When the NHL announced it would return with playoff hockey, analysts took to TV and social media with their professional analyses. In this blog post, we ask a question you won’t see covered by the sports analysts: 
How unequal are the salaries among NHL players? At the end of the post, our team at Econ Eye makes our official prediction for the 2019-2020 Stanley Cup champions.
How do economists visualize inequality?
A clever graphical tool called the Lorenz curve enables economists to compare the distribution of income in different periods, in different places, and using different measures. The income Lorenz curve graphs the cumulative percentage of income against the cumulative percentage of households. With perfect equality, the Lorenz curve would be a 45-degree line. (We build a Lorenz curve for the NHL in the graphical exercise below.)
How do economists measure inequality?
A standard measure is the Gini ratio, which measures how equally incomes are distributed compared to perfect equality, and has a value between zero and one. A country (or sports league) with a large Gini ratio has a highly unequal income distribution. If income is equally distributed, the Gini ratio is zero.
What is the Gini ratio of NHL players’ salaries?
The Gini ratio for NHL players’ salaries is 0.460. For comparison, Canada and the U.S.—the home countries of all 31 NHL teams—have Gini ratios of 0.303 and 0.486, respectively, when looking at after-tax income.
Does inequality vary by position?
All NHL players can be grouped into forwards, defensemen, or goalies. The salaries among defensemen are the most equally distributed with a Gini ratio of 0.439, followed by goalies with a Gini ratio of 0.452, and finally forwards with a Gini ratio of 0.467.
Does inequality vary by team?
Income inequality varies greatly between NHL teams. The team with the highest amount of salary inequality is the San Jose Sharks (0.554), followed by the Los Angeles Kings (0.552) and the New York Rangers (0.533). The teams with the highest equality of players’ salaries include the Vancouver Canucks (0.366), the Carolina Hurricanes (0.385), and the Calgary Flames (0.389).
Does a team’s equality (or inequality) influence its performance?
Great equality enhances team spirit, which might improve the team’s performance. Greater inequality strengthens the incentive for a low-pay player to work hard, which might improve the team’s performance.
When we ran the numbers, we found these two influences on team performance were similar—the relationship between salary inequality and team success is weak.
What is Econ Eye’s Official Prediction for the 2019-2020 Stanley Cup Championship?
Even though the correlation between salary inequality and team performance is weak, we’ll go against our training and use it. The weak correlation suggests teams with higher equality among players’ salaries perform better, on average. We’ll predict the team with the lowest Gini ratio will be the 2019-2020 Stanley Cup champions: Vancouver Canucks.
Let’s look at the distribution of NHL players’ salaries.
Now take a short quiz to check that you understand what you just read.
Multiple Choice Questions: NHL Salary Inequality