ESRI Discussion Paper Series No.362 Moneyball Revisited: Some Counter-Evidence

This paper replicates Hakes and Sauer (2006) and reconsiders the Moneyball hypothesis to address the potential bias that should have been dealt with in past studies. Basic economic theory suggests an exact correspondence between pay and productivity when markets are competitive and rich in information, while it is hard for researchers to provide empirical evidence on the correspondence between pay and productivity in the real labor market. By measuring more precisely the productivity of professional baseball players, we find that after the publication of Moneyball, the slugging average, which is widely accepted as one of the most common measures of batting skill, has the dominant effect on winning when compared to the factor that Moneyball considered important.After publication, the slugging average becomes undervalued in determining the payroll, probably because of Moneyball. The counter-evidence against Moneyball suggests that the payroll may have become less efficient than before Moneyball.