Economics & Baseball

Former Federal Reserve Chairman Alan Greenspan reviewed baseball data to sharpen his math skills. Current Fed Chairman Ben Bernanke has created formulas to improve a pitchers' ERAs(earned run averages). Michael Lewis wrote a bestseller about Oakland A's General Manager Billy Beane and his use of statistics to buy and sell baseball players at the most opportunistic times. Beane had to do this since his team was on a strict budget, but he was only the first in a new wave of baseball minds that rely more on Ivy League math educations than athletic experience. Theo Epstein, Jon Daniels, Pat Gillick, Al Rosen........and so on. Players like Nick Swisher have become major league stars because of this devotion to statistics. All of these individuals would surely credit Bill James as the Father of Baseball Economics. James' 1977 Baseball Abstract began the ultimate exercise in uncovering the relationship of numbers and baseball. His research and more importantly, his theory paved the way for the current chess match of economics that has allowed teams like the Oakland A's to compete with major market money powers such as the New York Yankees, and win. These economic chess matches are the reasons some teams pass on even the greatest individual players like Alex Rodriguez because they don't want to overpay for statistics that don't necessarily equal wins. Then, there are some teams like the Texas Rangers who sign these players and set their franchise back 7-10 years, only to come around to a finer understanding of the importance of economics and baseball. Even economics is catching up to the mighty Yankees, who have exhausted their very deep pockets overpaying for individual players that aren't generating the value for their high costs. (See Kevin Brown, Randy Johnson, Gary Sheffield, and of course, Alex Rodriguez). It's the same when investing money. The idea is to buy low and sell high. The Federal Reserve Bank even works the same for all practical purposes, using its resources to jumpstart the economy when things are low, and then reigning it in when the economy gets too high. Foreign trade works the same too. It's better to export more than one imports, or more simply put, it's better to make more than you spend. Baseball, unlike like any other team sport except maybe for world football(soccer), involves detailed strategy and that makes it interesting. And since the widely accepted, albeit forced marriage of economics and baseball, the game is even more interesting. And that makes Bill James' Historical Baseball Abstract required reading for both the economist and the ethusiast alike.