ABSTRACT
The salaries paid to professional athletes in all sports have risen greatly in recent decades. In 2011, the average weekly earnings in the NBA were more than twice the average annual earnings of nonathletes in the United States. This chapter analyzes the forces that have caused the incomes of professional athletes to reach such levels. In general, the substitution effect is stronger than the income effect, so higher wages lead workers to supply more labor, and the labor supply curve slopes upward. In recent years, professional sports seem to have been plagued by the widespread use of performance-enhancing drugs (PEDs). Tournament organizers and teams provide disproportionate rewards to get players to provide more effort. This reward system has some dangers, as it can lead to poor teamwork, sabotaging one's opponents, and carrying effort to unhealthy extremes. The unhealthy extremes include levels of practice that lead to permanent disability later in life or to the abuse of performance-enhancing drugs.
