It’s NBA Playoff season. I will be rooting for the LA Lakers, but all this basketball hype had me thinking a little about economics (hallelujah!). The NBA is all about business, so in turn, I thought how I posed the question how exactly it would affect the economy. I did a little research, and turns out, Playoff season has a huge impact on the economy, especially amidst the crisis we all are so sick of at this point in time.
I found an article about the Oklahoma City Thunders (a weak sauce team admittedly, but a team still worthy of the Playoffs). Their admittance into this tournament has an impact both on the local and national level. First off, the fact that the team is even in the NBA, let alone in the Playoffs, increases the image and reputation of Oklahoma City. Now that they are in the Playoffs, however, much planning and effort needs to be accommodated for. The Playoffs requires a lot of manpower, so it will in turn create a lot of jobs to support such an event. Employment levels will rise. However, the Playoffs season is also a season for creative jobs. The article states that “economists long have recognized that a city’s image has a profound effect on its economic development efforts. Innovative and creative workers are essential to any modern, vibrant economy. These workers though, are not equally disbursed throughout the country. Not surprisingly, creative people are attracted to communities that offer a creativity-friendly climate — a climate that supports world-class art, culture, education, and yes, even sports. In short, these creative people are attracted to those places that are (for lack of a better word) cool.” Tourism will also increase in effect, and will increase the demand to visit Oklahoma City. Now multiply this effect by 16, as there are 16 NBA playoff teams. The NBA Playoffs will create a ripple effect of job creation, innovation, and development/technology. Demand for Oklahoma City (OKC) can be depicted in Figure 1:
Demand shifts from D1 to D2, as Prices rise from P1 to P2 and quantity moves from Q1 to Q2. This overall creates an increase in the equilibrium point from E1 to E2.
As there is also an increase in demand, demand defficiency will not be as much a problem, and thus unemployment levels will see a decrease, shifting Aggregate demand from AD to AD2. More jobs will be created as a consequence of the OKC’s playoff run:
