I went to a job talk by Josh Schwartzstein of Harvard. He is working of Selective Attention and Learning. Here is a leading example: Suppose you go to the doctor because you are sick. He says you have a food allergy and asks you what you have eaten. If you put low probability on the theory that your sickness is caused by food allergies, you may not be able to answer him as you did not collect data on what you ate given your beliefs. That is, selective attention leads to selective data collection. Josh uses this point to study the long run properties of learning but I want to take up something else he said.
He gave an interesting interpretation of Moneyball (2003) by Michael Lewis. The book (which I have not read but will now buy!) claims that the Oakland A’s found batters who were undervalued. They might not get runs but might be good at getting walks and this can translate into runs too. The Oakland A’s got such prospects for cheap because other teams did not realize the potential of such batters. They were focusing on the runs and not on the walks but the Oakland A’s worked out the value of walks. Once Moneyball gets published though, everyone should recognize this possibility and the players should get valued correctly by the market and arbitrage opportunities should disappear. And a paper by Hakes and Sauer confirms this: by 2004 wages reflect ability to get on base while they did not before! Other theories might also lead to similar conclusions but it’s an interesting interpretation and story nevertheless.
Cheap Talk 
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January 26, 2010 at 7:24 pm
Vinnie
A quick (oversimplified) summary:
The A’s had an excellent string of seasons with a very small payroll through the early- and mid-aughts, during which time Moneyball was released and became a lightning rod for authors, bloggers, and talking heads. One side of the story was that A’s general manager Billy Beane was a genius who exploited a gross inefficiency in the free agent market, building a productive offense around the undervalued asset of on-base percentage. The other side is that Beane was just lucky to have three young, very talented, cost-controlled starting pitchers arrive to the major league roster around the same time, and the offense was along for the ride. Many in popular media misinterpreted the Moneyball “philosophy” to be a narrow preference for players that walked a lot, which it most definitely was not. That just happened to be the undervalued asset du jour when the book was written.
As his roster makeup shifted away from the high-walk guys and the A’s began to struggle toward the end of the decade, many took delight in their failure, claiming that Beane wasn’t so smart after all and–to boot–that he was a hypocrite to his own philosophy. Of course, he wasn’t–he just recognized, as you point out, that the rest of the league caught onto the fact that walks were undervalued (even before the book became a sensation). Billy Beane is still regarded as one of the brightest GMs in the game, but recent A’s teams have been hurt by bad luck with injuries and the simple fact that it’s very hard to consistently win with a small payroll.
To an extent, Beane was also beat at his own game when the scenario repeated itself. This time the undervalued asset was defense–specifically range and reaction time, two qualities that were very difficult to quantify before the recent popularization of some new defensive metrics. Again, the rest of the league is catching on. In the meantime, low-budget teams like the Rays and Twins were able to capitalize on this inefficiency over the last few years while the late movers were still chasing on-base percentage.
The question now will always be, what’s the current undervalued asset, and how do we know which players have it? With the sophistication of statistical research MLB front offices, it’s unlikely to be something as simple as on-base percentage for a long time. My guess for the next one: pitchers who induce a lot of pop-ups.
February 4, 2010 at 12:07 pm
colin
I’ve been meaning to comment for a little while on this, but it’s kind of up my alley. For one, noted sabermetricians have called the Hakes/Sauer conclusions into question:
http://www.insidethebook.com/ee/index.php/site/comments/going_through_the_sauer_hakes_moneyball_data/
http://www.insidethebook.com/ee/index.php/site/comments/the_sauer_hakes_moneyball_spreadsheet/
http://www.insidethebook.com/ee/index.php/site/comments/why_i_hate_regression_techniques/
http://sabermetricresearch.blogspot.com/2007/10/updated-moneyball-effect-study.html
FWIW, Tango has worked for the new Mariners’ front office and would probably get the title Best Living Sabermetrician. The study itself is mostly what gets picked on, so the conclusions are still up in the air. Personally, I’m somewhat skeptical. For one, I don’t recall Moneyball backing up its assertion all that much. Considering how integral OBP is for offense (and that any basic study of offense would demonstrate such) and how much money goes into paying for professional baseball players, it seems somewhat ludicrous that the boat could be so badly missed. Michael Lewis –i haven’t read MB in a while, keep in mind–writes that it’s a function of the culture, basically, that allows such an oversight.
It’s also somewhat amusing that, supposedly, the new inefficiency is with regards to defense. OBP is often referred to as an “old player skill” while Lews, iirc, characterized baseball draft experts’ love affair with great, young athletes as a sort of idol worship. In fact, these young athletes have great value simply because it turns out that the ability to run fast peaks early in age relative to other skills and that it’s highly correlated with good defense. So whereas Lewis described OBP as undervalued relative to other skills, it may have in fact been that Lewis’ personal understanding of the game was simply faulty.