•••• Imagination and

Commercialization

•••• Undergraduate

Research

•••• Fantasy Sports and

Economics

•••• Upcoming Speakers

I n s i d e

T h i s

I s s u e

Volume 13, Issue 2 January 2011

EDITOR

Dr. Greg Delemeester Professor of Economics

Marietta College

ASSISTANT EDITOR Seth Dimick, C’12

Special thanks to Dr. Jacqueline Khorassani

Tom Perry

On the web @ economicroundtable.org

By: Seth Dimick

Entrepreneur and space explorer, Anousheh Ansari, spoke to the Economic Roundtable on Tuesday, November 16th, at the Lafayette Hotel. Ms. Ansari is a member of a very select group of individuals who have had the privilege of traveling to space. Notably, Ansari has the distinction of being the first (and thus far, only) female private space explorer as well as the first (and thus far, only) Iranian astro-naut. Ansari said that even as a small child she was always fascinated with the stars and space, and although she went on to receive a degree in electrical engineering, she never gave up on her dreams of going to space. During her luncheon address, she spoke about the importance of space exploration and the need for further ad-vancements in space travel.

Ansari began by emphasizing the uniqueness of the human imagination. Among all the creatures on this vast planet, it seems that we alone have the ability to imagine and create. We have the ability to imagine things that do not exist and then create the means of making such things possible. Ansari spoke to how our crea-tive abilities must be fostered and not hindered. She shared how her long journey to space began with her imagining about the stars and distant worlds as a small girl in Iran, and that she never quit imagining. She is, and believes we should all be, concerned with the decreasing number of science students in schools (with the number of female science students decreasing more dra-matically) because it will hinder our ability to advance. A large part of her life’s goals is to inspire students to imagine—which is one rea-son she is willing to travel around the world and speak about space travel. She uses the idea of space travel as a powerful motivating force for

imagination. Ansari and her family, using the wealth they’ve created with their start-up tech companies, have done much to advance imagination, especially in the field of space travel and exploration. Ansari identified that technological advancements in space travel have moved incredibly slow in comparison to other technologies such as computers. She attributes this to the fact that the Please turn to Ansari, page 2

Space: Imagination and Commercialization

Photo by Tom Perry

page 2

field is closely held by government organizations. She set out to start a paradigm shift in the field. She realized that in order for advancement to proceed, the private sector must begin taking part in space travel in collaboration with government organizations. This is why the Ansari family helped fund the Ansari X Prize. The original X Prize was a $10 million award that would go to the first private team that could transport a person into space, have them return safely to earth, and repeat the process with the same vehicle within a two week period. Ansari described the X Prize as a $10 million investment that led to $100 million of spending on research towards space travel vehicle attempts. The winning team’s victory led to a newfound company, Virgin Galactic, which was able to raise hundreds of millions of dollars for a business venture to carry paying passengers into space. The vehicles they have been developing will be able to carry seven passengers into space and are scheduled to be operational in late 2011 or early 2012. Ansari was greatly satisfied with the “return” on her investment and plans to hold future X Prizes for progressive automotives (100+ MPG), deep ocean exploration, life sciences (reducing costs of human genome decoding), and global development. An X Prize has already begun for a lunar lander that has fifty teams signed up. Ansari went on to explain the benefits of advancing space travel and exploration. She spoke on all the great advancements and technologies we already benefit from due to space exploration and spoke on possible fu-ture benefits, including solar panel satellites for renewable energy; space research and manufacturing that could lead to new medicines, new treatments, and new materials; space planes that could be used for incredibly fast travel; and space tourism, possibly including space hotels and resorts. Ansari also pointed out that limited re-sources cause much of the conflict on earth, and that resources are abundant in space. Lastly, she touched on how

the Earth may not be inhabitable forever. To end her time, Ansari shared her per-sonal experience of traveling to the International Space Station, which has been a joint effort of sixteen countries, travels five miles per second, two hundred and twenty miles above the planet, and completes and orbit in ninety minutes. An-sari trained for six months for an alternate spot on a mission, and discovered that she was going to be rotated in during the last few weeks before take-off. She fulfilled her dream by traveling to the International Space Station in a tiny space capsule with two other astronauts, and partici-pated in experiments and research while on board before returning to Earth. Now that she has fulfilled her dream, she says that she will continue being a spokeswoman for space travel, and continue traveling the world to inspire oth-ers to support the advancement of space aviation and all sciences. Upon the conclusion of her talk, Dr. Gama Perruci, Dean of Leadership at Marietta College, presented Ms. Ansari with the Mister Mac Leadership Award.

Ansari, continued from page 1

• Dr. Lynne Kiesling, Senior Lecturer, Department of Economics, Northwestern University, Monday, January

31, 2011. Location: Lafayette Hotel. Topic: Smart Grid: Promoting Innovation in the Electricity Industry

• David Leonhardt, Economics Journalist, New York Times--Washington Bureau, Wednesday, April 6, 2011. Location: Parkersburg Country Club. Topic: TBA

Upcoming Speakers

Ansari (wearing her ERT Jacket and holding her Leadership Award) with Drs. Perruci and Khorassani.

The Determinants of Small Domestic Equity Mutual Fund Performance

During the Market Downturn: Does Social Responsibility Matter?

Cody Meglio graduated from Marietta College in December 2010 with majors in Accounting, Econom-ics, and Finance. For his senior cap-stone project, Meglio examined the impact of socially responsible invest-ing on mutual fund performance. So-cially responsible investing (SRI) has become increasingly controversial even as it has gained popularity. Meglio’s paper uses regres-sion analysis to determine if SRI has any significant impact on mutual fund performance. The study uses the ordi-nary least squares procedure and a cross-sectional dataset comprised of 20 SRI mutual funds and 50 regular mutual funds. The funds in the sample each have less than $500 million in net assets and invest primarily in domestic equities. They are studied during the three-year period from 2007 to 2010, a time when the market tumbled. The empirical model includes control variables relating to risk, cost, fund size, fund age, man-agement characteristics, and fund style. Three alternative measures of performance (Jensen Alpha, Sharpe Ratio, and net performance) are used to explore the impact of these explanatory variables on fund performance. Ultimately, whether the fund is an SRI fund or not is found to have no significant impact on any of the three measures of performance. Additionally, the study finds that standard deviation has a signifi-cant negative impact on performance but a significant positive impact on the Jensen Alpha. Fund loads and 12b-1 fees are also found to have significant negative impacts on the various measures of perform-ance.

Note: The opinions expressed in MACRO & micro do not necessarily represent the opinions of the ERT or the B&E Depart-

ment at Marietta College.

By: Greg Delemeester

This is part of a continuing series of reports on the undergraduate research projects of senior economics ma-jors at Marietta College. Students must demonstrate their academic proficiency by completing an empirical economic research project using the statistical methods of multiple regression analysis. Under the direction of Dr. Jacqueline Khorassani, students must write up their work and then make a presentation to an open forum.

Undergraduate Research page 3

Cody Meglio is presenting his findings.

page 4

Fantasy Sports and Economics By Greg Delemeester

Sometimes learning can be both fun and eye opening—not only for the student, but also the teacher! So it

has been with my use of a fantasy sports league in the sports economics class that I teach at Marietta College. As

part of their course grade, students are responsible for the on-the-field and in-the-board-room management of a

sports franchise. This past semester, students were assigned “ownership” of a team in a 12-team fantasy football

league. Two websites were instrumental in operating the league: CBSSports.com handled the on-the-field opera-

tions while EconFantasy.com handled the in-the-boardroom decisions.

The 12-team football league was structured so that it contained franchises ranging from large market (e.g.,

New York and Los Angeles) to small market (e.g., New Orleans and Cleveland) cities. Prior to player allocation,

team owners met as a group to decide on the governing rules of their league. Given the unequal market sizes of the

franchises, the team owners have always decided to adopt some form of revenue sharing concerning league-wide

revenues (broadcast, merchandising, and concessions) in order to bolster the economic fate of the small-market

franchises. In addition, the league invariably votes in favor of imposing a salary cap so as not to give an unfair

advantage to the large market teams when it comes time to procure players. The salary cap, however, is a “soft”

cap in that teams are able to exceed the maximum, but must pay a “luxury tax” on overpayments.

Each team owner was responsible for filling up a 14-man roster (7 starters and 7 reserves). However, in

contrast to the traditional player draft common to most fantasy leagues, the MC EconFantasy Football League util-

ized an auction mechanism for initial player allocation. That is, players were allocated to the highest bidder, sub-

ject to the league salary cap. It’s always interesting to see team strategies during this stage as some will spend a

large fraction of their “cap money” on one or two star players, while others will spread the money more evenly

over seven starters. For example, this past season, one franchise spent 73% of their cap money on just two players

(Peyton Manning and Adrian Peterson), leaving them with very little to spend on the rest of their roster. The even-

tual league champion, on the other hand, was able to obtain five quality players for the same money by avoiding

the mad rush for the marquee players.

Once the team rosters were set, the league began a 10-game regular season followed by a three-round

playoff season. Each week teams had to set their starting lineups based on matchups, injuries, and who had a bye

week. Players would earn points based on various performance criteria set by the league commissioner (me!). A

team wins their game if their fantasy team scores more points than their opponent.

On the financial side of operations, home teams were responsible for setting the prices for tickets and con-

cessions. Each team played in a stadium that was divided into four sections, each with their own pricing. Teams

also were responsible for setting the prices on four concessions: beer, hot dogs, nachos, and tee-shirts. Team own-

ers had a rough idea of the major factors affecting the demand for tickets and concessions (e.g., market size, team

winning percentage, number of star players, etc.), but not the specific equations that the EconFantasy website util-

ized to operationalize the demand functions. Consequently, the pricing component of the league has always been

one of the most challenging aspects to the exercise.

Upon completion of the regular season play, student franchises must complete a term paper summarizing

their experience along with an analysis of league operations (e.g., prices and profits, competitive balance, etc). At

this point, students are able to integrate the concepts learned in class by referring back to their fantasy league ex-

perience. Finally, trophies are awarded to the League Champion, the Best Financially Managed Team, and the

Toilet Bowl Champion (best of the worst teams).