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Sports Fans vs. Traditional Economics: Why Many Economists Think the Fans are On to Something

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Economists David J. Berri and Martin B. Schmidt look at the way data influences decisions in sports -- sometimes to detrimental effect -- and how fans may do a better job of evaluating players than the coaches and general managers.

Sports fans often argue that the people running their favorite sports teams are not...well, to put it kindly, getting it right. In fact, fans often think that coaches and general managers keep making the same wrong decisions over and over again.

Such arguments, though, directly contradict the traditional story told by economists. Specifically, economists have traditionally argued that decision-makers don't repeat errors. Sure mistakes can happen. But once a mistake is made, bad things start to happen to the person who got it wrong (i.e. they get fired, ridiculed, etc.), and then the mistakes get corrected.

Who is right, fans or traditional economics? In recent years academic research, often conducted by economists, increasingly sides with the sports fans. First there was the Moneyball story, or the tale told by Michael Lewis in 2003 that baseball people have historically undervalued on-base-percentage. Then there was the story told in The Wages of Wins (our first book with Stacey Brook) that scoring is overvalued by people in the NBA.

In Stumbling on Wins we note these two stories and then move on to many, many more. These stories include a discussion of the valuation of goalies in hockey, the pay of black and white quarterbacks, the draft day evaluations of people in the NFL and NBA, the problem coaches in the NFL have on fourth down, how NBA coaches allocate minutes, and even the statistical impact NBA coaches have on outcomes.

The stories we tell touch upon two broad issues. First, decision-makers often have trouble interpreting the data that is collected on players. People can see a baseball player's on-base percentage or how efficiently a basketball player scores, but how these factors impact wins is not always well understood. And we can see this lack of understanding when we examine various decisions made in sports.

Even when the data is understood, though, another problem appears. Data in sports is often quite inconsistent over time. So although the numbers can explain current outcomes, these same numbers don't predict the future very well. For example, a goalie's save percentage this season is not very correlated with what a goalie did in the past. A similar story can be told about the performances of NFL quarterbacks across time. As a consequence, the salaries paid to these athletes—salaries that are related to past performance—are not statistically linked to the current performance of these athletes. Hence, performance and pay, as many fans have noted, are not always related.

The idea that people in sports have trouble evaluating players is certainly interesting to sports fans. And our book primarily focuses on telling such stories. But these same stories have clear implications beyond sports. In recent years research has shown that, in general, people have trouble making "good" decisions. For example, Daniel Gilbert's Stumbling on Happiness, a book that inspired our own title, showed how people's efforts to find happiness are often sabotaged by their own actions. Dan Ariely, in Predictably Irrational, presented a number of experiments that show the difficulty people have in evaluating new information and making good decisions. And Richard Thaler and Cass Sunstein, authors of Nudge, not only describe the troubles people have making choices, but also how the presentation of choices can lead to better outcomes.

In sum, the stories we tell about sports are really part of a larger tale. Essentially people in sports, like people everywhere, are not generally foolish or stupid. People in sports are really just people. And people—contrary to the traditional arguments put forward in economics—are capable of driving sports fans crazy by making the same mistakes over and over again.

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