Tag Archives: Consumer Surplus

Ireland's first win against the All Blacks – Positive Externalities and loads of Consumer Surplus

ire-v-abs-chicagoYou maybe aware that the rugby game yesterday morning (NZ time) between Ireland and the New Zealand All Blacks in Chicago created history. It was the first time that Ireland have beaten the All Blacks – the closest they got previously was 10-10 in 1973 at Landsdowne Road (the first International that I ever attended).

Irish supporters, including myself, will take great pleasure in talking about such a result – lets face it we lost it in the last few minutes 3 years ago at Croke Park in Dublin. What all this alludes to is the fact that as part of this entertainment comes without the public paying for it, the public benefits from an externality.

Those who flew to Chicago to support Ireland and went to the game will have no doubt spent a significant amount of US dollars tonight in the bars around town. Nevertheless the satisfaction (utility) derived in US$ from the game would have been much greater than the price they paid for the ticket. This suggest that there is a lot of consumer surplus present – the difference between the price that a consumer WOULD BE WILLING TO PAY, and the price that he or she actually HAS TO PAY. The success of the Irish team will boost merchandise sales and interest for the next Test in Dublin but also has been good for rugby in general. When the All Blacks play overseas there are significant externalities whether it be the revenue generated in hosting the match or the social benefits to society. Furthermore the lead up to the game brings about a sense of delayed gratification (Behavioural Economics). The fact that people have paid for their ticket with the game in two weeks time means that they can reap the pleasures of anticipation of being at the game in Dublin. Research (Smarter Spending – see previous post) shows that owning material things from expensive homes to luxurious cars turn out to provide less pleasure than holidays, concerts or even witnessing Ireland beating the All Blacks. With Ireland’s win national pride increases, along with patriotism and people feeling better about themselves. This is turn brings people together and boosts well-being of the nation especially with the current unstable political environment and evidence that the economic recovery is starting to fade – the challenges of Brexit and recent industrial relations.

One wonders what will happen in two weeks time in Dublin but no doubt there will be externalities.

Ireland’s win – Positive Externalities and loads of Consumer Surplus

The game between Australia and Ireland on Saturday night at Eden Park was the biggest upset so far in this RWC. The RWC in New Zealand generally brings pleasure to a significant part of the population. Some will pay to go to games; others will pay to watch it on SKY TV; some will watch it on free to air on TVONE and Maori TV; others will listen to it on the radio; another group will enjoy reading about it in the newspapers. Irish supporters, including myself, will take great pleasure in talking about such a result – lets face it we don’t have much to cheer about at the moment with the state of the economy. What all this alludes to is the fact that as part of this entertainment comes without the public paying for it, the public benefits from an externality.

Those who have flown over for the RWC to support Ireland and went to the game will have no doubt spent a significant amount especially when you consider the state of the euro. Nevertheless the satisfaction (utility) derived in NZ$ from the game would have been much greater than the price they paid for the ticket. This suggest that there is a lot of consumer surplus present – the difference between the price that a consumer WOULD BE WILLING TO PAY, and the price that he or she actually HAS TO PAY. The RWC has been a great success so far and there have been more positive than negative externalities (transport system). Also it looks as if it will be a Northern Hemisphere v Southern Hemisphere final – a positive externality for the IRB? Go Ireland!!!!!