Sports

Tobias J. Moskowitz has a recent paper on this question, the results are illuminating:

I use sports betting markets as a laboratory to test behavioral theories of cross-sectional asset pricing anomalies. Two unique features of these markets provide a distinguishing test of behavioral theories: 1) the bets are completely idiosyncratic and therefore not confounded by rational theories; 2) the contracts have a known and short termination date where uncertainty is resolved that allows any mispricing to be detected. Analyzing more than a hundred thousand contracts spanning two decades across four major professional sports (NBA, NFL, MLB, and NHL), I find momentum and value effects that move betting prices from the open to the close of betting, that are then completely reversed by the game outcome. These findings are consistent with delayed overreaction theories of asset pricing. In addition, a novel implication of overreaction uncovered in sports betting markets is shown to also predict momentum and value returns in financial markets. Finally, momentum and value effects in betting markets appear smaller than in financial markets and are not large enough to overcome trading costs, limiting the ability to arbitrage them away.

SSRN and video versions of the paper are here.  The underlying idea here is neat.  The marginal utility of consumption is unlikely to be correlated with the outcomes of sporting events, so we can test some propositions of finance theory without having to worry much about those risk factors.  Lo and behold, a version of momentum results still holds up.  And if you would like an exposition of that approach, do see my earlier dialogue with Cliff Asness.  And here is Cliff on Fama on momentum.

Bank of Japan should call them willie wonka bonds “YOU GET NOTHING. yOU LOSE!”

Who is advising Japan? Forcing banks to lend all ¥ will not get 2% inflation. It creates loanees market with even lower rates. Dumb move

Negative interest rates in Japan is blowing my mind

Here is his Twitter account, here is the Bloomberg story.  They promised us flying cars, and all we got was…

Jose Canseco

Here is the video, the podcast, and the transcript.  Kareem really opened up.  Here is the summary:

Kareem Abdul-Jabbar joins Tyler Cowen for a conversation on segregation, Islam, Harlem vs. LA, Earl Manigault, jazz, fighting Bruce Lee, Kareem’s conservatism, dancing with Thelonious Monk, and why no one today can shoot a skyhook.

Maybe you think of Kareem as a basketball player, but here is my introduction:

Kareem Abdul-Jabbar is one of America’s leading public intellectuals. I would describe him as an offshoot of the Harlem Renaissance, and what he and I share in common is a fascination with the character of Mycroft Holmes, the subject of Kareem’s latest book — and that of course, is Sherlock Holmes’s brother.

Here is Kareem:

I did know Amiri [Baraka]. I think the difference is I believe in what happened in Europe during what they call the Enlightenment. That needs to happen to black Americans, absolutely a type of enlightenment where they get a grasp of what is afflicting them and what the cures are.

I think that the American model is the best in the world but in order to get everybody involved in it we have to have it open to everyone. That hasn’t always been the case.

The most under-appreciated Miles Davis album?

For me [Kareem], the most under-appreciated one is Seven Steps to Heaven. And that shows, I think, Miles’ best group. There’s a big argument, what was Miles’ best group, the one that had Cannonball Adderley, Coltrane, Bill Evans, and Philly Joe Jones and Red Garland or Herbie Hancock, Ron Carter, Tony Williams, and Wayne Shorter?…number two is Porgy and Bess.

He cites Chester Himes as the underappreciated figure of the Harlem Renaissance.  And Kareem thinks like an economist:

It [my instruction] was going well with Andrew Bynum, but Andrew finally got to sign his contract for $50 million, and then at that point Andrew thought that I didn’t know anything and that he didn’t have to listen to me, and we don’t know where Andrew is right now.

Read or hear also his very interesting remarks on Islam, and where its next Enlightenment is likely to come from, not to mention Kareem on the resource curse and of course his new book (and my Straussian read of it).  And Kareem on his favorite movies, starting with The Maltese Falcon.  Self-recommending!

Kareem

Robert Parrish could not much push him away from his preferred spots on the floor, but due to snow we are altering the venue:

New venue:

Westin Arlington Gateway, F. Scott Fitzgerald Ballroom (2nd floor), 801 North Glebe Road Arlington, VA

Tuesday, January 26, 2016, 3:30 p.m. – 5:00 p.m.

At the event, you can participate in the conversation by tweeting your questions and comments using the hashtag #CowenKareem.

You can watch the event online at mercatus.org/live

Max Mendez Beck emails me:

Given the advent of statistics in sports that occurred in the last five years, I am struck by how well soccer works as a metaphor for current epistemological debates regarding the use (and primacy) of quantitative versus qualitative data in social science research. While the three major American sports (football, basketball, and baseball) have been overtaken by a quantitative obsession (count how many tables and numbers you see on an average ESPN show), soccer is emblematic of a sport that is quite difficult to measure quantitatively.

Consider how easy it is to determine who did well in an average NBA game without needing to even watch it. You can just look at points, assists, rebounds, steals, turnovers, etc. In soccer, individual statistics are almost nonexistent. Even as major sports channels have attempted to incorporate quantitative measures into their soccer broadcasts–for example, by showing the number of kilometers a player has covered when he gets subbed out (a pretty uninformative statistic on its own)–these numbers have not caught on with the regular fan.

While in basketball everyone debates about who “the best ever” is by referring to their career averages in points, field goal percentage, PER, etc. In soccer the only statistic that is ever used is goals scores, and goals scored is only one small dimension of a player, even smaller if he is not a striker. It would be silly to judge Andrés Iniesta or Zinedine Zidane on how many goals they scored in a season.

So what is it about soccer that makes it so hard to quantify? Or what makes American sports so easy to measure? One obvious answer is the length of the units that can be easily separated and analyzed. In basketball its a maximum of 24 seconds, in baseball its essentially a pitch (or an at bat), and in football its each snap. For soccer, the only apparent unit to separate out is the 45 minute halftime mark. Changes in possession could be another measure, but even then a team’s single possession could be several minutes long.

However, the real challenge comes in measuring individual accomplishments. Just recently I was watching a Barcelona game and Iniesta clearly was having an amazing game (as was mentioned several times by the announcer), and yet the things that made him have a great game were only describable in words and not numbers. There was a beautiful and sudden “regate” or dribble around a defender before he passed it on to a teammate for a quick counter attack. There was the beautiful pass between defenders that led to an assist for the first goal. There was the sudden change in direction and over the top pass to the other side of the field that put the defenders on their heels. Many of these moves are incredibly situational; they have to do with the rhythm of the game and the need to speed it up or slow it down. Nothing in the boxscore could truly capture these attributes.

So the question is: Is soccer something that can’t be measured in numbers?

Here are various readings on the topic.

This was the year when it became clear that much of Eastern Europe probably won’t end up as free societies.  It’s not just semi-fascism in Hungary.  Poland and Slovakia, arguably the two most successful economies and societies in Eastern Europe, took big steps backward toward illiberal governance.  How can one be optimistic about the Balkans?  I imagine a future where African and North African refugees are bottled up there, and Balkan politics becomes slowly worse.  As for Ukraine, a mix of Russia and an “own goal” has made the place ungovernable.  Where is the bright spot in this part of the world?

Nothing good happened in China’s economy, although more fingers have been inserted into more dikes.  I am not hopeful on the cyclical side, though longer term I remain optimistic, due to their investments in human capital and the growing importance of scale.

I have grown accustomed to the idea that Asian mega-cities represent the future of the world — have you?

Syria won’t recover.

This was the year of the rise of Ted Cruz.

It was an awful year for movies, decent but unpredictable for books.  The idea that Facebook and social media rob the rest of our culture of its centrality, or its ability to find traction, is the default status quo.  Not even that idea has gained much traction.  Cable TV started to receive its financial comeuppance.  Yet on the aesthetic side, television is at an all-time peak, with lots of experimentation and independent content provision, all for the better.  I suspect this is one reason why movies are worse, namely brain drain, but I am hoping for longer-run elasticities of adjustment into the broader talent pool.

Against all odds, Homeland was excellent in its fifth season.

I became even more afraid to move my cursor around a web page, and in terms of content, more MSM sites became worse than better.  Banning photos would solve twenty percent of this problem.

Stephen Curry and Magnus Carlsen were the two (public) individuals I thought about the most and followed the most closely.  Each has a unique talent which no one had come close to before.  For Curry it is three point shooting at great range and with little warning; for Carlsen it is a deep understanding of the endgame as the true tactical phase of chess, and how to use the middlegame as prep to get there.  It wasn’t long ago Curry’s weapons were “trick” shots, perhaps suitable for the Harlem Globetrotters; similarly, players such as Aronian thought Carlsen’s “grind ’em down” style could not succeed at a top five level.  Everyone was wrong.

But here’s what I am wondering.  Standard theory claims that with a thicker market, the #2 talents, or for that matter the #5s, will move ever closer to the #1s.  That is not what we are seeing in basketball or chess.  So what feature of the problem is the standard model missing?  And how general is this phenomenon of a truly special #1 who breaks some of the old rules?  Does Mark Zuckerberg count too?

I realized Western China is the best part of the world to visit right now.  The food trends where I live were Filipino and Yemeni, which I found welcome.  Virginia now has a Uighur restaurant in Crystal City, and the aging San Antonio Spurs continue to defy all expectations.  Kobe Bryant, who “ranks among the league’s top 5 percent of shot-takers and its bottom 5 percent of shot-makers,” has redefined the retirement announcement, among other things.

Top curling teams say they won’t use high-tech brooms.  Just wait.

AnandCarlsen

Golden State fact of the day

by on November 26, 2015 at 11:53 am in Sports | Permalink

So far this season, [Stephen] Curry has made 74 threes — the most in the NBA. Damian Lillard ranks second, with 45. To say that Curry is an outlier would be an insult to the word outlier. So far this season, 84 percent of NBA threes have come off assists. But for Curry, that number is just 62 percent, and his ability to get his own deadly looks beyond the arc is arguably his signature weapon as a scorer. For context, only one of Klay Thompson’s 33 threes has been unassisted this season.

Here is more from Kirk Goldsberry at 538.  Here is a Curry highlights reel.  Here is the educational philosophy of Kevin Garnett.  And ESPN has lost seven million subscribers in the last two years, that is quite a bleed rate.  Meanwhile, last night Kobe Bryant was one for seventeen.

Happy Thanksgiving!

The trouble with podcasts is that they are difficult to grow: while text can be shared and consumed quickly, a podcast requires a commitment (which again, is why advertising in them is so valuable). Simmons, though, by virtue of his previous writing, is already averaging over 400,000 downloads per episode.

Podcast rates are hard to come by, but I’m aware of a few podcasts a quarter the size that are earning somewhere in excess of $10,000/episode; presuming proportionally similar rates (which may be unrealistic, given the broader audience) The Bill Simmons Podcast, which publishes three times a week, could be on a >$6 million run rate, which, per my envelope math in the footnote above, could nearly pay for a 50-person staff a la Grantland.

Most of the article, by Ben Thompson, is about the economics of Grantland.

1. What would the end of football look like?

2. Two economists explain the NBA lockout.

3. How to Boost Your Medal Count in Seven Easy Steps.

4. The Economics of Moneyball.

5. Explaining the Bowl System.

6. Would I Lie to You?

Model this, basketball defense

by on October 9, 2015 at 10:59 am in Sports, Television | Permalink

The veteran forward [Jared Dudley] explained concessions are sometimes necessary and the Suns purposely awarded opponents easy buckets occasionally to speed games up, which he emphasized the Wizards are not considering.

Here is more from Jorge Castillo, who is writing about the desire of the Wizards to speed up their offense, and take more three point shots, and all that entails.

Is the way forward here to model the Suns, the Wizards, Dudley, or all of the above?

cryo

While Anastasia Garvey, an actress and model, doesn’t have office pressure, she says she is constantly on edge wondering if she’ll get a certain job. She has developed a regimen of ways to disconnect: meditation, acupuncture, cupping therapy, monthly trips to a reservation-only spa and most recently cryotherapy — as in spending some time being blasted by air cooled to minus 260 degrees.

It only lasts three minutes, plus time to warm up again on a stationary bike, but it costs $90 a session, she said. She goes three times a week.

“The first time I did it I couldn’t remember my name,” she said. “You’re in a freezer. You’re so cold you can’t think of anything.”

There are many interesting ideas and bits in this NYT Paul Sullivan piece: “As for the seeming contradiction of the Buddhist boxer…”

Observers seem to focus on the target event and not its complement.  Bagchi and Ince have a new paper on this question:

Consumers routinely rely on forecasters to make predictions about uncertain events (e.g., sporting contests, stock fluctuations). The authors demonstrate that when forecasts are higher versus lower (e.g., a 70% vs. 30% chance of team A winning a game) consumers infer that the forecaster is more confident in her prediction, has conducted more in-depth analyses, and is more trustworthy. The prediction is also judged as more accurate. This occurs because forecasts are evaluated based on how well they predict the target event occurring (team A winning). Higher forecasts indicate greater likelihood of the target event occurring, and signal a confident analyst, while lower forecasts indicate lower likelihood and lower confidence in the target event occurring. But because, with lower forecasts, consumers still focus on the target event (and not its complement), lower confidence in the target event occurring is erroneously interpreted as the forecaster being less confident in her overall prediction (instead of more confident in the complementary event occurring—team A losing). The authors identify boundary conditions, generalize to other prediction formats, and demonstrate consequences.

Of course this also has relevance for the evolutionary processes governing pundits.

Here is a related press release (pdf).  For the pointer I thank Charles Klingman.

The culture and polity that is Germany:

Officials in Stuttgart were among the loudest protesters against the labour minister Andrea Nahles’ new workplace safety regulations, which stated that the lifts could only be used by employees trained in paternoster riding.

“It took the heart out of this place when our paternoster was brought to a halt, and it slowed down our work considerably,” said Wolfgang Wölfle, Stuttgart’s deputy mayor, who vociferously fought the ban and called for the reinstatement of the town hall’s lift, which has been running since 1956.

“They suit the German character very well. I’m too impatient to wait for a conventional lift and the best thing about a paternoster is that you can hop on and off it as you please. You can also communicate with people between floors when they’re riding on one. I see colleagues flirt in them all the time,” he added, celebrating its reopening at a recent town hall party to which hundreds of members of the public were invited.

…In officialese the lifts are referred to as Personenumlaufaufzüge – people circulation lifts – while a popular bureaucrats’ nickname for them is Beamtenbagger or “civil servant excavator”. The name paternoster – Latin for “our father” – is a reference to one of the prayers said by Catholics using rosary beads, which are meditatively passed through the hand, just as the cabins are in perpetual motion around the shaft.

There is more here, with excellent videos of paternoster riding, all via Michelle Dawson.  By the way, it has been against the law to build new paternosters since 1974.

Imagine if I wrote a post that just served up a list like this:

The people who deserve to be raised in status:

Norman Borlaug, Jon Huntsman, female Catholics from Croatia, Scottie Pippen, Yoko Ono, Gordon Tullock, Uber drivers, and Arnold Schoenberg,

And

The people who deserve to be lowered in status:

Donald Trump, Harper Lee, inhabitants of the province Presidente Hayes, in Paraguay, doctors, Jacques Derrida, Indira Gandhi, and Art Garfunkel

You might get a kick out of it the first time, but quickly you would grow tired of the lack of substance and indeed the sheer prejudice of the exercise.

Yet, ultimately, the topic so appeals to you all.  So much of debate, including political and economic debate, is about which groups and individuals deserve higher or lower status.  It’s pretty easy — too easy in fact — to dissect most Paul Krugman blog posts along these lines.  It’s also why a lot of blog posts about foreign countries don’t generate visceral reactions, unless of course it is the Greeks and the Germans, or some other set of stand-ins for disputes closer to home (or maybe that is your home).  Chinese goings on are especially tough to parse into comparable American disputes over the status of one group vs. another.

I hypothesize that an MR blog post attracts more comments when it a) has implications for who should be raised and lowered in status, and b) has some framework in place which allows you to make analytical points, but points which ultimately translate into a conclusion about a).

Posts about immigration, the minimum wage, Greece and Germany, the worthiness of entrepreneurs vs. workers, and the rankings of different schools of thought or economists all seem to fit this bill.

Sometimes I am tempted to simply serve up the list and skip the analytics.

Addendum: Arnold Kling comments.

Mirko

1. Novelist: Help!  I do own a copy of Sarah Nović’s Girl at War, but haven’t yet read it.

2. Basketball player: Toni Kukoc, the “Croatian sensation.”

3. Painting: There was an active school of Naive painting in Croatia, from Hlebine near the Hungarian border.  Perhaps my favorite from the group was Ivan Generalic, but Mirko Virius was very good too.

4. Inventor: Nikola Tesla.  Before you go crazy in the comments section, however, here is a long Wikipedia page on to what extent we can justly claim that Tesla was Croatian.  Here are further debates, Croat or Serb?  Or both?

5. Pianist: How about Ivo Pogorelić?  Here is his Petrushka.

6. Economist: Branko Horvat, the market-oriented market socialist, is the only one I can think of, here is an overview of his contributions (pdf).  Am I forgetting someone?

7. City: Split, not Dubrovnik.  I am here for two days right now, then on to Belgrade for a conference/salon.

I cannot name a Croatian movie or composer or pop star.  I have the feeling they have many more famous athletes.  Don’t they have a lot of beautiful models?  Aren’t they the world’s most beautiful people?  Has anyone set a movie here?

The bottom line: It would be worse without Tesla.