Pizza Cutter posts an interesting bit of analysis on shifts in the labor market chronicled in Moneyball at The Hardball Times.
Did Moneyball really have an effect outside of Oakland and the handful of teams that embraced Sabermetrics in the following years? Were the lessons of Moneyball taken to heart league-wide? The surprising answer is “Yes, and in a much more powerful way than you might expect.” The way to tell whether a man believes something is if he’s willing to “put his money where his mouth is.” In baseball, that’s rather literal. Teams buy the service of players in a (mostly) open market. How much money they are willing to commit to a player tells a lot about what they think of him. And what drives those salaries tells a lot about what the market as a whole thinks about what makes a player valuable.
Cutter then examines the correlations of OBP, home runs, and RBI with player salaries for five years before and five years after Moneyball‘s publication. He finds that the OBP correlation increases around the time the book was released, and the correlations decline for home runs and RBI.
Cutter’s findings fit with the findings of two studies by Jahn Hakes and Skip Sauer (The Sports Economist), both excellent economists and fans of baseball and sabermetrics. Their first paper (working version), published in Journal of Economic Perspectives looks at the baseball market from 1999 — 2004. They used multiple-regression analysis to examine the valuation of on-base percentage relative to slugging average and found OBP was undervalued but the “undervaluation of a batter’s ability to get on base, appears to have been substantially if not completely eroded by the time the book was published.”
In a follow-up study (working version) published in International Journal of Sport Finance, Hakes and Sauer expand the sample before and after Moneyball from 1986 — 2006 and examine specific skills (i.e., walking and power) to see how they were valued over time. Again, the findings mirror Cutter’s results: “we find that the pricing anomaly extends well before the period described in Moneyball, and that with some important caveats, the market correction in the post-Moneyball period persists.” That the inefficiency extends well into the past is an interesting finding.
It’s been said that the plural of anecdote is data. Well, Michael Lewis gave us an enjoyable anecdote, and there appears to be strong evidence in data that the anomaly discussed in the book was real. On-base ability was undervalued, but the market quickly adjusted to correct for the inefficiency.