Paul L. Caron

Tuesday, April 22, 2008

Is Moneyball Passé?

As long time readers of this blog know, I have an interest (obssession?) in the application of objective metrics, à la Michael Lewis's wonderful Moneyball book, in measuring law school and law professor performance.  (See links below the fold.).  But Dan Drezner suggests that the Moneyball phenomenon may be a victim of its own success -- Winning Strategy Loses Its Edge (Marketplace):

Some baseball traditionalists are delighted by the A's woes. To them, this represents a clear rebuke to Michael Lewis' 2003 book, "Moneyball." That book chronicled how Billy Beane allegedly out-drafted, out-traded, and out-thought other baseball GMs by relying on sophisticated baseball statistics known as sabermetrics.

This innovative strategy helped the A's outperform their payroll, because Beane signed and drafted players that performed better than baseball scouts expected. He applied a simple economic principle to the practice of building a baseball team: When a business sector is run by an insular old-boy network, an outsider can exploit market inefficiencies and reap significant arbitrage opportunities. For some of those traditionalists, the apparent decline and fall of the A's symbolizes the failures of the "Moneyball" philosophy.

But as sabermetric methods have become more accepted in the boardrooms of baseball, Beane and other innovators have fewer inefficiencies to exploit. Since the publication of “Moneyball,” almost every team in the major leagues has incorporated sabremetric thinking into their organization.

The Boston Red Sox won two World Series in the past four years while employing Bill James, the godfather of the sabermetrics community. Other franchises around the league have also hired young sabermetrics devotees to run their front offices. The result: The popularization of sabermetrics has left Beane with less of an advantage — it’s harder to find diamonds in the rough when everyone else is mining the same territory. The A’s are not struggling because of “Moneyball”’s failure — they are struggling because of its success.

Hat Tip:  Is "Moneyball" Out of Gas? (Voir Dire).

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Maybe the central assertion of Moneyball doesn't involve sabermetrics at all. Maybe it's more about finding *anything* that's undervalued and buying low. Here's a thought experiment: Imagine a world where sabermetrics was always the standard in evaluating baseball players; there was no scouting, nothing but VORP and EqA, etc... The Billy Beane of this bizarro world would likely stumble upon a group that did taboo, underground scouting (like the pre-1980s statheads in our universe), and would use this scouting information to gain a competitive advantage over the other teams so hopelessly mired in pure statistical analysis. A few years later, Michael Lewis writes "Moneyball", a book about how scouts are costing statheads their jobs and how scouting is the wave of the future. Angry statheads fire back: "This is the way we've always done things, how dare these scouts come in and shake up our sport!" A holy war rages on... Not that hard to imagine, right? Because, for Beane at least, it was never about the stats per se -- it was about the data (objective and subjective) that wasn't being properly valued in the marketplace. While teams have certainly caught up to Beane on the OBP front, he was already past that and moving on to the next inefficiency (ever wonder why he would let Lewis spill his trade secrets, if they were so important?). And that's why Moneyball will never die, as long as at least one shrewd GM can stay one step ahead of the curve.

Posted by: Neil | Jun 4, 2008 11:49:47 AM

The problem with Geoff's assertion is that "Moneyball" tracks the A's 2002 season, which is after Jason Giambi, McGwire, Canseco, et. al. (the steroid users) left the team.

Also, don't look now, but the A's are tied atop the AL West division....

Posted by: adb | Apr 22, 2008 2:20:28 PM

Moneyball is passe. It is all supercruchers and prediction markets as far as the eye can see.

Posted by: Apep | Apr 22, 2008 8:39:01 AM

Maybe it depends upon what the central assertion of moneyball is.

If moneyball asserts that by using sabermetrics, you will win more than other teams, it certainly is passe in that widespread adoption of such methods undercuts any advantage early adopters may have had.

On the other hand, if moneyball asserts that by using sabermetrics, you will win more than you would if not using sabermetrics (especially at the same cost/expense), then it seems like the spread of moneyball makes it even more essential. Imagine where the A's would be if they stopped using moneyball entirely!

I should add that I've always been a bit skeptical of the A's / Billy Beane as an example of "baseball genius" or a demonstration of the success of moneyball. The A's success can equally be explained by the relatively high number of heavy steroid users on the team during its "moneyball" heyday. Maybe it was proximity to BALCO, not sabermetrics, that explained the team's success.

Posted by: Geoff | Apr 22, 2008 3:34:16 AM