According to ESPN analyst Kirk Herbstreit, athletes are dropping out of bowl games for a variety of reasons. In fact, Herbstreit believes that extending the playoffs will not fix the problem. "I'm not sure if modifying it, enlarging it is going to affect anything," Herbstreit said on Saturday's College GameDay broadcast.

Herbstreit’s comments drew a large amount of criticism, with many others in the sports commentary industry arguing players still love football, but they fear injury. It's the fear of career-ending injuries which is driving the decision to opt out of bowl games goes the counterargument.

In response to abundant criticism, Herbstreit walked back his statement a little, but didn’t really change the substance of his claim. He highlighted in a Tweet that “of course some players love the game the same today as ever.” However he immediately followed up this remark with, “but some don’t.”

Just wanted to clarify some of my comments from earlier today. Of course some players love the game the same today as ever. But some don’t. I’ll always love the players of this game and sorry if people thought I generalized or lumped them all into one category. pic.twitter.com/PS9Pu5rcoo

— Kirk Herbstreit (@KirkHerbstreit) January 1, 2022

Personally, I agree with those who believe Herbstreit's explanation for why players are skipping bowl games is inadequate. It's crucial to note, though, that Herbstreit's detractors don't have all of the facts.

True, players can suffer career-ending injuries in bowl games, but this isn't a new occurrence. Because injuries have always been an issue for athletes to consider, injuries alone cannot explain why players are increasingly opting out of bowl games.

So, what's the deal with athletes opting out of bowls? To understand why, we must first grasp certain fundamental economic concepts.

Opportunity Lost

The necessity of sacrifice in sports is the first subject I teach in my Sports Economics program for MBA students. Consider the use of a first-round draft choice by an NFL team owner and coach. One possibility is to utilize the choice to get a star quarterback who will almost certainly be taken in the first round. We can even envision them trading their first-round pick for a number of second-round picks. They might perhaps utilize these choices to improve their offensive line.

Choosing one option over the other, whether it's a great quarterback or a rebuilding of the offensive line, involves sacrificing the other. It's impossible to utilize a first-round draft selection and then trade it for more second-round picks. Economists refer to the opportunity cost as whatever the highest valued foregone alternative is.

The opportunity cost is two second round picks if the coach and owner elected to utilize a first-round pick rather than exchange it for two second-round picks.

However, if the opportunity cost of doing a particular action rises (i.e., more sacrifice is required), we should anticipate people to choose that activity less frequently.

For example, if the coach and owner are offered ten second round selection picks instead of two, we should anticipate them to trade their first round draft pick rather than utilize it. To put it another way, when the opportunity cost of using a first-round draft selection rises, we should anticipate clubs to trade it more.

How Much Lost?

This idea of opportunity cost may now be applied to players who skip bowl games. The potential of injury, as Herbstreit's critics point out, is the opportunity cost of participating in a bowl game. But, as previously said, competing in bowl games has always come at a cost.

To understand why athletes are opting out now, consider that the financial loss from a career-ending injury is bigger today than in the past. Because the opportunity cost is higher in economic terms, players are playing in fewer bowl games.

Compare now to the year after Herbstreit graduated from college, 1994, to see this plainly. In 1994, a selected rookie in the NFL may be paid as little as $104,000. If we compensate for inflation, this amount would be worth around $180,000 today.

In 2021, however, the NFL's minimum wage for selected rookies will be $660,000. In other words, if a collegiate player who is expected to be selected into the NFL suffers a career-ending injury in a bowl game, they will lose roughly $480,000 per year more than a guy who played when Herbstreit did.

If we multiplied that sum by the average number of years in an NFL career (3.3), it costs players $1.5 million more now than it did in 1994 to miss the draft due to a bowl game injury. This isn't even taking into account how much money superstar rookies can make in the NFL today–simply it's comparing the league minimum.

Is it reasonable to conclude that the fact that more players skip bowl games today than in 1994 demonstrates a lack of enthusiasm for the game? Not at all. In 1994, players just didn't have as much to lose if they got hurt. It's possible that current players are less enthusiastic about the game, but it seems far less plausible than the economic reason.

The lesson is obvious. People will do less of something if the opportunity cost of doing it rises, even if they enjoy it. Every choice, especially those in sports, is based on economic considerations.

Although this assertion has more truth than the previous one, a comprehensive study reveals that it is still untrue. Why? To comprehend, we must evaluate the foregone choices once more.

Alternatives to “Infrastructure”

So, when $1 trillion is spent on an infrastructure bill, what’s the opportunity cost? Well, given that people prefer lower deficits, one alternative way to use $1 trillion dollars is to pay down the deficit.

So, instead of paying for infrastructure, imagine a future where this trillion dollars are utilized to reduce the debt. The deficit would be one trillion dollars smaller than it is now if this were to materialize. This is the flaw in the argument that the infrastructure plan will not increase the deficit. While the deficit will not grow in absolute terms if the infrastructure bill is enacted (provided adequate income is collected), the deficit will grow relative to a world in which the revenues are used to reduce the deficit.

It's worth noting that this is the best-case scenario for the infrastructure bill right now. If Congress can only supply one of two goods: 1) building infrastructure or 2) reducing the deficit, the highest value alternative use of money for infrastructure is, by definition, reducing the deficit. The best case scenario for building infrastructure is a slightly greater deficit. If there are other things that might be done with the $1 trillion in wealth, it's likely that Congress is passing up a better opportunity.

What is the societal benefit of taxpayers maintaining their $1 trillion and investing money in tens of thousands of enterprises and purchasing things from tens of thousands of others? The worth of this choice is beyond our abilities to assess, yet it's plausible, if not likely, that it's better than paying down the debt. If this is the case, the infrastructure cost will be substantially higher.

The Bottom Line

No such thing as free infrastructure exists.

However, in spite of unpredictable swings in the economy and prices, one store has remained consistent throughout it all. Dollar Tree has long been known for being the last true “dollar store” which spans the whole US. For the last 35 years, when you walked into the Dollar Tree, you knew you wouldn’t spend more than one dollar per product.

All of that is changing, however. After 35 years, the Dollar Tree has announced they’ll begin to carry products with a price over one dollar. This invites two important questions: how was the store able to keep prices low for so long, and what is changing now?

Dollar Tree and the Art of Shrinkflation

To figure out why the Dollar Tree has decided to raise prices now, it’s important to consider why and how they’ve gone without changing prices for so long. As any bargain shopper knows, the Dollar Tree isn’t really the cheapest option out there. Buying large quantities in bulk is going to get you the best per unit money price every time. So if the Dollar Tree isn’t offering the cheapest per unit price, what’s the draw?

In a word: consistency.

Consumers like consistent prices and product availability. There’s nothing more annoying than going to a store and seeing an empty shelf or a price tag double what you expected. People know what to expect at the Dollar Tree. Need a box of candy for a movie? That’ll be one dollar please. Looking for a travel size shampoo? You know where to find it. Want a cheap toy for your kids? No sticker shock at the Dollar Tree.

This is why Dollar Tree is so resistant to price changes. In a world of credit cards, is $1.50 that much harder to swing than $1? Not for most. But that isn’t the point. People appreciate the one-dollar ceiling at the Dollar Tree. It makes it easy to plan.

But how does the Dollar Tree do it? When there is inflation, the value of a dollar falls. How can the Dollar Tree offer the same products year after year in exchange for a less valuable dollar?

Let me answer that question with another question. Why don’t you buy all your phone chargers at the Dollar Tree?

The Dollar Tree does carry chargers for phones, and they’re certainly cheaper than the prices on Amazon or at Walmart. So why doesn’t everyone get their phone charger from the Dollar Tree?

Most of you probably have an answer. Dollar Tree phone chargers are awful.

If you buy a phone charge from the Dollar Tree, it’s probably because you had an emergency. You know that it will probably only work for a day before it breaks. And here is our answer. The Dollar Tree doesn’t offer the same products every year for a less valuable dollar. They offer worse products for the less valuable dollar.

By spending additional resources, companies that make phone chargers can make them more resistant to wear and tear. If you have an iPhone, you may have at some point purchased a charger with a metal cover rather than the cheap plastic that breaks. These chargers are better, but they’re more expensive to produce. The Dollar Tree can use this logic in reverse. By making their phone chargers lower quality every year, they’re able to offset the fact that the one dollar used to purchase the charger is less valuable.

Another way the Dollar Tree can keep their prices low is by shrinking the size of a product. Is the dollar 5 percent less valuable this year compared to last year? Easy fix—make your shampoo bottles hold 5 percent less shampoo. Economists call the practice of reducing the quantity or quality of a good while keeping its price the same shrinkflation.

Shrinkflation is a form of inflation because you’d have to spend more money to get the same quantity or quality as you did in a previous year. The prices have remained the same, but the products are worse.

The Limits of Shrinking

It’s no secret that the US is experiencing higher than desired inflation over the last year. Recent inflation numbers show inflation well above the 2 percent target set by the Fed. Some measures have inflation at its highest rate in three decades. Just recently, Atlanta Federal Reserve President Raphael Bostic admitted inflation “will not be brief.” This flies in the face of Federal Reserve Chairman Jerome Powell’s claims over the last few months that inflation would be “transitory.”

So, inflation is higher, but then why would Dollar Tree raise its prices? Why not just use shrinkflation techniques to combat inflation? The answer is straightforward—there is a technological limit on how low quality you can make your products.

Consider, again, the Dollar Tree phone charger. People don’t mind the bad quality, because they expect it. If it breaks after 5 charges, there’s no surprise. Here’s the problem though: there is a minimum amount of inputs you need to make a charger work. If the Dollar Tree tries to cut the use of raw materials like metal in a charger, there’s only so much they can cut before the charger doesn’t work at all. If a charger doesn’t work for at least one charge, selling it is simply fraud. There are technological limits of shrinkflation.

The unprecedented move by Dollar Tree is unsurprising, then, given higher rates of inflation. The rampant money printing since January 2020 has caused the value of the dollar to fall, and Dollar Tree has decided that the cost of trying to force the quality of some products down even further is greater than the cost of alienating customers by raising some prices above a dollar.

So, although $1.50 phone chargers may not be the end of the world, I believe this change is a signal. It’s a signal that high price levels are expected to persist, and even the store with the stickiest prices must now let them rise. Inflation fought a 35 year war with the Dollar Tree, and, in the wake of unprecedented money-printing, inflation won.