My sister-in-laws won’t let me say the “H” word around their kids because of how much hockey equipment and ice time cost. Instead they have opted for lacrosse. The joke’s on them, however, as the recent Time article “How Kid Sports Turned Pro” estimates the average annual spending for lacrosse for one child is $7,956 while hockey is only $7,013!
There is no doubt a major shift happening in the United States around youth sports: away from informal neighborhood and club leagues toward more organized and costly alternatives. Kids don’t just show up to a field with a bat and a ball anymore. According to Time, families are now asked to shell out $300 for a bat, $250 for a glove, $200 for a uniform, $90 for cleats, $70 for an equipment bag, and the list goes on. And in this case of baseball, that is just the equipment. There is also the travel, tournament fees, batting cages, and private coaching that many parents fund with the hope of giving their kid a slight competitive advantage. Youth sports are big business, having grown from an $8 billion industry in 2005 to a $15 billion industry in 2016.
Those of us working on financial inclusion might take note that this shift means that many lower income families are being shut out entirely. Just 19 percent of families with annual incomes under $25,000 participate in organized sports versus 41 percent of families with incomes over $100,000.
Some observers think that one of the drivers of higher and higher costs is parents’ often irrational hope that their children will ultimately get college sports scholarships. This hope is more alluring as college costs soar. The possibility that scholarship hopes drive spending warrants our examination because it speaks to a major underlying factor in our financial inclusion work: people do not always make rational financial decisions and are especially bad at responding accurately to small probabilities.
The Time article points out the long odds that a high school player will continue playing in college (1 in 41 for football and 1 in 99 for basketball) and the even longer odds of going pro. Most parents might know such facts intellectually, but nevertheless discount the odds when it comes to their own children. If we were programmed to make rational financial decisions, more parents would save the excessive money otherwise spent on sports, sign their kids up for the recreational league, and use the savings to pay for college.
This sports phenomenon also illustrates an exclusionary dynamic that is at work in many instances, including financial services. As elite sports programs vie to attract parents who can afford them, membership requirements become increasingly high-end, shutting out lower income parents. Similarly, as banks compete for depositors who can maintain high balances, they create bank account products that are too expensive for low income consumers when they could create products with broad appeal.
Even though I know all this in my head, I just signed up my 4 year old for a learn-to-skate program. There goes two hundred dollars for him to push milk carts around on the ice while my husband and I (who both could have taught him to skate) watch. NHL, here we come. I’ll see you at the rink!
Have you read?
Three Behavioral Implications of How Mexico Diaries Harness Households Pay for Healthcare
Beyond Design, Behavioral Science for the Pilot and Scale of Product Innovations
Kate McKee: On the Behavioral Economics of Poverty and Implications for Financial Inclusion