Sports offers students many opportunities to learn about important economic concepts in colorful and interesting ways. For examples, sports can be used to illustrate the gains from specialization in production. When players at a young age display skills well suited for soccer, football, basketball or baseball they are usually encouraged by parents and coaches to concentrate on those positions for which their physical skills are especially well suited. In baseball, smaller players with "good hands" are found at second base or shortstop. Tall boys - and girls - are likely to play center or forward on their basketball teams. The principle of comparative advantage implies that team success will be greatest when each player specializes in that position for which his or her contribution is greatest. Even if a player were to have an absolute advantage at two positions; e.g., by being both the best outfielder and pitcher on the team, he or she should specialize in that position (say, outfielder) for which the advantage is greater. In this way, the player?s opportunity cost as an outfielder, which is the loss of his/her contribution as a pitcher, is less. A teammate should fill the position (pitcher) for which the former player has an absolute advantage but a comparative disadvantage.
Because the advantages of specialization are so great, it is rare to find real world examples of famous athletes with absolute advantages in two different areas. One could argue that tennis stars Pete Sampras and Venus Williams have the physical skills to excel at other sports, but they have chosen to concentrate on what they do best. Examples in non-sports activities are also rare. Outstanding law school students who have superior typing skills are likely to concentrate on trying cases and allowing less skilled typists to handle secretarial duties.
Babe Ruth is an example of someone who clearly had an absolute advantage in two different areas. As comparative advantage implies, Ruth and the team he achieved his greatest fame with, the New York Yankees, were better off when Ruth specialized as a hitter/outfielder, the area of his comparative advantage, even though he could have been the best pitcher on the team.
Go on to Part 1