What a Difference a Fan Makes…Maybe

This week, during the first five days of the 2021 Australian Open, the stadium was packed…by pandemic standards. It was 50 percent occupied with up to 30,000 fans. Then, authorities declared a snap lockdown because of a Covid outbreak.

The local favorites felt the difference. Whereas cheers had spurred some to achieve far beyond what was expected, the silence eliminated the “home field advantage.” Yes?

Not necessarily. The “Observer Effect” is not a sure thing.

The Observer Effect

In the factory

Our story starts in 1924 at a Western Electric factory in Hawthorne, Illinois. As the maker of telephones for AT&T, Western Electric welcomed a study on the impact of lighting at the plant. The results?  Yes, output went up for the workers with new experimental lights. But it also rose for those with the same lights. And it continued to go up when the lights were turned down. Teaching them nothing, the researchers canceled the study and went home. Then though, others continued and formed some unexpected conclusions.

From the Hawthorne study, we got the Observer Effect (aka, the Hawthorne Effect). As you would expect, the Observer Effect focuses on the impact of the study itself. Rather than lighting, it was the attention that made the difference. And from there, an entire field of industrial relations developed.

Do take a look at some fascinating history. You can see the Western Electric plant and a history of the Hawthorne Effect, starting at 6:42 or so:

Next, we have to fast forward to 2009 and a study from economists Steve Levitt and John List.

With new data from the Hawthorne experiments, they said the facts were inadequate. Consequently, it is possible that the lights made a difference and there was probably a mild incentive from the observers, but the evidence is not definitive.

In the Sports Stadium

However, the Observer Effect was here to stay.

When the NY Times described the Australian Open, it hypothesized that hometown players, energized by the Observer Effect, won matches they otherwise might have lost. But sports economists have said it is a bit more complicated. One scholar from the University of Toronto points out that you have athletes, coaches, and referees. For athletes, a packed stadium creates anxiety or fuels performance. It can relate to whether the fans are supporting you or an opposing team.  As for the coaches, she believes they are driven by fan noise. And finally, it’s the referees whose decisions could be influenced by a home field crowd.

Our Bottom Line: Human Capital

Capital, composed of human capital and physical capital, is one of the three factors of production from which all goods and services are made. Physical capital includes the buildings, technology, and tools that we use to make things. Then, rather like you increase productivity by adding a building or a machine, so too can you increase your store of human capital. This time though, you add knowledge and inspiration.

And that returns us to an athlete, a coach, and a referee. The impact of an empty stadium certainly affects each individual. From there though, it depends on the composition of that person’s human capital.

My sources and more: Today, I began at the Australian open where the NY Times said a cheering crowd made a difference. That led to the Hawthorne Effect, to the original paper, and to its refutation from Freakonomics economist Steve Levitt. Then, making the sports connection, this NPR interview had some insight as did these comments, here, here, and here.