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Quantifying Market Inefficiencies in the Baseball Players’ Market

Author

Listed:
  • Ben Baumer

    (Department of Mathematics and Statistics, Smith College, Burton Hall 308, Northampton, MA 01063, USA.)

  • Andrew Zimbalist

    (Department of Economics, Smith College, Wright Hall 103, Northampton, MA 01063, USA.)

Abstract

Among the central arguments of the bestselling book and movie Moneyball was the allegation that the labor market for baseball players was inefficient in 2002. At that time, Billy Beane and the Oakland Athletics used observations made by statistical analysts to exploit this market inefficiency, and acquire productive players on the cheap. Econometric analysis published in 2006 and 2007 confirmed the presence of an inefficient market for baseball players, but left open the question of to what extent, and how quickly, a market correction would occur. We find that this market had in fact already corrected by 2006, and moreover argue that the perceived market response to Moneyball in 2004 is properly viewed as part of a more gradual longer-term trend. In addition, we use official payroll data from Major League Baseball to refute a previous observation that the relationship between team payroll and performance has tightened since the publication of Moneyball.

Suggested Citation

  • Ben Baumer & Andrew Zimbalist, 2014. "Quantifying Market Inefficiencies in the Baseball Players’ Market," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 40(4), pages 488-498, September.
    • Handle: RePEc:pal:easeco:v:40:y:2014:i:4:p:488-498
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    Citations

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    Cited by:

    1. Kim, Jaemin & Dibrell, Clay & Kraft, Ellen & Marshall, David, 2021. "Data analytics and performance: The moderating role of intuition-based HR management in major league baseball," Journal of Business Research, Elsevier, vol. 122(C), pages 204-216.
    2. Michael A. Roach, 2018. "Testing Labor Market Efficiency Across Position Groups in the NFL," Journal of Sports Economics, , vol. 19(8), pages 1093-1121, December.
    3. Zaytseva, I. & Stupin, M., 2023. "The key to the "Moneyball" phenomenon: What are the determinants of the level of effort in absence of fi nancial motivation in professional football?," Journal of the New Economic Association, New Economic Association, vol. 60(3), pages 12-26.

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