Valuing Pitchers

It’s been a while since I’ve posted a study here, but that doesn’t mean I haven’t been working on them. Here’s my latest article: Does the Baseball Labor Market Properly Value
Pitchers?

Abstract. Defense in baseball is a product of team production in which pitchers jointly prevent runs withfielders. This means that raw run prevention statistics that economists often use to gauge the value of pitchers, like ERA, may not properly assign credit for their performances. Therefore, marginal revenue product (MRP) derivations based on such statistics contain some erroneous information that may bias the estimates. In this paper, I examine a method for isolating pitcher contributions to the team production of defense. Evidence from the labor market suggests pitchers are paid according to their individual contributions consistent with the areas in which pitchers possess skill.

Some of the findings in this paper I published at The Hardball Times over the summer, but there’s a lot of new stuff. It’s written for an audience of academic economists, so you might find it a bit dry. But, here’s an interesting tidbit that ought to spark some interest.

The market appears to have solved the problem of estimating pitcher MRPs in team production well before McCracken published his findings in 2001. This finding mirrors Hakes and Sauer (2005), which finds that the baseball labor market corrected its misvaluation of on-base percentage and slugging percentage before it became public knowledge in Michael Lewis’s bestseller, Moneyball.

I presented this at the SEA meeting a few weeks ago, and I got some excellent comments that improved he paper quite a bit.

3 Responses “Valuing Pitchers”

  1. A.West says:

    Interesting. I’m wondering if Moneyball actually starts driving GMs to overpay for OBP, leaving some other characteristic undervalued (like, say, defense)? Those Yankees looked awfully statuesque in the field this Fall.

  2. salb918 says:

    Re: A West’s comment

    I think you’re on the mark here. None other than the Billy Beane himself assembled this year’s best defensive squad, as measured by Defensive Efficiency. He’s stocked up on reputedly strong defensive players – Mark Kotsay, Jay Payton, Eric Chavez, Bobby Crosby, and Mark Ellis – whil the OBP sluggers feast on bigger contracts elsewhere.

  3. matty fred says:

    If positional player defense is the undervalued commodity of the moment, and if it won’t take too long for the rest of the market to value it more “correctly,” I wonder what the next undervalued input will be.