## Monday, February 6, 2012

### Moneyball

I’ve never read a book about baseball I liked more than Moneyball by Michael Lewis. Before reading this book I had no idea that professional baseball teams were so dumb about what contributes to winning and what doesn’t. Lewis tells the story about how the Oakland A’s had much less money than many other teams yet managed to put together winning seasons by finding undervalued players.

At its core, this book is about how statisticians and mathematicians revolutionized baseball, but you don’t have to care about math to enjoy Lewis’s compelling story. It might be a stretch to say that you don’t have to like baseball to enjoy the book, though.

In very simple terms, the Oakland A’s general manager Billy Beane and his assistants showed that walks are far more valuable than most people realize, and bunting and stealing bases are far less valuable than people realize.

Over the years I figure I’ve played or coached about 2000 baseball and softball games. A simple rule I used to judge the value of a hitter was to add his on-base percentage and his slugging percentage. For high-scoring leagues, I would double the on-base percentage before adding the slugging percentage. Billy Beane worked with statisticians who took this type of approach to a much higher level.

In the 2002 season, the A’s won 103 games with a \$42M payroll, but Texas won only 72 games with a \$107M payroll. This shows the power of detailed analysis over “gut feeling.” Similar thinking has taken investing to unbelievable heights of statistical analysis. Unfortunately for the statisticians, you have to compete against the whole world of other brilliant statisticians when investing, but baseball teams only have a few dozen opponents.

The book points out the problems with traditional baseball statistics: “the easiest way not to make an error was to be too slow to reach the ball in the first place.” The A’s took such a different approach that in the 2002 draft, they got 13 out of the 20 players they wanted; most teams would feel lucky to get 3.

The book has some humour as well: “Cecil Fielder acknowledges a weight of 261, ... leaving unanswered the question of what he might weigh if he put his other foot on the scale.”

Beane’s approach to relief pitchers is similar to pump-and-dump schemes where fraudsters buy stock in a small company, hype it to the world with questionable claims, and then sell after the stock rises. Beane knew that relief pitchers were way over-valued. So, he would make one of his pitchers look great as a reliever to drive up his perceived value, and then cash in by trading the reliever to another team.

Overall, I’d say that this book is a must-read for baseball fans. Either you will be annoyed at the lack of reverence for tradition or you’ll love the way that careful analysis turned the game on its head.