Compensating Differentials and the Social Benefits of the NFL

Revised: March 2004

WP 02-12/R – The authors use hedonic rent and wage equations to measure the compensating differentials that obtain in central cities and metropolitan areas with franchises of the National Football League.

A previous version of this working paper was originally published in September 2003.

The authors find that rents are roughly 4 percent higher and wages are about 2 percent lower in metropolitan areas with franchises, though the latter of these two effects is not significant. Rents are about 8 percent higher in the central cites of these metropolitan areas. Thus, professional sports franchises appear to be a public good and once these quality of life benefits are included in the calculus, the seemingly large public expenditure on new stadiums appears to be a good investment for cities and their residents.

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