Human capital formation in professional sports: Evidence from the PGA tour

Summay

This paper examines human capital formation by professional golfers using a three step procedure. First, production functions relating golfers' earnings to their skills indicate that putting and driving distance are the most important skills, both in terms of magnitude and statistical significance. Between the two, putting is by far the more important.

In the second step, production functions relating a golfer's skill level to his practice time indicate robust relationships for putting and driving distance, again with putting being the more significant relationship. The data show little support for any kind of diminishing marginal product of practice. The simplest formulations with constant marginal products outperform other more complex specifications.

In the third step, individual VMPs for practicing the separate skills were calculated using the estimates from the first two steps. The VMPs vary over a wide range with practice on putting sometimes calculated to be worth over $500 per hour while practice on sandtrap shots is worth only a few dollars per hour. If the cost of practicing is a constant across the different skills, then these results indicate that golfers wishing to allocate their practice time optimally should be spending more time on putting and driving distance than other skills, with putting the more important of the two. Alternatively, if golfers are assumed to be optimizing, then these statistics support the contention that practicing putting is more costly, physically or mentally, on the margin, than practicing driving.