Fraser Forum

William Watson: Subsidies to play golf? You might think that’s a joke. You’d be wrong.

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Wednesday, May 18, was National Golf Day in the United States. Unfortunately, I didn’t realize that until the day was almost over, too late to celebrate by going out for a quick nine. I found out about it in an e-article sent along by Golf Digest, one of two magazines I read religiously—the other being The Economist, of course.

To my surprise and consternation, the Golf Digest article mainly recounted how representatives of the golf industry were marking National Golf Day by holding more than 100 meetings with U.S. senators and representatives to try to get their support for the PHIT Act, the “Personal Health Investment Today Act,” which would “make golf camps and clinics, lessons and training aids, green fees and driving-range fees, tournament fees and, wait for it . . . golf balls and golf clubs tax deductible up to $1,000 for an individual or $2,000 for a head of household or family.”

Some of this stuff you just can’t make up. But it seems PHIT is not a joke. “At the moment,” Golf Digest reports, “78 Congressmen and 12 Senators support the bill…” What might happen if a golf course owner who claims to be able to drive the ball 280 yards became president?

Most people I’ve sent the Golf Digest story to have thought it was a joke. I suspect that’s because most people find golf slightly ridiculous, chasing a ball around an artificial countryside trying to shoot it down a hole. Why should we subsidize something so silly, seems to be their subtext, even if, sad to say, silliness has seldom been a disqualification for receiving subsidies.

We who actually play golf don’t think there’s anything remotely silly about it. I’m just about to enter the score for my first round of the year on the comprehensive Excel spreadsheet I keep that records all my scores back to 2004, when I first took up the game (because my 11-year-old wanted to try it: He thought it was OK and still plays a bit; I thought it was great and try to play a lot.) The graph of my average score against time is (slightly) downward-sloping. If that trend holds, I’ll shoot my age when I’m 96 or 97.

The reason subsidizing golf (but not golf itself) is silly is that there is no market failure in golf. There are no third-party effects. The people who play golf capture all the benefits from it (such as they are, some days). We also capture all the fitness benefits. If I walk the six or so miles required by an average 18-hole round, that’s six or so miles onto my fitness chart, not yours. (Fortunately for me, golf is like swimming: the worse you are the more exercise you get out of it. If you’re good, you miss those lengthy detours into the trees that have added so much to my walking totals over the years.)

If golf does involve a market failure, it’s “negative externalities.” Many of us high handicappers have had the embarrassing experience of slicing our drives into people’s backyards. I remember bonking one especially mis-hit tee shot off someone’s roof. It must have made an awful noise inside, though I didn’t stick around to find out. Dealing with the costs of this kind of externality is something the golf course can negotiate with its neighbours, using well-understood Coase-ian principles, no government subsidies required.
When an activity’s benefits go to the person engaging in the activity there’s no reason for government to be involved. The person will pay for the activity up to the point where its benefit is no longer greater than its cost, which is exactly how economists define the efficient allocation of resources to the activity.

That doesn’t stop the golf lobbyists making the usual lobbyist arguments, of course. Thus we’re told that golf makes a $70 billion impact on the U.S. economy. Well, good for golf! The fact that an industry is big and important—though $70 billion is only 0.38 per cent of US GDP—is not sufficient reason to subsidize it. If you’re big, congratulations! It doesn’t follow there will be net benefits to society from your being bigger.

The lobbyists also mention the high costs of health care: $3.2 trillion in 2015. But if these costs are borne privately, there’s still no market failure. If my golfing more brings down my health care costs, which is not impossible, that’s a benefit I pick up.

On the other hand, if you pay my health care costs, then it’s certainly a logical possibility that if you do help finance my taking better care of myself, you’ll get some payback by paying less once I become healthier. But it’s hardly a likely possibility. Think about it. If you spend a dollar getting me to play more golf, are you really likely to make a dollar back—let alone more than a dollar, assuming you want the investment to be profitable? Especially when the dollar you spend is most likely to compensate me for playing golf I would have played anyway, not inducing me to play more. My guess is you’d have to go pretty far down the list of potentially profitable things you could do with a dollar before you got to making money for yourself by paying me to play golf.

On the other hand, if you came golfing with me and we put a friendly wager on our game, that could easily be to your financial benefit.

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