College

Buchtel College of Arts and Sciences (BCAS)

Date of Last Revision

2020-05-07 13:10:48

Major

Economics

Honors Course

3250:497

Number of Credits

3

Degree Name

Bachelor of Arts

Date of Expected Graduation

Spring 2020

Abstract

This paper aims to examines the affect of race on compensation for NBA players. Based on prior research, I pose the hypothesis that racial discrimination does exist in the NBA with there being a premium for white players. A second hypothesis I present based on the previous research is that the premium for white players exist for only some groups of players and for other groups there with not exist discrimination based on player race. By using career data from every player who played in the 2019-2020 NBA season and their 2019-2020 salaries, a few different models where ran. The OLS showed that as a whole, there is racial discrimination as black players made around 15% less than white players at a 0.1 significance level. The same model was ran, but as a fixed effect model accounting for team each player plays for. This model found that there was no evidence that discrimination exists. This showed that only some teams discriminate, and only certain players see discrimination. To look at my second hypothesis, three more fixed effect models were ran. One showing only rookie players and one showing low value adding or marginal black players found evidence that black players see discrimination in pay. The model showing high value adding black players found no evidence of discrimination, but possible reverse discrimination as there was a black premium of around 46%. These results show that there is evidence of racial discrimination in the NBA. It’s likely from employer discrimination, but further studies would have to be done to determine if this is the most likely cause as they could look at ticket sales, city demographics, and other data surrounding the consumers of the NBA to see if there’s evidence of consumer discrimination.

Research Sponsor

Dr. Francesco Renna

First Reader

Dr. Elizabeth Erickson

Second Reader

Dinkar Kuchibhotla

Honors Faculty Advisor

Elizabeth Erickson

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