Moneyball: The Art of Winning an Unfair Game.

• Author: Thaler, Richard H.
• Position: Book Review

MONEYBALL: THE ART OF WINNING AN UNFAIR GAME. By Michael Lewis. New York: W. W. Norton. 2003. Pp. ix, 288. $24.95.

In this lively book, Michael Lewis (1) explores a topic that would seem of interest only to sports fans: how Billy Beane, the charismatic general manager of the Oakland Athletics, turned his baseball team around using, of all things, statistics. What next--an inspirational tale about superior database management? But there are some general lessons in Lewis's book that make it worth the attention of people who do not know the difference between a slider and a screwball (a group that, unfortunately, includes many lawyers and law professors). Those lessons have to do, above all, with the limits of human rationality and the efficiency of labor markets. If Lewis is right about the blunders and the confusions of those who run baseball teams, then his tale has a lot to tell us about blunders and confusions in many other domains. In that sense, the tale bears directly on continuing debates about behavior, cognition, and law. (2)

1. MEASURING PERFORMANCE

   Lewis focuses on the extraordinary success of Beane, who has produced a terrific baseball team despite one of the lower payrolls in baseball. Since 1999, when Beane took over, the Athletics have compiled an amazing record. In 1999, the Athletics ranked eleventh (out of fourteen teams) in the American League in payroll and fifth in wins. In 2000, the Athletics ranked twelfth in payroll and second in wins, a feat that they duplicated in 2001. In 2002, the last year covered in the book, they ranked twelfth in payroll again--and first in wins. This past season, 2003, was yet another division-winning season with a cheap payroll.

   How did Beane pull this off? He did it largely by ignoring or defying baseball's conventional wisdom, otherwise known in baseball lingo as The Book. (As in, "The Book says that you should bunt in this situation.") It turns out that many chapters of The Book are simply wrong. Sacrifice bunts are rarely a good strategy, and steals are vastly overrated. (Unless a base stealer succeeds at least two-thirds of the time, his running efforts reduce runs scored rather than increase them. (3)) The portion of The Book that was most in need of revision, and the most important edge that Beane was able to exploit, involved player evaluation. Here he tried to figure out, statistically, how much a player was likely to contribute to his team's chances of winning. If he couldn't measure a factor or its impact, he dismissed it as subjective.

   Beane found that, as a statistical regularity, players drafted out of high school are much less likely to succeed than players drafted out of college (p. 16). And so he drafted no high school players, regardless of how highly they were touted. He hired a young assistant named Paul DePodesta, a Harvard economics graduate, who relied on his computer to project players' performances, without so much as ever seeing a player swing a bat. Much of the tension, and the comedy, of Lewis's book comes from the conflict between Beane's and DePodesta's statistical methods of evaluation and the well-established strategies of experts who have scouted, played, and breathed baseball for decades. The verdict? Statistical methods outperform experts. (4) It's not even close.

   As Lewis tells the tale, Beane's particular approach has intensely personal foundations. Beane himself was a top high-school prospect, one of the most sought after in the nation. He was fast; he was tall; he was strong; he could hit the ball a mile. The baseball scouts loved him. As one of them admitted, "I never looked at a single statistic of Billy's. It couldn't have crossed my mind ... He had it all" (p. 9). According to those who watched him, "The boy had a body you could dream on. Ramrod-straight and lean but not so lean you couldn't imagine him filling out. And that face!" (p. 7). Beane was selected in the first round of the draft, with the highest of expectations. He was destined to be a star.

   There was just one problem: Beane did not play professional baseball very well. He thought too much. He was too emotional. His failures notwithstanding, baseball people saw his body, and his face, and his raw talent, and concluded that he was bound to succeed. "Teammates would look at Billy and see the future of the New York Mets. Scouts would look at him and see what they had always seen ... The body. The Good Face" (p. 47). He certainly had talent, and once in a while he would do something truly sensational. But after several years in major league baseball, his performance was woefully bad. With only 301 at-bats, he hit .219; more embarrassingly, he had 80 strikeouts and only 11 walks. Abruptly, he quit the game. While playing for Oakland, he told the team's general manager that he no longer wanted to be a player, and would prefer the job of advance scout, an employee who travels ahead of the team to analyze future opponents. The team's general manager was stunned: "Nobody does that. Nobody says, I quit as a player. I want to be an advance scout" (p. 55).

   Beane was a much better baseball analyst than baseball player, and he quickly moved up the Oakland club's hierarchy. He became interested in a simple question: What is the most efficient way to spend money on baseball players? The origins of Beane's iconoclastic answers can be found in the writings of Bill James, a once-obscure but now-legendary baseball writer/statistician. (5) While working as a night watchman for a pork-and-beans factory, James decided that he wanted to write about baseball in a way that would illuminate what really happened and why. In his view, conventional statistics were insufficiently helpful and sometimes downright misleading. Consider the area of defensive play. When a player mishandles a ball or makes a bad throw, he can be assigned an "error." A player who accumulates a lot of errors seems like a bad fielder, whereas one with few errors seems really good. The problem is that a player may accumulate errors in part because he is unusually good at getting to the ball. If you do not get to the ball, you are most unlikely to get an error (according to the chapter on scoring in The Book). So errors are a crude measure of fielding ability.

   Or consider walks. Since the late nineteenth century, walks have been treated, in official statistics, as neutral--neither good nor bad. According to a nineteenth-century expert whose advice is followed to the present day, "There is but one true criterion of skill at the bat, and that is the number of times bases are made on clean hits" (p. 70). Of course, many people realized that a walk is a positive event for the hitting team and a negative event for the team in the field, but this commonsense notion was not incorporated into baseball's most common measure of batting skill, the batting average, which leaves walks out. James found this preposterous, and he pushed for the use of the "on-base percentage" as an improvement.

   James also criticized the use of "runs batted in" as a standard measure of a hitter's value. James pointed out that some players are in a position to bat in a lot of runs because they either are lucky or play on good teams. Other players bat in fewer runs, but only because they do not have the opportunities of their apparent superiors: "There is a huge element of luck in even having the opportunity, and what wasn't luck was, partly, the achievement of others" (p. 71).

   Eventually James punctured countless myths about what was important to winning in baseball. And he had a positive agenda, too. He devised a formula to measure "runs created"--a formula that predicted, from just a few aspects of a player's performance, how many runs he would produce for an average team (p. 77). James's formula had explosive implications. It suggested that professional baseball experts, those who ran the teams, were placing far too much emphasis on batting averages and stolen bases, and far too little on walks and extra base hits. Statistical measures were moving actual decisions in a way that resulted in inferior...