Once he got to college, Backstrom put his hobby on the backburner to focus on his studies. But his interest in trading cards was rekindled when his study of economics cast a different light on the card market. Now, as an assistant professor in the Department of Agricultural Sciences at Texas State University, Backstrom uses the sports and trading card market as a research laboratory.
“It’s an open-air marketplace where we can run economic experiments in real time,” Backstrom says, with relevance to asset valuation, grading and authentication, bargaining and auctions, market manipulation, portfolio and risk management, and marketing. “The insights matter for the card market, of course, but many features and issues in the market also apply to other settings, including commodities trade, agriculture, energy, environmental and natural resource markets, and even studies of discrimination.”
On the front row, Mickey Nolen, Dr. Jesse Backstrom, and Joey Lozano display sports collectibles at the TX Hill Country Card Show.
Connecting agriculture to the card market
Backstrom, who's known to his students as “Dr. B,” grew up with an appreciation for agriculture due to spending his childhood summers on his grandparents’ dairy farm in Wisconsin. He studied environmental science as an undergraduate and eventually found his lane at the intersection of environmental science and economics.
“Ecologists often underweight economic realities, and economists can oversimplify ecological systems,” he says. “I’m interested in bridging that gap with evidence.”
As an economist, he applies that toolkit to study real-world questions. In one ongoing experiment, he’s studying why bidders become overoptimistic in “common value” settings—think an unopened pack of cards or an undrilled oil lease—where the true payoff is the same to everyone but unknown at the time of bidding.
During his postdoc work at the University of Chicago, Backstrom’s advisor was Dr. John List, whose field experiments at card shows in the 1980s and ’90s helped pioneer modern economic experiments in natural settings.
Backstrom and List have since teamed up to study today’s card-collecting hobby—including digital marketplaces, third-party grading (a process of authentication and assigning a numerical grade based on card condition), live “breaks” (when people place bids on cards before the package is opened for a live audience), and influencer marketing. Some analysts estimate the industry to be worth around $12 billion and say it has outpaced broad equity indices over the last two decades.
Attendees at the TX Hill Country Card Show.
Conducting sports cards research in the field
Over the last five years, Backstrom has attended more than 20 different card shows around the country, setting up a booth with his “TXST Economics and Sports Cards” backdrop. Backstrom also imagined the creation of a new type of card show series—one with a university umbrella over it.
This summer, he launched the TX Hill Country Card Show, the first student-sponsored card show on a university campus. Graduate students Mickey Nolen and Joey Lozano, both card collectors themselves, were instrumental in planning the inaugural event, which ran August 9-10 in the LBJ Student Center and drew attendees across all ages.
Nolen, who is also the vice president of the Agriculture Business Association at TXST, met Backstrom while in his international food and fiber systems class as a sophomore. “I attend card shows with him, talk to attendees, and collect data points for his project,” Nolen said. “It’s been a very fun experience.”
A student examines sports cards at the TX Hill Country Card Show.
Backstrom and Nolen are also working on another project that focuses on “repacks,” which are custom-assembled packs created by collectors and sold on the secondary market. They hope to study risk preferences and how transparency and the degree of information about value distributions (within repacks) influence bidders’ risk-taking tendencies.
Backstrom’s goal is to study the factors that drive overoptimism in a setting when people are bidding on items of uncertain value—like a pack of cards that might contain a sought-after rookie card of the next great NFL quarterback.
“An analogy I like to use is oil and gas lease auctions,” he said. “The federal government has mineral rights in the Gulf that it auctions. Firms have to figure out what is a competitive bid that they can place that gives them the chance to win the auction. But they have to be mindful of the fact that there’s uncertainty surrounding how much oil and gas might actually be in those leases that they’re seeking to acquire.”
With a pack of unopened sports cards, there is uncertainty that the pack will actually contain a valuable card. Buyers have to spend time and resources figuring out the odds of the desired card being in the pack along with the prices of those cards, while also factoring in what the competition will be like before determining a competitive bid to give them a chance to win the auction.
“In our setting, we’re trying to provide more steps that allow bidders to be a little more cautious and rational when it comes to bidding,” he said. “And that’s not only just for the purpose of trying to win the auction, but if they win the auction, that usually sends a signal that their bid was the most optimistic. However, oftentimes, they open the pack only to realize that the valuable card they were in search of was not there.”
Backstrom is also using the card market to explore market manipulation, commodities grading, repack trends, pricing, collector psychology, and other market dynamics.
Exploring the historical hobby versus modern investing
Looking broadly at sports and trading cards, Backstrom said collecting was historically a hobby where people collected the cards they liked, whether it be their favorite players, teams, or Pokémon. As time went on, investors began to realize the value of hard-to-find cards. For example, an ultra-rare baseball card from 1906 sold at auction for $7.25 million in 2022.
“It’s increasingly thought of as a nontraditional asset class, much like how art is viewed,” he said. “Many people are actively seeking to invest some of their personal wealth into those classes.”
In fact, the PWCC 500 Index, which tracks the sales of sports trading cards that were released before 2000, outpaced the S&P 500 from 2020 through early 2022.
What Backstrom finds interesting in the current market, though, is the discussion surrounding what drives people to collect sports cards for active players versus trading cards for retired players or characters, such as Pokémon.
“In the sports world, there’s more volatility and factors that can influence the value of a card,” he said. “With vintage cards, their card values are a little more set in stone and mirror Pokémon cards. With modern cards where playing careers are not complete, their values are more speculative while the players have however many years left of their careers.”
Backstrom is analyzing the data he has collected over his five years of research and drafting a paper analyzing overoptimism among bidders. He expects to submit it for publication later this fall and present his findings at conferences next spring.
TX Hill Country Card Show
A second TX Hill Country Card Show is set for November 1-2 in the LBJ Student Center and is open to students and the general public. It will feature appearances from TXST athletes including Bobcat running back Lincoln Pare, quarterbacks Brad Jackson and Keldric Luster, and wide receiver Beau Sparks.
Lane Fortenberry
Lane Fortenberry is the internal communications manager for TXST's Division of Marketing and Communications. He writes stories for the TXST Newsroom, runs the Campus Communicators group, and drafts talking points for presidential events.
