wheat is relatively abundant (later).
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Friday May 25, 2007 at 5:02pm