Moviegoers with an interest in either Brad Pitt or statistics will find much to enjoy in Moneyball, the new film adaptation of Michael Lewis’s book examining the analysis-heavy strategy employed by the cash-strapped Oakland Athletics. Since its release, the book has been frequently invoked as a portrait of how teams with smaller payrolls can gain a competitive advantage by foregoing players who rack up impressive traditional statistics, like RBIs, in favor of those with talents in more obscure realms, such as on-base percentage. But as Jonathan Lehman points out today, a number of critics now argue that this strategy was all hype. What do the experts say?
A 2004 paper by two Clemson economists, called “An Economic Evaluation of the Moneyball Hypothesis,” finds that Lewis’s thesis was essentially correct: The baseball labor market did indeed exhibit “significant inefficiency” when Lewis wrote his book—but the new ideas spread so quickly that those inefficiencies have been mostly eliminated. The authors first note that the book’s claims are correct. Battingaverage is indeed a poor estimate of a player’s added value, and on-base percentage, once widely undervalued by baseball insiders, actually gives a better measure of a player’s worth. In their analysis of the 2000-2004 seasons, the authors find that this misevaluation was widespread: “the coefficient for slugging is significantly greater than the coefficient for on base percentage, which is the reverse of their importance to team success.” But today, that insight is available to everybody, so it’s more difficult to use it to gain a competitive advantage. “The particular margin of inefficiency emphasized in Moneyball, undervaluation of a batter’s ability to get on base, appears to have been substantially if not completely eroded by the time the book was published,” the authors conclude. Still, as Lehman notes, that doesn’t mean the Moneyball “method” is irrelevant, because the book is about more than just one static insight. Rather, Lehman argues, it’s “an idea, its norms constantly evolving to keep pace with a dynamic market.” For fans of small-market teams (like my poor, beloved Cincinnati Reds), that comes as something of a relief—we may not have the most money, but if we can master a statistical analysis of major league baseball in a given season, the playoffs might finally be within reach.