Category: Sports
J.C. Bradbury emails me on the allocation of talent
I hope you are doing well. I have a Micro III question that I thought might interest you. I often have such Tyler questions, but keep them to myself, yet this morning I decided to share with you.
What does Jeremy Lin tell us about talent evaluation mechanisms? This article ( http://www.wired.com/wiredscience/2012/02/what-jeremy-lin-teaches-us-about-talent/?utm_source=dlvr.it&utm_medium=twitter ) argues that the standard benchmarks for evaluating basketball and football players at the draft level are flawed. The argument is that Jeremy Lin couldn’t get the opportunity to succeed because his skill wasn’t being picked up by the standard sorting procedure. This got me thinking. Baseball sorts players in a different way than basketball. In professional basketball (and football), college sports serve as minor leagues, where teams face a high variance in competition (the difference between the best and worst teams in a top conference is normally quite large), with very little room for promotion. There is some transferring as players succeed and fail at lower and higher levels, but for the most part you sink or swim at your initial college. This is compounded by the fact that the initial allocation of players to college teams is governed by a non-pecuniary rewards structure with a stringent wage ceiling, which likely hinders the allocation of talent. At the end of your college career, NBA teams make virtually all-or-nothing calls on a few players to fill vacancies at the major-league level. In baseball it’s different. Players play their way up the ladder, and even players who are undrafted can play their way onto teams at low levels of the minor league. At such low levels, the high variance in talent is high like it is in college sports; however, promotions from short-season leagues through Triple-A, allow incremental testing of talent along the way without much risk. I have looked at metrics for predicting major-league success from minor-league performance and found that it is not until you reach the High-A level (that is three steps below the majors) can performance tell you anything. Players in High-A who are on-track for the majors are about-the age of college seniors. Performance statistics from Low-A and below have no predictive power. Baseball is also much less of a team game than basketball, so this should make evaluation easier in baseball but it is still quite difficult by the time most players would be finishing college careers. Also, a baseball scout acquaintance, who is very well versed in statistics, tells me that standard baseball performance metrics in college games are virtually useless predictors of performance (this is contrary to an argument made in Moneyball). Even successful college baseball players almost always have to play their way onto the team.
Back to Lin. He played in the Ivy League and his stats weren’t all that bad or impressive in an environment that is far below the NBA. If Lin is a legitimate NBA player, he didn’t have many opportunities to play his way up like a baseball player does. In the NBA, he experienced drastic team switches, and even when making a team he received limited opportunities to play. MLB teams often keep superior talent in the minors so that they can get practice and be evaluated through in-game competition. An important sorting mechanism for labor market sorting is real-time work. Regardless of your school pedigree, most prestige professions (lawyers, financial managers, professors, etc.) have up-or-out rules after a period of probationary employment where skill is evaluated in real world action. Yes, there is a D-League and European basketball, but the D-league is not as developed as baseball’s minor-league system, and European basketball has high entry cost and may suffer from the same evaluation problems faced by the NBA. Thus, I wonder if the de facto college minor-league systems of basketball and football hinder the sorting of talent so that the Jeremy Lins and Kurt Warners of the world often don’t survive. Thus, another downside of these college sports monopsonies is an inferior allocation of talent at the next level.
J.C.’s points of course apply (with modifications) to economics, to economies, and to our understanding of meritocracy, not to mention to how books, movies, and music fare in the marketplace. Overall I would prefer to see economics devote much more attention to the topic of the allocation of talent.
Here is J.C. on Twitter, here are his books.
Is Jeremy Lin a fluke?
Nate Silver says no. I say that in Mike D’Antoni’s offensive schemes a lot of point guards reap more than the statistics they would pick up on other teams and from other offenses, and since the D’Antoni scheme is not very generalizable, or capable of winning a championship, the “other team” metrics are more or less the correct ones. Who else thinks the Knicks can continue to steamroll through victories like this, with or without their two “stars”? (ZMPers I call them.) I say he’s been toasting a number of teams that don’t have real defense against good attacking point guards, such as Washington and the Lakers. I think he will be very good but maybe someone like Fat Lever or Kenny Smith is the right comparison. That’s stillgood. In the playoffs, with a real defender on him, I suspect he is just another good player. He was by the way an economic major at Harvard, let’s ask Mankiw.
Addendum: Via Ben Casnocha, here is Metta to Lin.
Markets in everything the culture that is Sweden (England)
The odds were always going to favor the Swedes; after all, the sport originated in the small southern town of Varalov in the 1970s, and Swedes have been breeding show-jumping rabbits since the 1980s. Today, close to 1,000 active bunny jumpers can find at least one competition somewhere in the country most weekends, and there are two national championships a year. The U.K., on the other hand, hosts just a handful of competitions a year and is home to only about 10 rabbit jumpers.
In Sweden, where the fluffy competitors train for up to two hours a day, there is an established network of breeders who are always looking for talent. “Our bunnies are so used to competing, so they know what to do,” Ms. Hedlund says.
Choosing the right breed of rabbit is also important. Sweden’s 200 or so breeders are experimenting widely, and charge more—up to 1,500 kronor ($225)—for a rabbit with prizewinning parentage.
“You want mini lop for the cool and positive attitude and hare for the bigger size and long back legs,” Ms. Hedlund says. “But you don’t want too much temperament; you’d want a mix of a cool and a competitive attitude.”
Here is more, and it goes without saying, interesting throughout! And the sport is supposed to be good for the animals. For the pointer I thank Richard Herron.
p.s. Not all is well in Kaninland:
Despite their dominance of the sport, Swedish bunnies are bested by their Danish neighbors when it comes to world records. In 1999, a Danish rabbit called Yaboo set the world long-jump record when he flew over a three-meter, or nearly 10-feet, hurdle, while his compatriot Tösen bounced 99.5 centimeter, or about 40 inches, to nab the high-jump record in 1997.
Addendum: Photos and video here.
What would the end of football look like?
Kevin Grier and I have a new piece up on Grantland, on that topic. It is perhaps hard to excerpt, but here is the close of the piece:
Another winner would be track and field. Future Rob Gronkowskis in the decathalon? Future Jerome Simpsons in the high jump? World records would fall at a rapid pace.
This outcome may sound ridiculous, but the collapse of football is more likely than you might think. If recent history has shown anything, it is that observers cannot easily imagine the big changes in advance. Very few people were predicting the collapse of the Soviet Union, the reunification of Germany, or the rise of China as an economic power. Once you start thinking through how the status quo might unravel, a sports universe without the NFL at its center no longer seems absurd.
So … Tennis, anyone?
Markets in everything China bid of the day
Wealthy Chinese have been snapping up contemporary art, top wines and some the world’s most expensive cars. Now they’re adding pigeons to their must-have list.
A Chinese shipping magnate last weekend spent 250,400 euros ($328,000) for a Dutch pigeon, a new world record according to Pipa, the firm that ran the online auction.
These aren’t your ordinary birds that eat scraps in the park but ones bred for the arcane sport of pigeon racing, which has a cult following in England, Belgium, Netherlands, Germany and, increasingly, China.
The buyer, Hu Zhen Yu, runs Zhenyu Holding Group in Wenzhou. He told Pipa that he wants to “focus more and more on the pigeon sport.” Zhenyu last year sponsored a pigeon race in Wenzhou that awarded 7 million yuan ($1.1 million) in prize money.
But all is not well with the pecuniary externalities:
Pigeon racing has traditionally been a rural pastime, and the entrance of wealthy Chinese hobbyists is ruffling some feathers. The Telegraph quoted veterans of the sport complaining about the high bids and loss of the birds to another continent.
The link is here and for the pointer I thank the excellent Daniel Lippman. Here is also another MIE in China link. Here are China’s hard landing odds, updated.
Why is NBA TV viewership up so much?
The first 325 games of this NBA season averaged attendance of 17,094. That’s better than 89 percent of capacity, and a hair better than the first 325 games of last season, which averaged 17,057.
But almost every other indicator blows those in-arena numbers away. Viewership is going a bit nuts:
- ABC has had just three games, so it’s hard to say anything conclusive, but the audience is up five percent compared to a year ago.
- ESPN viewership is up 23 percent.
- TNT viewership is up 50 percent.
- NBA TV viewership is up an insane 66 percent.
- NBA on regional cable sports networks are up 12 percent.
- Local over-the-airwaves broadcasts are up 36 percent.
NBA TV is particularly interesting. Five of the channel’s ten most viewed games ever have been this season, with January’s Lakers-Clippers game the most viewed game in network history.
That is from Henry Abbott, here is more. Many people thought the strike would hurt fan interest, but apparently not. (It did hurt my interest, but not out of any grudge; I tuned into a few early games and found them unspeakably bad in terms of quality. By now most players seem to be in shape, although blowouts and lopsided low scores remain too common. I believe the spread of the “team coordination” variable has increased.) Is this a behavioral effect? Like taking the peanuts away and making people crave them more?
Do more frequent games, in response to the strike-shortened season, spur a greater “habit formation” demand? Do more frequent games imply that a major star is playing on TV virtually every night? That is my hypothesis. How will the NBA respond?
By the way, I have a longstanding custom of predicting, or rather failing to predict, the NBA championship winner each year. This year I say it is wide open, yet to be determined, and ask me again after the trade deadline. MLE is Miami, but a well-coordinated lesser team could knock them off, especially if they remain injury-prone.
Hunting Endangered Species
Can hunting save an endangered species? Yes. In Africa hunting has been critical to the conservation of a number of species, despite the sometimes opposition of the United States which can prohibit US citizens from hunting even in foreign countries.
I was surprised to discover, however, that “some exotic animal species that are endangered in Africa are thriving on ranches in Texas, where a limited number are hunted for a high price.” Texas hunters have saved several endangered African species, unfortunately for the animals, the story does not end happily. Video from 60 Minutes below–some excellent material on incentives, ethics and conservation for classroom discussion.
Explaining the economics of the Bowl system
Over at www.grantland.com, here is my piece with Kevin Grier, on the question of bowls vs. playoffs. Here is an excerpt:
In 2007, Mark Schlabach chronicled the Chick-fil-a Bowl’s selection process. He explained that Boston College was not invited to the game in Atlanta because organizers worried that BC’s fan base wouldn’t buy enough tickets and spend enough money.
“The BC thing ate me up for a week,” Stokan (the Bowl President) said. “The factors on the field were very favorable to Boston College. But when you look at this thing, you have to take into account the players, the administrators, the relationships with the leagues and the financial commitments. The city really depends on us because we’re one of the top 10 conventions. We have an obligation to hotels, restaurants and retailers.”
Are you surprised that this bowl is run by the local Chamber of Commerce?
…Did you know that there is a “Sugar Bowl CEO”? Circa 2009, he was paid more than $600,000 a year. Is it surprising that the Sugar Bowl and Fiesta Bowl each have more than $30 million in net assets? Did you know that many of these bowls also receive government subsidies?
The piece ends thus:
In sum, we have a system where the games are not designed to produce the best on-field matchups, the competitors often lose money but fight fiercely to participate, outsiders and observers complain vehemently, and the organizers amass and waste a great deal of money with little oversight.
Welcome to capitalism, American style. Get back to us when you’ve found a better system.
Here is Art Carden on the same topic.
Richard Thaler prefers a playoff system to BCS
Even if you think the tradition of the bowl games is worth preserving, going to an eight-team playoff would help such bowls. Here is how it might work. In an eight-team playoff there are seven games. Give each of the existing bowl games one of the first-round games, played the first weekend in December. These games would attract more attention than any of the nonchampionship BCS games now because they determine who keeps playing. Then rotate the semifinal and final games among various locations, much as is done with the Super Bowl and the NCAA basketball tournament. For traditionalists, restore the championship game to New Year’s Day, thereby shortening the season by a week even for the teams that play in the championship.
This system would not only be attractive to college-football fans, it would also help curtail high-stakes conference-jumping by colleges that want a share of that BCS money. This turmoil is leaving some conferences desperately short of teams. Rumor has it that the Big East has offered a spot to the Sorbonne.
Here is more.
Assorted links
1. Private equity and jobs, setting the record straight.
3. Further notes on the new European agreement, if indeed that is what it is, and good comments here, and good tweet in Spanish.
4. The Economist picks best books of the year 2011, including TGS.
5. A professional NHL hockey player speaks to the issue of hockey helmets and collective action problems. Good, thoughtful piece, deeper than a lot of economic treatments of the same issue.
6. “our jet packs are here…”
The economics of Moneyball
At www.grantland.com, I have a new piece up with Kevin Grier, excerpt:
Here’s something funny about the Moneyball strategy: It is bringing us a world where payroll matters more and more. Spotting undervalued players boosts their salaries and makes money more important for the general manager; little did Billy Beane know that in the long run he would be strengthening the hand of the large home-market teams, such as the Yankees. From 1986 to 1993, payroll explained 2.2 percent of the variation in team winning percentage, and that meant spending more money yielded little return in terms of quality on the field. In the 2004 to 2006 seasons, after the Moneyball revolution was under way, payroll explained 27.1 percent of the variation in team winning percentage, which means a stronger reason to spend more.
One of our sources you will find here, a very good paper by Jahn Hakes and Skip Sauer.
The Coase theorem is back in the saddle
On nearly every count, the deal favors the owners, who had sought all along to overhaul the system. The players made significant concessions, including a reduction of up to $300 million year in salaries, $3 billion over the life of the agreement.
It seems there will be an NBA season. The details of the deal have not yet been released, and on minor issues are still being negotiated, but the exact revenue split will depend on revenue projections. Henry Abbott discusses winners and losers.
How best to improvise a new professional basketball season
Since a regular NBA season is looking unlikely, what are the remaining options? I don’t see why the lead players should be so keen to start up in Europe. What if Comcast (or cash-rich Google?) said to a bunch of top stars something like the following?:
We’ll take care of renting the arenas, you all just show up and play. We’ll create four teams, heavy with stars and key role players, and let them barnstorm in a multi-round tournament, twenty-four games total, with elimination games toward the end. Past stars, like Magic Johnson and Charles Barkley (no MJ!), will be the coaches and maybe sometimes the referees as well. We’re going to pay you all with equity, with the final return depending on how much the TV ads sell for. There also will be bonuses for the winners, so you don’t all mess around like in the All-Star game.
If more than four teams can be managed and coordinated, so much the better. At the end of a tournament the world champion is announced, and come September or October you can pit that team against the Dallas Mavericks.
One of the four teams can be non-American-born players only, to get the rest of the world involved.
Couldn’t this be…um…more fun, or as much fun, as the so-called regular season?
What else could we do?
Sign of the times
A major credit agency warns that Penn State University’s bond rating could be downgraded because of risks to its reputation and finances from a child sex abuse scandal.
Moody’s Investors Service said Friday it has put the university’s Aa1 bond rating under review for a possible downgrade after ex-coach Jerry Sandusky was charged with molesting eight children over a 15-year period.
Moody’s will assess the potential impact on Penn State of risks from possible lawsuits, a decline in students applying to attend the school, loss of donations from philanthropies and changes in its relationship with the state.
Here is the link, hat tip to Michael Rosenwald.
On Twitter
Follow Italian 10, yikes! Further updates here, and here come the margin calls.