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Abstract
Michael Lewis's best-selling book, Moneyball, demonstrated the efforts of Oakland A's General Manager, Billy Beane, to create a successful baseball team in spite of its location in a small market. Previous studies have argued that the salary returns to the neglected skill of on base percentage (OBP) should rise once the Oakland A's hitters demonstrated proficiency with this skill. Our key result is that after Moneyball was published in 2003, hitter salaries for free agents signing new contracts were not more closely related to OBP. Consistent with efficiency, we find no long-term change in valuation in OBP. In contrast, we do find evidence of a rise in salary returns to productivity in the form of bases per hit ('power hitting') but this again is consistent with efficient market adjustment. In sum, it appears the labor market for hitters in baseball was efficient both before and after the appearance of Moneyball.
Keywords: efficient markets, moneyball, major league baseball
Introduction
Michael Lewis's 2003 book Moneyball (Lewis, 2003) describes the efforts of Oakland Athletics general manager Billy Beane to bring statistical methods to bear on the world of baseball management. By exploiting what Beane and his management group believed to be inefficiencies in player evaluation and baseball strategy, they endeavored to achieve output-wins-far in excess of what would generally be expected given their limited budget.
The central economic assertion in Moneyball is that baseball teams did not value players correctly. Beane believed that too much emphasis was placed on process- how players looked when they were playing-and not enough on the actual results. A devotee of baseball statistics guru Bill James, Beane attempted to implement the idea of results over process by seeking out players who did not fit the traditional description of a Major League baseball player, but could contribute to winning games via the fundamental aim of baseball: scoring runs, and preventing the opponents from scoring.
Most attention has been paid to the claim in Moneyball that hitters were being incorrectly evaluated. Specifically, it has been argued that on-base percentage (OBP, a measure of plate discipline, or the ability to avoid making an out when at the plate) was more important than slugging percentage (SLG, a measure of hitting prowess giving additional weight to...