Competition, Ignorance and Football

Michael Lewis’ “Moneyball” shows how Bill James revolutionized baseball by statistically analyzing players and teams. Josh Levin in slate.com asks why this hasn’t quite taken off in other sports like football. The key point is that it’s easy to isolate to isolate the relationship between certain behaviors in baseball and scoring points. In football, it’s a lot harder – people’s actions on the football field are all interrelated, making analysis difficult. Thus, a dependable statistical analysis of football has yet to emerge.

This might be an interesting curiosity about the difference between baseball and other sports, but I think there’s a broader point about competition and knowledge. The success of statistics in baseball created the opportunity for entreprenuerial behavior by some baseball managers. The introduction of statistics into baseball allowed a few team owners to impose high costs on those who refused to believe that statistics was valuable in sports. This was made possible by baseball’s rules – everything centers around a few events (at bats, outs, runs) and it’s easy to attribute individual performance to these events.

One might conjecture that some businesses are like baseball – inputs and outcomes are discrete and easy to measure. In those kinds of industries, the creation of knowledge is a low cost activity and those who have the knowledge can easily compete against others, forcing them to accept your analysis of the situation.

Other industries are like football – messy and hard to relate inputs to outpus. In this case, it would be hard to do what Billy Beane did in baseball. I’d guess that success in such industries is characterized by “judgment” – the intuitive understanding of how the industry works built from years of experience. If you don’t have that, then you’re probably relegated to following “gurus.” Seems like a nice explanation of management fads – organizing people is probably a messy business where everything is interconnected, and it’s hard to come up with easy to implement rules. Thus, a lot of management behavior revolves around business fads. Readers are encouraged to email me interesting examples of industries or economic activities that are very “baseball”-like or “football”-like.