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Many NFL Players Make Abysmal Financial Decisions, Research Shows


OK. If and when UAB's football team gets back on the field, select players might have a chance to tackle that ultimate dream - making it to the NFL. College stars who get there enter a new financial world. In the course of just a few years, successful NFL players can make the kind of money most Americans dream of making over a lifetime. But a new study has found a twist, and we're going to hear about it from NPR's social science correspondent Shankar Vedantam. Hey, Shankar.


GREENE: So what's the study about?

VEDANTAM: Well, the study examines how NFL players drafted between 1996 and 2003 - how they fare financially not over their careers, but over their lifetimes. Now, most players know, of course, that you can make a lot of money in the NFL, but you're in a high-risk occupation. Your career can be cut short for all kinds of reasons, including injury. Colin Camerer is a behavioral economist at Caltech. And he said that conventional theories in economics suggest that when people go through boom times, they usually know that they should sock away a lot of that money for retirement. Here he is.

COLIN CAMERER: If you know you're going through a boom income time, like early in the NFL, you should be saving a huge percentage of that money. Probably, you should be saving 80 percent of it instead of spending 80 percent of it. And then when they have very low income, like they're retired, then you can kind of dip into your nest egg and be paying quite a bit more.

GREENE: So that's the smart strategy. I assume you're going to tell me that NFL players don't always stick to that.

VEDANTAM: (Laughter) That's exactly right, David. And it's not just that players seem to be making poor financial decisions. They seem to be making abysmal financial decisions. Camerer and his colleagues Kyle Carlson, Annamaria Lusardi and Joshua Kim find that there's a staggering rate of bankruptcy among former NFL players, David. They find about one percent of former players go bankrupt every year, and that number keeps rising steadily year after year. So by year 12, for example, about 15 percent of former players have gone bankrupt. Camerer told me there were two things that really surprised them. The first was how quickly bankruptcy started to happen after players left the NFL. Here he is again.

CAMERER: The thing we were very surprised by was that the bankruptcies start almost immediately upon retirement. And also, the rate of bankruptcy seems to be surprisingly unrelated to how long they lasted in the league and how much total money they earned.

GREENE: Well, that's interesting. So it's not just players who come into the league and only are there for a couple years, get injured so they didn't make as much as they expected, then go bankrupt. It's players who've been in the league for a long time - experienced over a long period, amass a lot of money. They go bankrupt, too.

VEDANTAM: That's right.

GREENE: What's happening? Why?

VEDANTAM: Well, you know, there are lots of theories about what could be happening. The researchers wrestled with this in different ways. One theory is you have a lot of young kids entering the league, and perhaps the people who are guiding them are not helping them make very good financial decisions. There could be psychological issues at play. When you make a lot of money suddenly, you start to think of risk very differently. So Camerer finds, for example, that players tend to invest in very risky ventures, like nightclubs, which have very high odds of failure. And that could be because when you make a lot of money suddenly, it's silly money. You don't take the same care with the money as when you earn it much more slowly.

It could also be that players are being influenced by their peers. You know, they see their pals buying expensive cars and big houses. They feel they need to do the same thing. One of the really interesting hypotheses that Camerer wants to explore in a subsequent study is whether football injuries and concussions, in particular, might have something to do with this. Is it possible that players are being injured, and those brain injuries are prompting them not to make good financial decisions over their lifetime?

GREENE: Shankar, thanks, as always, for coming in.

VEDANTAM: Thank you, David.

GREENE: That's NPR's social science correspondent Shankar Vedantam, who regularly joins us to talk about social science research. You can find him on Twitter - @HiddenBrain - and you can follow this program - @NPRMontagne, @NPRGreene and @MorningEdition. Transcript provided by NPR, Copyright NPR.

Shankar Vedantam is the host and creator of Hidden Brain. The Hidden Brain podcast receives more than three million downloads per week. The Hidden Brain radio show is distributed by NPR and featured on nearly 400 public radio stations around the United States.