The 2010 True Hoop Stat Geek Smackdown has begun. In introducing this year’s line-up, Henry Abbott made the following statement: “….2009 champion David Berri is all over the Web promoting his book about the foolish mistakes of professional sports executives. I’ve had a few e-mails from NBA front-office people eager to see him get his comeuppance.”
Upon reading this words I thought… “are teams going to lose in the playoffs just to see me lose this contest?”
Okay, seriously (or as serious as we get here)… here are a few thought on this reaction. Much of what we say about human decision-making in Stumbling on Wins can be found elsewhere in the behavioral economics literature. Much of the behavioral economics literature, though, is based on laboratory experiments. And although such experiments reveal that people do not always behave rationally, subjects in experiments conducted by researchers like Dan Ariely (see Predictably Irrational) are anonymous. So these subjects probably do not bear any ill-feelings towards Ariely or other researchers.
The criticism of experiments, though, is that real-life is not a laboratory. In the real world – so the story goes – people do a much better job of understanding costs and benefits. And thus, in the real world, people should be rational.
As we note Stumbling on Wins, we are not sympathetic to this critique. And what happens in sports serves as a very effective rebuttal. What happens in the world of sports is extremely real to the decision-makers employed in this industry. Furthermore, such decision-makers – relative to what we see elsewhere – are given an abundance of information and clear motivation to get the decisions right. But as published study after published study indicates, this is not happening. Hence the need for our book.
So we believe our book is an important contribution (okay, how about just “a contribution”?) to the behavioral economics literature. However, there is a downside to research in sports. The people we talk about are very real people. And naturally, when real people see their decisions questioned, some hostility results.
Oddly enough, though, many people in sports appear to agree with our basic conclusion (and I am not just referring to the sports executives I have personally talked with who seem quite happy with our research). Sports teams are increasingly reaching out to statistical consultants. Turning to such people is an admission that the traditional methods are not working. In other words, teams are admitting that in the past, they were indeed stumbling on wins.
As G.I. Joe would say, though, knowing is only half the battle. Teams now know that statistical analysis is necessary. But which analysis should be employed is the other half of the problem. As I have noted in the past, some models teams have employed are not as helpful as advertised.
Of course, saying that means another group of people are rooting against me. And I sense they are all likely to be made happy by the playoffs. When it comes to analyzing teams, most analysts take the same approach. The better teams have the highest efficiency differential (offensive efficiency minus defensive efficiency). Homecourt advantage also helps. With these two pieces of information, every person in the TrueHoop contest reached the same conclusion on six out of eight opening round series. The lone exceptions – Denver vs. Utah and Dallas and San Antonio – are series where differential and homecourt advantage tell a different story. In these series, I think we all took an educated guess (with the emphasis on guessing).
The winner of this contest will be the person who guesses on series like these the best. Yes, that could be me again. But it seems unlikely.
So if you are rooting against me, it seems likely that a bit of happiness will come into your life in the future. But if you are an NBA executive ignoring statistical analysis, such brief periods of happiness are going to be followed by unhappiness. In other words, a comeuppance is coming if you keep ignoring statistical evidence in making decisions.
– DJ
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mrparker
April 19, 2010
Nobody likes to be told they are dumb.
mrparker
April 19, 2010
Thats not to say it shouldn’t be said.
todd2
April 19, 2010
You’re confusing them with facts. And perhaps pointing out that the emperor isn’t wearing clothes. Having said that, I can’t understand the vitriol.
mrparker
April 19, 2010
Todd2,
Have you had a chance to read the Big Short? There is a bunch of anecdotal stuff in that book that shows where profiting from contrarian views gets you. It kind of makes everyone hate you.
DR
April 19, 2010
A GI Joe quote? Awesome
todd2
April 19, 2010
Haven’t read it, it’s on my list. I’m a fan of John Galbraith, who coined (and debunked) the phrase “conventional wisdom.”
Statement
April 19, 2010
Colangelo should read your blog.
Alvy
April 19, 2010
With AK-47 out and now Memo, it does seem like Jazz have no tune for this series.
I still have Mavs in seven.
Italian Stallion
April 19, 2010
I think you have to explore behavior carefully before saying it’s not rational.
On a previous thread I gave the example of the executive that kept buying IBM products even though he knew they were inferior to another brand. On the surface it doesn’t seem rational to buy inferior products. But it actually is if you know that you won’t get fired for going along with conventional wisdom but could be by going against it. In this case, the person weighed the risks and rewards and went with the inferior product because it made more sense for him even if not for the company.
I think we see the same thing with mergers and acquisitions on Wall St also.
If one company makes a large purchase with some kind of “supposed benefit”, a lot of times another company inside the same industry will do the same thing. Sometimes they will even overpay because they are afraid that that if they don’t they will miss the boat and lose their job. It’s irrational to overpay just to follow along, but again, sometimes people are weighing multiple risks and rewards and their own interests are not perfectly aligned with the interests of their employers.
Lastly, specific to basketball, most of the owners in the NBA made their money outside of basketball. So they really know very little about basketball. It’s an expensive hobby/business for them. They didn’t get there through basketball merit.
It’s not like the real world where the owner of a business has often built the company by himself and has proven expertise at it.
That lack of basketball knowledge occasionally leads owners to hire executives that are poor GMs, coaches etc… which in turn leads to poor player decisions. That’s not irrational behavior. It’s ignorance.
If owners started out controlling teams of 10 years olds, the most successful ones got to control high school players, the most successful ones got to control college players etc… by the time they sorted themselves and got to the NBA, the behavior would seem a lot more rational. That would be more like a market and only the smartest basketball people would tend to be the owners of NBA teams and they would be doing the hiring etc…. .
Michael
April 20, 2010
Stallion that’s an excellent point.
Perhaps NBA decision makers are appear irrational because they are really driven by status signalling?
This reminds me of something Robin Hanson wrote about tradeoffs between ‘near’ and ‘far’ mental models:
http://www.overcomingbias.com/2009/01/a-tale-of-two-tradeoffs.html
So in the context of basketball, G.M’s may foster far-mode, social image enhancing ideals such as ‘building a winning team’, whilst simultaneously indulging near-mode, status raising behaviours such as overpaying to sign a high scoring/high profile free agent (regardless of that players actual production) even if this conflicts with their professed far goals.
Thus, following conventional wisdom is more immediately rewarding for the G.M, even though long term it may cost them their job.
Rick H.
April 20, 2010
I’m reminded of an article I read about the effect of visual stimuli on a free-throw shooter’s performance.
Ultimately, a study found that those thunder sticks (and other assorted psyche-out techniques) have a negligible impact on performance due to the brain’s ability to block visual “white noise”; one simply cannot process that much information at once.
However, the study also showed that if people make a unified movement (like a long arm wave from left to right), it can affect a player’s sense of balance, which severely affects free throw percentage.
Mark Cuban, that wily rascal– he was approached by these scientists, and he allowed them to implement the strategy (knowing, perhaps, how important FT% is to efficiency). During the first game, players on the opposing team made an astoundingly low FT% (I want to say it was around 50% or lower), but during the second game, the percentage returned to the normal rate.
And that’s all it took– Cuban immediately put a stop to it.
This may just be a little anecdote, but if an owner is that quick to dismiss an unconventional psyche-out strategy, imagine how he would feel when opening his checkbook!
mrparker
April 20, 2010
I guess NBA players are Veblen goods.