Economics for Dummies: Capitalism + golf + scandal = ?


O Eldrick*, what hast thou wrought, forsooth?

The sex scandal that engulfed Tiger Woods may have cost shareholders of companies endorsed by the world’s No. 1 golfer up to $12 billion in losses, according to a study by two economics professors from the University of California, Davis.

The study, released on Monday by researchers Victor Stango and Christopher Knittel, gave an estimate for damage to the market value of Woods’ main sponsors caused by revelations of alleged extramarital affairs that surfaced after he was involved in a minor car accident outside his Florida home on November 27.

“We estimate that shareholders of Tiger Woods’ sponsors lost $5-12 billion after his car accident, relative to shareholders of firms that Mr. Woods does not endorse,” the researchers wrote, adding that millions of shareholders were affected.

Linkage added.

Millions of shareholders.

Sit back and let that sink in for a bit.

Done soaking? All righty then:

In their study, the two professors said they looked at stock market returns for the 13 trading days after November 27, the date of the car incident that ignited the Woods scandal.

They compared returns for Woods’ sponsors during this period to those of both the total stock market and of each sponsor’s closest competitor. They also reviewed returns for four years before the car accident to build up a comparative picture of the sponsors’ market performance.


Overall, Knittel and Stango concluded that the scandal reduced shareholder value in the sponsor companies by 2.3 percent, or about $12 billion.

They called the results statistically significant and said the overall pattern of losses at the parent companies was unlikely to stem from ordinary day-to-day variation in their stock prices.”

“…unlikely to stem from ordinary day-to-day variation in their stock prices.”

Once more, sit back and soak that up, kiddies.

And when you’re done with that, ask yourselves: Is it wise to “let the markets decide”? Especially if you’re one of the millions who lost money thanks to the indiscretions of the all-too-priapic Mr. Woods?

I can’t tell you exactly what to do next (that, as always, is up to you, kids), but it may be prudent to reconsider two things held dear in Conservolandia: One, the reliance on markets for your well-being, instead of a proper social safety net; two, belief in the whole “family values”, squeaky-clean image thing. Obviously, neither of them has served certain parties here.

And for the record: I divested myself of both stocks long ago, folkies.

*Tiger’s real name, according to Bartcop. Bartcop also calls him “Tiger Woo”, and now we can see why.

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2 Responses to Economics for Dummies: Capitalism + golf + scandal = ?

  1. Polaris says:

    Some people are wondering if Tiger Woods ever used illegal substances to enhance his golfing skills.
    Many of his fans and sponsors are willing to look the other way concerning his womanizing, and they do not mind illegal athletically enhancing drugs if one does them without being caught, but if any proof ever surfaces Tiger’s sponsors will find such a thing more difficult to downplay. Many of his records will become questionable.

  2. I heard that he was taking Ambien–a sleeping pill with a lot of troublesome side effects. One of them, apparently, is a disrupted sex drive. Some people taking the pill even get the urge have sex in their sleep–a very bizarre variation on sleepwalking. They don’t remember it on waking, but anyone who’s been unlucky enough to be in their path at the time certainly does!
    Of course, if he’s on sleeping pills–and powerful zonkers like that–it makes one wonder what else he was on. People who take “downers” usually also take “uppers” when they want to be alert. It’s possible that he uses amphetamines. It’s also possible that he was on steroids–for a golfer, he sure has big arms. And one doctor who treated him is currently facing charges of prescribing controlled substances for athletes. Steroids can also cause rages–he’s been known to throw fits over missed shots, which few other golfers would have done. And sexual derangement connected to testosterone shots–steroids, again–could also result.
    Whatever his problem is, it’s clearly connected to some form of substance abuse. The question is, what substances has he been abusing? And will he come clean about it, or will he try to lie his way out again? It’s obvious that he needs professional help, and I hope that he gets it. He can certainly afford the best.

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