The Impact of Moneyball on the MLB

Yesterday, Skip Sauer, an economist from Clemson University, posted over at TSE about how the impact of Michael Lewis's Moneyball on Major League Baseball.

When Jahn Hakes and I embarked on our first academic paper on the subject, we thought there was a decent chance that we could refute the economic claims in Moneyball, in particular that players with high OBP were under-priced in the labor market.  Any card-carrying economist knows this is inconsistent with equilibrium in a well-functioning, competitive labor market, and were not baseball teams intensely competitive?  But instead, Jahn and I found that high OBP players did come cheap, relative to the contribution of their skill to winning baseball games.  Intriguingly however, we found that the “OBP discount” vanished in 2004, the year that Moneyball was published.  The likely reason:  other teams, like Michael Lewis, had looked into what was going on in Oakland, and hired people out of the A’s front office.  Now there were multiple bidders for high-OBP players in baseball’s labor market, thus driving up their price.

OBP refers to on-base-percentage. And more from his second paper inspired by Moneyball.

In the early, pre-expansion period of 1986-1993, the estimated percentage boost in salary from a one standard deviation increase in the ability to take walks was a measly 2.8%.  Post-Moneyball, the figure was 14.0%.  The financial returns to the overlooked skill increased by a factor of five. Is that not indicative of a fundamental change in the game?

Pretty impressive findings. I've been thinking about sports economics as a potential career for several years now. Perhaps this movie will generate some buzz and increase demand for people trained in economics, statistics, finance, and mathematics that want to work in professional sports for a career. Or even college sports for that matter. As someone who grew up in a great college town, I wonder about the extent to which big-time college football programs are actively implementing advanced statistical analysis to improve their teams.