This website uses cookies to ensure you have the best experience. Learn more

The Kentucky Derby: Implications And Economic Indications

619 words - 3 pages

Notoriously the most famous horse race in the world, the Kentucky Derby is also one of the most interesting economic markets. With millions of dollars flowing into this race for three-year-old thoroughbreds, this unique event is historically an indicator of economic success and growth. Thoroughbred horses are costly and unpredictable investments. The prices paid for a thoroughbred reflect the general willingness of horse owners to take risks and therefore a forecaster of the risk-taking atmosphere of the country in general.
The cost for a Kentucky Derby horse can range greatly, with the most expensive winning derby horse having a purchase rate of $4 million USD (ESPN). In 2014 the median cost for a derby horse was $200,000 USD. A winning horse can have returns of up to three or four times their worth. In periods of economic downfall such as the recession of 2008 the Kentucky Derby also ...view middle of the document...

The utility function shows how utility (a subjective measure of satisfaction) is dependent on wealth. In this example, as the wealth of potential buyers increases, the utility function becomes flatter. That is, the wealthier the buyers, the less impact buying a losing horse will have on their utility. As seen in Figure 1 as wealth increases, utility decreases.

Figure 1:

When utility is leveling out for the demographic that is buying horses to race there is a direct correlation of utility leveling out in other aspects of the economy. When investors are willing to take risks with horses and other gambling situations they are also more likely to take risks in the stock market. When deciding how to allocate their savings, people have to decide how much risk they are willing to undertake to earn a higher return. Putting ones money in a savings account, while it may be a less risky option is also an option that may not return several million dollars as a racehorse may.
The cost of racehorses is not the only risk related economic indicator associated with the “fastest two-minutes in sports” however. The Kentucky Derby as well as being one of the largest markets for a big-ticket item is also one of the largest markets for betting and gambling. The Kentucky Derby generates a substantial portion of its revenue from bets wagered at the event. In 2013 total betting was equal to $130.5 million USD (Kleintop 2).. In 2013 a winning bet of $1 could return $3,462.80.
Wagering is an interesting concept when looking at utility function. In theory gambling fits into the utility theory nicely, with utility flattening out as wealth increases. What this theory fails to include is the inherent satisfaction gained from gambling. Many people at the Derby are wagering purely for the experience and the thrill they gain from watching their horse barrel along the course. This throws a spanner in the utility theory because utility (a measure of satisfaction) is increased purely by the activity itself, not the financial outcome.

Find Another Essay On The Kentucky Derby: Implications and Economic Indications

Maternal-Child Data for Hardin County, Kentucky and the U.S

1217 words - 5 pages In 2012, there were a total of 3,952,841 births in the United States and of these, 55,758 were born in the state of Kentucky (Martin et al., 2013). Hardin County, Kentucky is the home of about 107,025 people (Kentucky Health Facts, 2008). The main cities that make up Hardin County include Elizabethtown, Radcliff, and Fort Knox. Hardin County is considered a rural community. The majority of all births in Hardin County occur in a hospital or

Kentucky History: Warren County and The City of Bowling Green

1471 words - 6 pages . There was a forceful effort by the federal government to recruit and enlist slaves in Kentucky in 1864. Bowling Green and seven other military camps were chosen to obtain and defend those recruits. The bitterness coming from the war and from many families having been divided, left economic and emotional problems that took years to come back from. The Bowling Green population had never experienced military occupation. The Civil War, which put

Kentucky Fried Chicken and the Global Fast-Food Industry

1330 words - 5 pages space for expansion and new competition area is increasing and either offers new resources. For KFC this is a positive message that should support the expansion strategy. However, except market size and growth rate also other industry's key economic features are important. The fast-food industry has very standardized products which is an advantage in case of expansion. In case of KFC the supplier of chicken meat (Tyson Foods) is also supplying the

Economic and Societal Implications on Communities Surrounding Sports Franchises

2922 words - 12 pages & Humphries, 1999; Noll & Zimbalist,1997; Rosentraub, 1997; Zimbalist, 1998; Zimmerman, 1997). With professional sports franchises changing locations so often are there economic and societal implications of a professional sports franchise on the surrounding community? Sports stadiums are across the nation, but within the past decade, sports have become a national pastime not just regional entertainment. With the four major professional sports leagues

The Implications of Economic Deficits on Law Enforcement

1358 words - 5 pages News pertaining to state deficits has unfortunately become society’s reality. The societal implications are evident due to high rates of unemployment as well as the immense struggle of businesses and organizations. Criminal justice agencies are no different, and are equally subjected to the affects of economic deficits. This issue is affecting every state on a different level. For the purpose of this discussion, the state of Connecticut

Revolutions: The History and Implications

1600 words - 6 pages the elements of competition and mass mobilization are intrinsic to understanding the successes of each revolutionary movement. Yet, the catalysts and societal implications for each of these revolutions provides different venues of implementation that separates it from others. It is said that revolutions are the manifestations of an anarchic mentality that is fostered through widespread oppression on a variety of scales. This anarchic mentality is

Discuss the ethical, political and practice implications on accountability in nursing as a result of the current economic climate and recent cuts in health care spending

3588 words - 14 pages healthcare system.This essay aims to analyse and critically apprise evidence from a variety of sources in relation to accountability. All evidence will relate to the current economic climate and proposed cuts in healthcare spending. Professional, ethical and practice implications in relation to advocacy in nursing will be discussed. There are many areas that could be explored within the topic, such as whistle blowing, guidelines or decision

Kentucky Adult Corrections: Inmates with Mental Health Issues and the Facilities

3933 words - 16 pages Kentucky Adult Corrections: Inmates with Mental Health Issues and the FacilitiesThe mission of the Kentucky Department of Corrections is twofold:To protect citizens of the Commonwealth and to provide a safe, secure and humane environment for staff and offenders in carrying out mandates of the legislative and judicial process; andTo provide opportunities for offenders to acquire skills which facilitate non-criminal behavior?The Kentucky Inmate

Using Assisted Reproduction Techniques and the Implications

1554 words - 7 pages psychological, social, economic, religious, and even legal factors. The goal of this article is to consider the advantages and disadvantages of using the Assisted Reproduction Techniques (ART). Fertility is the ability to reproduce, but even though that nature gave all humans this ability, many times there are natural obstacles that prevent human beings from conceived. It is understood as ART the use of diverse artificial technical procedures to

The Cinema and Its Environmental Implications

1248 words - 5 pages Every development project today is creating many implications on the environment, some of which do not entail positive growth but rather cause stress on the natural component. For small island states such as Malta, these implications, particularly in the entertainment sector, are an even greater matter of concern (Briguglio & Briguglio, n.d.). In response to these statements, this essay aims to discuss the processes and impacts of a cinema, both

Fad Diets: The Effectiveness and Health Implications

2428 words - 10 pages Fad Diets: The Effectiveness and Health Implications As humans we are the only creatures who create food into more than just a nutritional need for survival. The American culture and society has a preoccupation with food, which poses a set of challenges for both the physical and mental body to maintain health (Abrams & Wells, 2005). This preoccupation of food causes many medical risks such as obesity, binge eating, food addiction, and eating

Similar Essays

Diabetes: The Economic And Social Implications

1357 words - 5 pages autoimmune, environmental, genetic, and viral factors are involved.2 Type 2 is responsible for other 90 to 95 percent of diabetics in America. Unlike type 1, type 2 diabetes can be directly correlated to "older age, obesity, family history of diabetes, previous history of gestational diabetes, physical inactivity, and certain ethnicities."2 This form of diabetes is interesting and disheartening in its implications and scope. The majority of Americans

The Global Economic And Political Implications Of The South African 2014 General Elections

1549 words - 7 pages South Africa. The purpose of this essay is to explore the world’s stake in South Africa, its nature and what implications the 2014 elections has on it. I will be exploring the South African mining industry by looking at the current platinum strikes and its implications on foreign investors. I will be showing the effects of the South African economy and politics on South Africa’s biggest import and export partner China. I will go further by examining

The Environmental Implications Of Political And Economic Reform In Communist China

2477 words - 10 pages , speedy, large scale, and often unregulated development will obviously have dire consequences for their natural environment. However, recent economic reform isn't solely to blame for the massive environmental degradation which China is experiencing. A long history of political negligence and disregard for environmental policy and practice are also a key contributor to the recent state of unrest. In recent years however, the question of equilibrium

Economic Implications Of National And Private Health Insurance In The United States

3007 words - 12 pages significant economic implications in America where the costs to provide healthcare are high and the overall organization between national/private insurance and hospitals/clinics is highly inefficient. With all of these issues plaguing the national economy with a financial structure that is in disarray, one would question how America’s health insurance developed into a severe problem both from an economic and individual perspective. To understand how