By Nubefy @ Shutterstock.com
In the past I’ve written about the usefulness of applying some math and statistics to sports. The best explanation for such benefits was Michael Lewis’ book, Moneyball. The book details the methods employed by Oakland A’s general manager Billy Beane to improve the team’s performance.
Now, Jon Hartley reports on the use of behavioral economics by the Cleveland Browns to improve from 2017’s sad 0-16 losing record to 2018’s 7-8-1 record, one of the biggest single-season improvements in NFL history. No surprise here, there’s a big time Billy Beane connection. Hartley writes:
The turnaround was orchestrated by a small team of analytics wonks in the front office, led by chief strategy officer Paul DePodesta, who was Billy Beane’s assistant general manager at baseball’s Oakland A’s during the early 2000s. They based their strategy on an academic paper published in 2013 by Wharton’s Cade Massey and Nobel laureate Richard Thaler, “The Loser’s Curse: Decision Making and Market Efficiency in the National Football League Draft.”
The paper argues that NFL coaches display a high degree of “present bias”—in layman’s terms, impatience. A simple example of such bias: When behavioral economists run experiments asking questions like “Would you rather receive $100 today or $120 one month from today?” they find most people choose the immediate $100, irrationally passing up a quick 20% return. But when both options are far in the future—“Would you rather receive $100 in 12 months or $120 in 13 months?”—subjects are far likelier to wait the extra month.
Messrs. Massey and Thaler found that almost all NFL teams overconfidently believed they had a realistic chance to build a Super Bowl team immediately—to the point that during the draft teams anxiously traded up into higher rounds or agreed to forgo high-value picks in future years. In doing so they gave up enormous amounts of draft value, to the usually unwitting benefit of their trading counterparts.
The study found that, on average, a team wanting a second-round pick in a given year’s draft would be willing to give up a first-round pick in the next year’s draft—a very high long-term price. What’s more, the ultimate performance of first-round picks didn’t justify how much teams were willing to give up to get them.
In 2012, for instance, the Washington Redskins desperately wanted Baylor quarterback Robert Griffin III. They acquired the No. 2 overall pick by giving the then-St. Louis Rams four very high-value draft picks over three years—first-round picks in 2012, 2013 and 2014 and a second-round pick in 2012. Mr. Griffin played only three seasons for the Redskins before suffering a series of injuries, and the trade left the Redskins in a hole for many years, short of draft picks to sign new talent.
A smart NFL front office could exploit other teams’ impatience by systematically trading higher-round picks for more lower-round ones and the current year’s picks for higher-value ones in future years. At least one team had already tried it. Patriots head coach Bill Belichick read a previous version of the paper in the early 2000s and used its insights by trading down first-round draft picks in seven of the 18 NFL drafts during his tenure—during which the team has made the playoffs 15 times and won nine conference championships and five Super Bowls.
Read more here.
E.J. Smith - Your Survival Guy
Latest posts by E.J. Smith - Your Survival Guy (see all)
- Investing Habits of the Fairly Wealthy: #2 Coach - December 7, 2023
- Have All of New Jersey’s Workers Already Moved to Florida? - December 7, 2023
- Georgia Accelerates Implementation of Its Flat Tax Plan - December 7, 2023
- Digital Dollars: A Warning Where You’re the Prey - December 6, 2023
- You Can See Where Big Government Is Headed - December 6, 2023
