Causal Hangover Effects

TL;DR

This study investigates whether playing in cities with active nightlife negatively impacts team performance in sports, using bookmaker odds and a causal model to identify hangover effects in NBA and MLB games.

Contribution

It introduces a causal framework to measure the impact of nightlife exposure on team performance, leveraging bookmaker data and focusing on back-to-back games in party cities.

Findings

Visiting party cities the day before reduces the likelihood of beating the spread.

The negative effect is statistically significant for NBA and MLB.

Market efficiency assumptions support causal interpretation.

Abstract

It's not unreasonable to think that in-game sporting performance can be affected partly by what takes place off the court. We can't observe what happens between games directly. Instead, we proxy for the possibility of athletes partying by looking at play following games in party cities. We are interested to see if teams exhibit a decline in performance the day following a game in a city with active nightlife; we call this a "hangover effect". Part of the question is determining a reasonable way to measure levels of nightlife, and correspondingly which cities are notorious for it; we colloquially refer to such cities as "party cities". To carry out this study, we exploit data on bookmaker spreads: the expected score differential between two teams after conditioning on observable performance in past games and expectations about the upcoming game. We expect a team to meet the spread half the time, since this is one of the easiest ways for bookmakers to guarantee a profit. We construct a model which attempts to estimate the causal effect of visiting a "party city" on subsequent day performance as measured by the odds of beating the spread. In particular, we only consider the hangover effect on games played back-to-back within 24 hours of each other. To the extent that odds of beating the spread against next day opponent is uncorrelated with playing in a party city the day before, which should be the case under an efficient betting market, we have identification in our variable of interest. We find that visiting a city with active nightlife the day prior to a game does have a statistically significant negative effect on a team's likelihood of meeting bookmakers' expectations for both NBA and MLB.