The WSJ Real Time Economics blog reviews a paper by Michael Lechner which finds that “sports-playing adults saw a boost in income of about 1,200 euros per year over 16 years when compared to their less active peers. That translates into a 5-10% rate of return on sports activities, roughly equal to the benefit of an extra year’s worth of education.” How can playing sports increase income?
The simplest mechanism is that playing sports increases one’s health level. Healthier people are less likely to get sick and more likely to be able to work to earn income. This health difference, however, only explains a portion of the income differential. Dr. Lechner claims that playing sports builds a social network which helps to increase pay (e.g., your friends are the ones who recommend you for jobs). In fact, Lechner finds that sports-playing men display a higher level of “social functioning” than did the less active men.
One worry of this study is that of reverse causation. If someone is very sick, they are not able to play sports. Further, if you are sick, you are probably less likely to engage in social activities. Thus, health–and not sports playing–may be a hidden, unobserved feature which may be driving these results.