Racehorse sales have little to do with ‘homo economicus’

Economic theory has long been dominated by “rational economic man” or “homo economicus”. This individual was dreamt up Adam Smith, a Scottish thinker of the 18th century, who reckoned people tend to make decisions in a rational way – properly weighing up pros and cons – and always in their very narrow self-interest.

Later economists picked apart this idea, with many saying humans are far from rational and are, in fact, wildly emotional, riddled with bias and often plain stupid. Lots of these critics have won Nobel prizes.
And yet, the rational man remains a central theme in economics and psychology.

All the brainboxes should go to a thoroughbred horse auction, observe the decision making that happens there, and then argue among themselves about rationality, self-interest, emotion and the like.

Take Sunday’s Cape Yearling Sale at Hollywoodbets Kenilworth.

Red-hot cash cards

South Africa’s economy is in the doldrums, unemployment is horrendous, politicians are stirring trouble, much of the world is spoiling for war, the local racing industry is still febrile after narrowly escaping Armageddon … in short, the mood isn’t conducive to splashing out money on a luxury, arguably irrelevant, pursuit.

Yet the Kenilworth bidders’ cash cards were red-hot. A press release from Bloodstock SA put it in business lingo: “A solid market and a strong bench of buying power came to the fore.”

All the numbers were up on the previous year’s sale. The gross aggregate rose by more than a million – to over R26-million – despite there being a smaller catalogue than in 2023.

Both average and median prices increased: the average rising from R171,151 to R206,756, and the median gaining from R130,000 to R180,000.

“With reasonable reserves set on the majority of yearlings, just 10 lots failed to find new homes,” said BSA.

In particular, the progeny of several young stallions got people excited and trying to outbid one another.

It might not have been obviously rational behaviour, given how few racehorses actually turn a profit, but it was narrowly selfish – as in satisfying egos and striving for personal happiness.

Godric Gryffindor

A pair of colts by new stallion One World jointly topped the sale – at R900,000 apiece. Lot 113, called Godric Gryffindor, was knocked down to the Hollywood Syndicate and Lot 37, Undivided, went to Sandy Arundel.

One World is a former Cape Met winner. Just the day before, at the very same venue, his name was to the fore when he registered his first stakes winner, in the shape of One Stripe, who bolted to victory in the R1-million Cape of Good Hope Nursery.

So, might there have been traces of rationality after all?

Godric Gryffindor was produced by the six-time-winning Master Of My Fate mare Preferential, while Undivided’s dam Dipladenia, a winning daughter of Flower Alley, was produced by a twice-winning daughter of Western Winter and multiple Grade 1 winning champion Dancer’s Daughter.

Further proof of rational thinking?

This was a small sale in the broad scheme of things, but the strong market will have thoroughbred breeders and stud farms looking forward to the country’s premier marketplace – the National Yearling Sale on the Highveld in mid-April – with some confidence. What imminent election?