At the intersection of economics and sports you’ll find the book Scorecasting: The Hidden Influences Behind How Sports Are Played and Games Are Won, by Tobias J. Moskowitz and L. Jon Wertheim. This book appealed to my analytical side, my sports nut side, and my love of debunking ideas that almost everyone is sure are true. I highly recommend this book to sports fans whether or not they are numbers people.
While this book has little to do with finances other than the obvious financial benefits for professional sports teams if they can figure out how to win, I see a strong parallel between sports and investing. In investing, we have the debate between index investors and those who hope to beat the odds with their stock-picking hunches. In sports we have the debate between those who crunch the numbers to determine the best strategies and those who operate on intuition.
The book begins with “whistle swallowing,” or the tendency for officials to try to avoid the perception that their decisions determine the outcome of a game. In baseball, the authors found that the strike zone is 188 square inches larger when the batter’s count is 3-0 than it is when the count is 0-2. It seems that umpires prefer not to call strikeouts and walks. On 0-2 counts, even pitches right down the middle are called balls 15% of the time. The authors conclude that perhaps batters should swing more on 3-0 counts because the pitch is likely to be called a strike anyway. However, I doubt that this is a good idea; walks are more valuable than most people realize and it makes sense to take a chance on drawing a walk on the 3-1 or 3-2 pitch rather than ground out on the 3-0 pitch.
In U.S. football, it turns out that teams go for it on fourth down far too infrequently. Even teams like the New England Patriots (who go for it much more often than other teams) don’t go for it often enough. This runs so contrary to people’s intuition that you won’t find many who agree with this assessment even after seeing the numbers. And even though going for it may be the right decision, coaches get lambasted when it doesn’t work out. The authors tell the story of the high school football team, Pulaski Academy, that never punts, never returns punts, and on kickoffs attempts on-side kicks or just kicks the ball out of bounds to prevent a return. Pulaski went on to great success.
In basketball, the authors show that sitting out players with foul trouble makes little sense. “Yes, a player may foul out of a game, but benching the player ensures that he’s out of the game.” The authors estimate that NBA coaches give up 0.5 points per game with the flawed strategy of benching star players in foul trouble. One coach gave an explanation of why he would continue to bench players with 5 fouls despite the evidence: “my kids go to school here!” It turns out that coaches feel great pressure to do what the fans expect them to do.
In basketball we often hear that defense wins championships. The authors crunched the numbers and found that, in reality, offense and defense are equally important. However, as any youth basketball coach knows, many players must be motivated to play hard on defense, but need little motivation to play hard on offense. So, declaring that defense wins championships isn’t really about choosing a strategy as it is about demanding that players put forth a full effort at both ends of the floor.
The authors devised a number of clever tests to show that the usual explanations for home-field advantage are mostly nonsense. The real answer is the influence the fans have on officials. This isn’t likely to be a popular answer, but the evidence that officials tend to favour the home team seems undeniable. The use of replay challenges in the NFL has actually reduced home-field advantage because visiting teams have more bad calls against them to get reversed than home teams have. I wonder if the reluctance of MLB to introduce replay challenges has anything to do with the expected reduction in the home-field advantage that fans tend to like.
In a discussion of how teams value draft picks, the book describes a clever experiment I hadn’t heard of before: “a certain economics professor has been known to stuff a wad of cash into an envelope, stating to his students that there is less than $100 inside. The students bid for its contents; without fail, the winning bid far exceeds the actual contents–sometimes even exceeding $100!” It seems that when it comes to bidding, competitive juices often overtake reason.
The authors also mention the classic test for overconfidence: “are you an above-average driver?” Three-quarters of test subjects say they are above average. This test has always bothered me because different people have different notions of what makes a good driver. Some think safety and others think technical skill. I have technical skill at driving, but I may not be safer than average. However, I don’t doubt the conclusion that people tend to be overconfident.
It turns out that icing kickers in the NFL and free-throw shooters in the NBA by calling a timeout makes no difference to the outcome (other than annoying fans).
Most fans believe that players are sometimes hot or cold, but the evidence suggests that there is no such thing as a “hot hand”. One aspect of this conclusion that troubles me is that, in basketball, there is a tendency for players who make a couple of shots in a row to get confident and take increasingly difficult shots. Researchers could control for increased difficulty resulting from longer shots, but may have a harder time controlling for greater defensive pressure or off-balance shots. However, I don’t doubt that people see patterns that aren’t there. Even if momentum exists to a small degree, fans will see it as 10 times bigger than it really is.
The Chicago Cubs’ century-long futility is legendary. The explanation? Fan “attendance is the least sensitive to performance in all of baseball.” It turns out that the owners still make money even if the team loses. “Attendance was more than four times more sensitive to beer prices than to winning or losing.”
I’ll give the last word to Amos Tversky who captured the tendency for people to stick with their intuition instead of believing the evidence: “I’ve been in a thousand arguments over this topic. I’ve won them all, and I’ve convinced no one.”