The Economics of Combat Sports (Part 1)

The Economics of Combat Sports Part 1 The team and I were recently up coaching and competing at the TBA World Expo, which is a large ev...

The Economics of Combat Sports

Part 1

The team and I were recently up coaching and competing at the TBA World Expo, which is a large event and tournament for muay thai in Des Moines. During some of the talks we were having both at the event and during the drive home, I came up with this idea for a series of writings on how I view combat sports through the lens of economics. This will not really be about the business of combat sports, directly, even though at times we will touch on it. Instead, I am going to talk about some of the most core concepts in economics and how they relate to the story of the martial arts. 

For some clarifying notes: When I talk about rational decision making or subsidizing / taxing / penalizing / rewarding things, I want you to consider this subjectively from the view point of the actor. In specific sections I will clarify this more fully, but this is an important distinction. In economics, the thinking strategy is to not judge the decisions outside the context in which the person made them and they way they viewed both their means and their ends. 

Secondly, we tend to look at how humans make decisions and assess value at the margin. The more we have of a good, generally it makes one more unit of it worth less. And the less we have of a good, it means that adding one more unit of it would be worth more. To best explain this, I will use an example: 

In John Wick 3 there is a scene where he is in the desert with no water. Suppose now that while wondering the desert near to die from dehydration, someone asked you what you would trade for a gallon of water. The value with be near infinite to you. Now, suppose you already had 10 gallons of water. Whats the value now of an additional gallon? What if you had 100 gallons? Would at some point having more water be considered bad? 

One other thing of note is to define scarcity and cost. For now it will be enough to say that everything has scarcity. We have, as a society, limited resources and unlimited wants. You may think that some resources are infinite, but the use of such resources to meet an end always as an opportunity cost of what else that time/space could have been used for. And thus, in having a cost, is by its nature scarce. 

People Respond to Incentives

In economics this is one of the most central ideas and I would be remiss to not start with and emphasize this point. In fact, its so core to the lens of thought that I will reference back to this idea in  pretty much any other section - at least in some way. The idea itself is very intuitive, though making predictions and applying the idea fully is very difficult. An incentive is then, by definition, anything any alters your decisions at the margin. A reward, a rule, a law, a tax, subsidies, etc etc. 

You respond to incentives every day in basically every decision you make. If your favorite food becomes cheaper, generally you don't eat less of it. You eat the same amount or more. With some careful thought you can begin to see how your view of the world around you blends with both the incentive structures outside your control and the reality of constrained optimization to create the outcomes and decisions you see as possible. 

So why did the martial arts even start? Because people respond to incentives. 

If you live in a small enough group of people life was probably pretty easy, as far as the decision making went, to determine how to best provide value. But when two groups of people met each other, they had to come to some decisions (I will attempt to avoid a long discussion on game theory). 

1. They could attempt to seclude themselves away from the other group and go about their life unchanged. 

2. They could attempt to trade. 

3. They could attempt to take goods from the other group. 

But this decision wasn't made in isolation. They also had to understand the other group was attempting to make the same decisions. As one group becomes more prosperous or the other group becomes less prosperous, the incentives for one group to choose option 3 become more strongly weighted. So if your group decided to spend all their time maximizing their ability to produce food and other goods, it would mean you were both an easier target and a richer target. So willingly you then would decide to forgo spending all your time hunting, fishing, and farming and instead devote a portion of that time to planning for the groups offensive  and defensive capabilities. 

All the farming in the world doesn't help feed the family when the guy down the road comes over and takes your family as slaves and forces you to farm for his family. 

This is an easy example of constrained optimization (which will be discussed in a later part in more depth). We budget our time, which constrains our choices, between our options. We can't spend all of our time on food and all of our time on fighting, because time is scarce. If we spend all our time on fighting, we need to pillage to eat which has some pros and cons and if we spend all our time on farming we get pillaged with other guy needs to eat, which has its pros and cons. So how do we choose to a lot out time? 

Eventually another sort of arrangement began to come about, one where I spend all my time farming and you spend all your time preparing for war, and if someone comes to take my food you protect it, and in payment I will make sure you don't go hungry either. There have been literally entire series of economics books written on these ideas, so instead I am going to move forward in time some, speak less generally, and talk about how we specifically got to this point in combat sports. 

In feudal japan, like most societies, there were these such people who were lifetime practitioners of how to kill. What incentive structure do they face? Its easy to see that in something where the cost of failure is death, there is a heavy incentive to practice. When someone tries to pioneer an idea or technique that isn't applicable, its weeded out with violence and is unable to be passed on. In fact, even if it could be passed on, if it wasn't successful in the past for other people then the risk of continuing becomes very great. In this, battle rewards success very heavily. 

The grappling portion of the Japanese arts comes from the nature of how they fought. When a man is wearing armor and has a three foot razor blade, boxing him is a losing strategy. The ability to move freely and sword fight in your armor also makes it possible for an opponent to joint lock you, a trade at the margin. It makes throws more effective than wrestling style shots, since level changes in armor are not the easiest things to accomplish. Once, when I was in the Army, I grappled another guy while we wore EOD bomb suits. This experiment really illustrated this point to me. And also image the cost of GETTING thrown! All your weight, plus your armor, plus your opponent falling onto your neck and head. These factors really emphasize controlling distance to neutralize weapons that work at contact range, controlling the position on top so that they can't escape back to their weapons, and then disabling the joints of your opponent using leverage. 

It should be noted the Japanese also trained extensively in the sword and the bow, and in most cases trained more extensively with them. Looking at the above information, the reasons for why become extremely obvious. Constrained optimization again: The diminishing returns of becoming better at swordsmanship are balanced with the ability also fight in another capacity if the person attempts to either clinch with you or they are a better swordsman and you must now clinch with them. 

But societies and cultures change, as do now the laws and incentives with them. Soon, this method of dealing with problems was essentially outlawed because the government 'needs' a monopoly on legitimate force to maintain power. However, the law of unintended consequences is always at work. When before the cost of failure and the cost of battle was so high, people were more careful and deliberate as to how they acted. When everyone trains to be dangerous and has the ability and willingness to actually act on it, you begin to consider you options and your attitude a bit different. By changing this, they noticed a change in their children and subsequent generations, where they had lost the respect and humility of people who grow up through a lifetime of learning through losing. This led to the creation of judo as a sport that wasn't specifically intended for use on the battlefield anymore but as a tool of character development. 

Almost all martial arts follow a somewhat similar pattern and it leads to a question that must be asked both during this transition and often afterwards. How do we come up with a set of rules for our new training? Surely, before they became sports, people still trained with rules. Those rules then become the traditional structure of what makes the style of training, because contrary to what most people think: The style is a way of training not specifically a way of fighting. The end state of all of these styles originally was to win in war, what made them different was how they trained to that end. So our rules must make the training safer so we should be able to get in the most repetitions, the most live repetitions, but not create structures which reward ineffective techniques. We wouldn't want to reward the gaming of training or drilling because even distorted incentives are responded to. 

The Danger of Tournaments

Competitions in martial arts and the combat sports have existed for as long as they have, or pretty close. Before you go try techniques in battle you might want to try them somewhat live at home. Even war drills and mock maneuvers are done by commanders, practicing moving their formations in preparation for the real deal. Think of the original competitions as a form of dress rehearsal. 

A lot of my future examples will come from jiu-jitsu, but for now I want to talk about muay thai. It followed a very similar path as jiu-jitsu and from an early time developed a competitive aspect. People who won local fights would eventually be a city or regional champion, and those champions would fight each other for honor. The rewards on these champions were great but so was the loss of face in defeat. During peace time especially, winning these fights became the focus of a lot of individuals, because... people... respond... to... incentives. They are using a skillset they have spent their time as a soldier developing to maximize their return in peace time. 

The original fights in muay thai didn't have rings or time limits. They kept going until one person was incapacitated or quit. There was no ruleset other than to win, and grappling / biting / whatever you wanted to do was not incredibly uncommon. This doesn't really promote people being able to have long careers fighting and probably discourages a lot of people then from training. So the constrained optimization problem is how do we get the most people training the safest version of this style while also maintaining its effectiveness.

The answer is straight forward but not simple. People respond to incentives. 

If falling on the ground in battle meant near certain death at the hands of someone with a weapon (or a friend with a weapon), then you make it so that dumping your opponent on the ground while you remain standing over him is highly weighted on the scoring. This would apply to knock downs with your hands or feet or knocking your opponent off balance while they are attempting to performing a technique on you. 

In the context of pure grappling, if you want to emphasize position control so that punches or weapons can be used, then you give more points for advanced positions. I don't need to punch you to be able to punch you, but in the absence of he ability to win via punches why would I specifically risk advancing to a position that offered me no reward? So we take away the reward of the position for safety reasons, which is to be able to strike, but replace it with a reward of another kind to still promote the methodology. 

But is the primary role of a tournament, in the USA at least, meant to spread the art of muay thai? Or boxing? or jiu-jitsu? Or wrestling? 

For probably all tournaments, the answer is no. The incentive structure isn't there. People go to tournaments to win prestige and medals and pay tournament promoters for that. The tournament promoter has to deal with insurance providers, commissions in some instances, and the biases of their athletes and trainers who pay them to compete. 

The more divisions you can have the more chances to win so the more different people will compete. The divisions become arbitrary and tend towards increasing. Even the rules begin to change. Judo, had an issue with people from other grappling styles coming in and just double legging people and winning judo tournaments, so they banned touching the legs with your hands. This meant that to compete in judo you had to train with judo coaches and schools and athletes (and not wrestlers) and such gets more buy in now from the judo community at these pure judo tournaments. 

If we allowed people in muay thai to catch kicks and dump their opponents on their heads by sweeping out their remaining standing leg, well maybe people would throw less kicks and start practicing how to take people down more. This incentive skews training and becomes problematic for some schools that don't focus on both the boxing aspect and the clinch / dumping aspect of muay thai. 

From a school business perspective, this makes some sense to be against this. The more the MMA, boxing, and grappling community can compete with you in tournaments, the more they can compete with you for business. You no longer are unique, and their are substitutes for your training now. In fact, you may not be a substitute for them as much as they are for you. You see this line of thinking in even how schools advertise. Schools try to hop on the success of other styles in good times, or differentiate themselves for other people to tap into different markets.

So we ban dumping in muay thai, right? 

Then in jiu jitsu we take away the incentive to go for a takedown by making guard pulling no points, and then for people who want to get the points they have to go for rushed takedowns and risk the submission more. Hell, why not do away with points entirely and make it sub only so that the positional grapplers such as wrestlers are even more disenfranchised by the rule set but yet dominate sports with more lenient rule sets like MMA. Then we can call that pure jiu-jitsu, which seems to imply that pure jiu-jitsu is awful in real fights. 

I doubt though that most people would admit that purely marketing, business / money, and personal bias was why they thought so strongly about these rule changes being beneficial to the 'sport' or the culture. If you study the idea of 'Bootleggars and Baptists' you will see too that enlisting people on the side of the Baptists protect the interests of the bootleggars from a much more defensible position, but some close inspection may reveal otherwise. But even if the promoters were being honest in why they changed the rules, from their perspective, there is another consideration. 

The law of unintended consequences is one of the driving forces of the economic way of thinking. In fact, there is a rule that goes both directions; the ripples from what I do effecting things in ways I may not have predicted and then the way that other actions will effect my bubble in ways I could never have seen. Muay thai and the other combat sports are no exception to this. 

If we put up red light cameras, rear end accidents at intersections go up. The trade off is in what other accidents go down, and that's how we should judge the rationality of the decisions to put up red light cameras. How many rear endings at the intersection are worth cross traffic accidents in the intersection? What if we force people to wear seatbelts? In each accident, the odds of it being fatal go down. But what if, as evidence shows, the overall accident rates goes up and so the total number of injuries and fatalities actually increased? 

If we eliminate something like dumps in muay thai, what does that effect? Well, the round has more time actually punching and kicking each other because there are less pauses in the action due to the dump and the getting up off the ground; this could potentially increase head injury rates. Also, by eliminating a path to victory that is relatively safe in the context of things such as head injuries, you make the athlete instead focus on 'stopping' their opponent via head injury more. This is apparent when you compare the concussive head injury rates in MMA and boxing. These sorts of weird outcomes are how forcing amateur boxing athletes to wear headgear was actually INCREASING the rates of concussive head injuries in boxers. 

Whats good for the muay thai school but more than likely bad for the student, is you make them less effective in other sports such as MMA and make MMA training less effective in muay thai. Lets take that a step further. If you own both a large promotion for something such as muay thai, and then also own a school where you predominately teach muay thai, it seems a very dangerous route to rent seeking with your ability to manipulate the rules to how you specifically train and to reward your students and your style. Most anyone who has been around combat sports long enough has seen promoters who try to rig the outcome of fights by picking opponents or rules that favor their guy. 

Consider how even having weight classes to promote more fair competition has in some ways made it more unsafe if not carefully implemented. So we have an athlete who cuts weight to compete and be the biggest strongest person, and because he is rewarded for this, other people also do it. Now, because most people are cutting the weight, he isn't the biggest strongest person, and the field is relatively fair again. Success! Except... now they are both very dehydrated and more prone to head injuries and the like and also a certain amount of time is spent weight cutting and not training, which was supposed to be the purpose of the tournament to see who trained more and was more skilled at fighting and not weight cutting... So we are back where we started, as athletes, except we are spending less time training and more susceptible to injury. Not to go super far down this rabbit hole but this example of a prisoners dilemma is how people end up making problematic decisions based on the incentive structure given by both the organization and how we predict others will react to those incentives. 

The problem doesn't stop at the tournaments. People respond to incentives. You force people to wear headgear, they wear it in practice so they can win a tournament wearing it. You ban dumping in muay thai, people in practice stop practicing them as much because it has no pay off or at least less of one overall. The competitions we have shape the ways that we train if we aren't careful and diligent about how we look at these things. How much BJJ schools preach a self defense emphasis and then spend a good portion of time drilling guard pulling and how to get advantages? Once you see the answer to that question, its hard to deny how competitions shape training and not the other way. 

The solution? I don't know. In my gym we promote the idea of training to fight and competing to in specific events as a way of testing it in a more limited situation by which I can learn and grow. We don't train for tournaments, we train to be better and to be adaptable and then to win in whatever given rule set. However, as a pattern prediction, people who train more specifically to game very specific scenarios will in the long run edge our athletes that train to just be better at fighting, especially as combat sports move further and further from combat. 

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