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Beyond Moneyball: Changing Compensation in MLB

Author

Listed:
  • Joshua Congdon-Hohman

    (Department of Economics, College of the Holy Cross)

  • Jonathan A. Lanning

    (Consumer Financial Protection Bureau)

Abstract

This study examines the changes in player compensation in Major League Baseball during the last three decades. Specifically, we examine the extent to which recently documented changes in players� compensation structure based on certain types of productivity fits in with the longer term trends in compensation, and identify the value of specific output activities in different time periods. We examine free agent contracts in three-year periods across three decades and find changes to which players� performance measures are significantly rewarded in free agency. We find evidence that the compensation strategies of baseball teams increased the rewards to �power� statistics like home runs and doubles in the 1990s when compared to a model that focused on successfully reaching base with a batted ball without a significant regard for the number of bases reached. Similarly, we confirm and expand upon the increased financial return to bases-on-balls in the late 2000s as found in previous research.

Suggested Citation

  • Joshua Congdon-Hohman & Jonathan A. Lanning, 2017. "Beyond Moneyball: Changing Compensation in MLB," Working Papers 1702, College of the Holy Cross, Department of Economics.
    • Handle: RePEc:hcx:wpaper:1702
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    File URL: https://hcapps.holycross.edu/hcs/RePEc/hcx/HC1702-Congdon-Lanning_FreeAgencyRewards.pdf
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    Keywords

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism
    • Z22 - Other Special Topics - - Sports Economics - - - Labor Issues

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