Effects of Deflation and Macroeconomic Shocks on Leisure Spending in the Pre-War Era: Evidence from Major League Baseball, 1890–1940

Pre-war baseball attendance data afford a unique opportunity to assess how leisure spending fared not only through deflation but also after such shocks as the Spanish Flu of 1918 and the 1929 Wall Street Crash. Long-run analysis via a vector error correction model (VECM) reveals significant cointegration of baseball attendance with both prices and output. A long-run positive relationship with prices offers evidence of a negative impact of deflation on leisure spending, suggesting that deflation is indeed more to be feared than inflation. There are also apparent parallels between the post-pandemic boom in leisure spending in 1919 and the post-2020 experience.