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Moneyball: The art of winning an unfair game, by Lewis, M. New York and
London: Norton, 2003, xv + 288 pp., USD 24.95 (cloth)

Article  in  Managerial and Decision Economics · December 2004

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This book is fun to read. Most economists will find some of it managerial economics from this book and it certainly would
familiar; most will learn something as well, since few of us have make a nice supplement to a more traditional course.
the knowledge of as many institutions as does John McMillan.
Non-economists will also learn from it, and this is actually a Paul Rubin
serious economics book that would make a good Christmas
present. It might be possible to teach an entire course in DOI: 10.1002/mde.1219

MONEYBALL: THE ART OF WINNING AN UNFAIR player payrolls: Anaheim, with a payroll of $62.7 million,
GAME, by Lewis, M. New York and London: Norton, 2003, finished four games behind the pennant-winning A’s, Seattle
xv + 288 pp., USD 24.95 (cloth). finished third with a $86 million payroll, and the cellar-dwelling
Texas Rangers, with a payroll of nearly $107 million, finished
31 games behind the divisional leader (p. 270). Nor was 2002 an
Baseball lore holds that ‘the abilities to run, throw, field, hit, aberration: Oakland won 102 games in 2001, a season in which
and hit with power’ (p. 3) are the ingredients}the ‘tools’, in the the owners spent $34 million; the year before that, they spent
sport’s jargon}essential for success at the major league level. $26 million, won 91 games and the division (p. xiii). Just as
By those measures, Billy Beane, a Southern California school- tellingly, the Minnesota Twins, the team that beat the A’s in the
boy picked by the New York Mets just behind Darryl first round of the 2002 League Championship Series, also
Strawberry in the first round of the 1980 amateur draft, had ranked among baseball’s poorest franchises.
it all: ‘Billy was a premium guy. He had the size, the speed, the Oakland’s success under Billy Beane undermines the conten-
arm, the whole package’ (p. 10). Signed for a then-mind- tions of Commissioner Allan H. (‘Bud’) Selig and other critics
boggling bonus of $125 000}Strawberry signed for of Major League Baseball’s modern economics who bemoan
$210 000}after turning down a full scholarship to Stanford the explosion in player salaries since the advent of free agency
as the heir apparent to John Elway at quarterback, Beane failed in the late 1970s and claim that large and growing wealth
to fulfill his promise. (Not, I hasten to add, because of a disparities between ‘big-market’ and ‘small-market’ teams
Strawberrian weakness for Snow White.) He bounced up and threatens the Holy Grail of ‘competitive balance’. The
down between Triple-A balland the Bigs for a decade, spending doomsayers go on to argue that additional doses of socialism
time on the rosters of the Mets, the Twins, the Tigers and, finally, in the form of salary caps and revenue-sharing are necessary to
the Oakland A’s. Realizing at long last that ‘he just didn’t have ensure the survival of the league’s poorer franchises, thereby
it’ in him to play professional baseball, Beane walked out of the preventing a handful of financially well-off teams from
A’s dugout during spring training of 1990 and into the front dominating the sport year in and year out.
office to ask for a job as an advance scout (pp. 54–55). How did the A’s do it? The answer to the question that
The rest, as they say, is history. But as told by Michael Lewis, motivated Moneyball should be obvious to this journal’s
the history is both fascinating and instructive. Impelling the readers: ‘in professional baseball it still matters less how much
reader to consume it in one gulp, Moneyball is the story of Billy money you have than how well you spend it’ (p. xiii). By quickly
Beane’s tenure as the A’s General Manager, a position he absorbing his audience in the details behind the pedestrian
assumed in 1997, and still holds notwithstanding an offer notion that ‘efficiency matters’, Lewis transforms the obvious
tendered by the owner of the Boston Red Sox at the end of the into a compelling lesson in managerial economics.
2002 season to become Major League Baseball’s highest paid Drawing on his own experiences as a professional baseball
GM ($12.5 million over 5 years). In telling that story, Lewis player, Beane concluded that much of the sport’s conventional
interweaves accounts of the 2002 amateur player draft, the 2002 wisdom about the keys to success is wrongheaded. In his view,
season itself}a season in which the A’s went from 46 wins and baseball lore, especially as it turns up in the recommendations
36 losses on July 1, placing the team third in the American of the scouts responsible for identifying Big League prospects,
League West, six games behind divisional leader Seattle, to relies too heavily on subjective judgments. True, the talent
winning the AL West pennant with a remarkable 103 regular scouts routinely take account of such objective performance
season victories}and the September 4th nail-biter between the indicators as foot speed, arm strength, and batting prowess, but
A’s and the Kansas City Royals. In that contest, Bay Area fans given the often trivial differences in the skill sets possessed by
saw the A’s blow an early 11-run lead, but recover to win their the amateur ballplayers in a given year’s pool of prospects, the
record-setting 20th consecutive game when Scott Hatteburg’s scouts’ overall assessments frequently are colored by simple gut-
one-out solo shot to the bleachersbroke an 11–11 tie in the feelings: ‘he’s an athlete’ (p. 30), or ‘imagine what he might
bottom of the ninth. become’ (p. 32; emphasis in original). Merely looking like a Big
Lewis wrote Moneyball to answer the following question: League player is a significant plus; being tagged with having a ‘bad
‘how did one of the poorest teams in baseball... win so many body’ or a ‘bad make-up’ has wrecked many major league dreams.
games?’ (p. xi). When the 2002 regular season began, ‘the Faced with soaring player salaries and operating under a
richest team, the New York Yankees, had a payroll of $126 budget constraint that made it impossible to mimic the fat
million’ (p. xi), triple that of the A’s, whose 2002 payroll was checkbook business model of the New York Yankees, Beane
just under $42 million, about the same as that of the Tampa fundamentally changed how the A’s went about selecting
Bay Devil Rays. In a game where wealth supposedly tilts the players in baseball’s annual rookie draft. He began, first, by
playing field unfairly, the four teams in the AL West finished insisting that his scouts focus exclusively on prospects with
the 2002 regular season in precisely the reverse order of their playing experience at the college level. He did so because such

Copyright # 2004 John Wiley & Sons, Ltd. Manage. Decis. Econ. 25: 549–554 (2004)
 BOOK REVIEWS 551

experience supplies a concrete performance record superior to outcome of a game is a lot smaller than the variance between
that available for those entering the draft directly from high the best hitters and the worst hitters’ (p. 137). Likewise, pitchers
school. Why waste time imagining what a player might become should be evaluated, not on the basis of the clocked speeds of
when one can observe his actual on-field accomplishments? their fastballs or their earned run averages, but rather the right
Second, and what is more important, Beane began exploiting numbers to look at are strikeouts plus walks, homeruns and
the lessons of ‘sabermetrics’, the relatively new science that extra base hits given up (pp. 241–242).
brings high-powered statistical methods to bear in modeling the What the foregoing examples suggest is that Billy Beane’s
game of baseball. (Lewis devotes a full chapter of Moneyball to entrepreneurial innovation, accomplished in consultation with
the pioneering work of Bill James, who launched the field of the needs he hired to mine baseball’s rich data, was to uncover
studynamed for SABR, the Society for American Baseball and take advantage of pricing anomalies in the market for
Research.) The upshot of the new learning made possible by professional baseball players. In Chapter 6 (‘The Science of
collating and mining baseball data at the micro, play-by- Winning an Unfair Game’), Lewis draws an analogy between
playlevel is that most of the information on individual Beane’s approach to managing the Oakland A’s and the pricing
performance contained in the time-honored box score is of derivatives in financial markets. Applying that methodology
flawed}flawed in the sense that it fails adequately to measure both in the drafting of rookies and in the trading of veteran
players’ contributions to what matters most for winning games, players allowed Beane to use his team’s limited resources much
namely producing runs. more effectively than other general managers who continued to
A few examples illustrate. Consider bitting. The orthodox rely on the sport’s conventional wisdom. He was able to sign
performance measures here are batting averages and runs- players cheaply because the attributes he was looking for were
batted-in (RBIs). Sabermetricians have shown, however, that undervalued on the market.
run production is more highly correlated with a hitter’s on-base Billy Beane beat the competition at its own game. One
and slugging percentages than with either (or both) of the fruitful tactic was known as ‘Selling the Closer’ (p. 125).
standard measures. The former is the fraction of time (per Because relief pitchers are evaluated routinely by the number of
thousand at bats) that a player actually manages to get on base ‘saves’ they accumulate in a season, whenever possible Beane
(does not make an out); the latter is the total number of bases seized the opportunity to inflate the market value of an A’s
recorded by a hitter per 4000 at bats. In other words, ‘a perfect reliever in his final contract year by purposefully calling him to
slugging ‘percentage’}achieved by hitting a home run every the mound late in games where Oakland had big leads. The
time}is 4000: four bases for every plate appearance’ (p. 127). reliever thereby notched more ‘saves’, became more valuable as
It turns out that a player’s ability to get on base is more a free agent, and provided Beane, under baseball’s free agency
important}three times more, in fact}than his slugging rules, with compensation in the form of a future draft pick
percentage (p. 128). The implication is that reaching first base transferred from the team acquiring the pitcher’s services.
on a walk}an outcome of a plate appearance that doesn’t even Implementing his sabermetric-driven approach to general
count in computing a player’s batting average}contributes management required Beane to be in complete control. ‘Billy
more to winning than ‘tried and true’ strategies such as bunting Beane ran the whole show’ (p. 154), hiring an on-field manager.
or hitting a sacrifice fly to advance runners already on base. Art Howe, who would be subservient to him. Beane ‘wasn’t just
Recognizing the importance of on-base percentage, along with making the trades and supervising scouts and getting his name
its corollary that striking out is the worst possible outcome of in the papers and whatever else a GM did. He was deciding
an at-bat, caused Beane to prefer hitters with ‘plate discipline’ whether to bunt or steal; who played and who sat; who hit in
and, hence, to look for players with high walk-to-strikeout which spot in the lineup; how the bullpen was used; even the
ratios whose patience made them successful in avoiding outs. manager’s subtle psychological tactics... . The whole thing was a
He acted on the belief that such discipline is innate, that no piece of theater’ (p. 154).
amount of coaching instruction or head-shrinking by sports A micromanagerial style was thrust on Beane because Major
psychologists can change a player’s basic demeanor in the League Baseball remains thoroughly in the thrall of business as
batter’s box, and that a player did not have to look like a major usual. But success fosters imitation, however slowly. After
leaguer to possess it. (Jeremy Brown, a University of Alabama Beane declined to become the Boston Red Sox’s new GM, the
catcher ignored in 2002’s rookie draft by every team save the job was taken by Theo Epstein, a 28-year-old Yale graduate
A’s because he has ‘fat thighs’, is Lewis’s exemplar. Selected by with no professional baseball playing experience (p. 279).
Billy Beane in the first round over the objections of his own Epstein is, however, one of small, but growing number of front
scouts, ‘the Badger’ quickly seized the starting catcher’s job office employees who have understood the main lesson of
after being promoted to the Oakland’s Single-A affiliate in sabermetrics. That lesson is that, owing to excessive reliance on
Visalia, California. Brownwent on to lead the team in batting tradition-laden performance evaluation methods, baseball has
average (0.310), on-base percentage (0.444) and slugging squandered its resources. Oakland has prospered by ‘playing a
percentage (0.545), knocking in 40 runs in his first 55 games different game than everyone else’ (p. xiii), and now that
(p. 284)). A lack of plate discipline was, in point of fact, a major different game may soon be played in Boston, perhaps even Red
reason for Beane’s disappointing professional playing career. Sox fans can look forward to seeing their team become a
Sabermetrics also proved to Beane’s satisfaction that perennial championship contender. Boston can win more
aggressive base stealing did not pay: ‘an attempted steal had games than the evil Yankees}and spend less money in the
to succeed about 70 percent of the time before it contributed process.
positively to run totals’ (p. 129). The results of similar large- Major League Baseball does not need more socialism. It
sample statistical modeling pointed to the conclusion that a needs better information about the relations between inputs and
player’s batting skills are more important than his defensive outputs, and more general managers like Billy Beane who are
skills: ‘the variance between the best and worst fielders on the willing and able to apply that information cost-effectively.

Copyright # 2004 John Wiley & Sons, Ltd. Manage. Decis. Econ. 25: 549–554 (2004)
 552 BOOK REVIEWS

One doesn’t have to be a baseball fanatic to be grateful for rial economics that students and business professionals alike
Moneyball. Its message is far more universal. ‘In any ordinary will profit from reading.
industry the Oakland A’s would have long since acquired most
other baseball teams, and built an empire. But this was baseball, WILLIAM F. SHUGHART II
so they could only embarrass other, richer teams on the field, Department of Economics, University of Mississippi,
and leave it at that’ (p. xiii). By exposing the embarrassment of P. O. Box 1848, University, MS 38677-1848, USA
riches plaguing the National Pastime, Michael Lewis has
provided a valuable introduction to basic principles of manage- DOI: 10.1002/mde.1220

PROPERTY RIGHTS: COOPERATION, CONFLICT, AND literature on the link between property rights and liberty,
LAW, edited by Anderson, T. L. and McChesney, F. S. beginning with Locke, and moving to a very fascinating section
Princeton NJ, and Oxford, UK: Princeton University Press, on Smith (at least to me}most of the section in my copy of the
2003, x+398 pp., USD 29.95 (paper). book is underlined with lots of stars in the margin, as West
challenges some of the traditional views of Smith and depicts
him as an even more radical laissez-faire advocate than others,
The editors of this excellent volume recognized the need for a like Viner, do, for instance). He then contrasts the views of
basic text on property rights, but rather than attempting to Locke, Smith and Hume with the utilitarians, clearly coming
write one themselves, they identified the topics that they felt down on the side of the former. Barzel moves the volume to
should be covered and then recruited other scholars to positive analysis by exploring the question first posed by Coase
contribute chapters on those topics. Edited volumes of this in 1937: why do firms exist? While Coase stressed transactions
kind often do not work as well as a text by a single authored, or costs, Barzel focuses on property rights within the firm. As a
perhaps a co-authored book, as chapters vary in quality, and point of departure, Barzel suggests that production within a
fail to hang together in a consistent fashion. It appears that firm might imply that someone owns the resources needed for
these editors recognized these potential problems, however. production rather than hiring them through a market. Owner-
They obviously took considerable care in selecting authors. In ship of some resources (e.g., labor services in the absence of
addition, they organized the 13 chapters into six sections in slavery) is not possible, however, except in a limited way,
order to cover the issues in a logical way. Then they wrote an through contracts. Thus, the firm will involve ownership of
introductory overview for the volume itself, explaining the some resources and contractual rights to the use of others (i.e.,
approach and organization of the book, and they wrote limited ownership of contractual promises). From this perspec-
introductions to each of the six sections of the volume to tive, Barzel essentially returns to Coase’s original answer,
further elaborate on their approach and purpose. As a noting that costs determine the size and scope of the firm, but
consequence, this is one of the most coherently organized and these costs are driven by ownership and contracting considera-
readable edited volumes I have ever come across. Furthermore, tions, not engineering and production considerations.
since one objective of the book is for it serve as a text, many of Part II of the volume focuses on the importance of exclusion.
the individual chapters provide very useful overviews of the Again the editors lead off with a very nice introduction, and this
theoretical and empirical literatures in the 13 topic areas that is followed by two very good chapters by Thrainn Eggertsson
the editors chose. Finally, the chapters are written by the and Louis De Alessi. All three contributions contrast individual
individuals who have made some of the most important (exclusive) private property with communal property, govern-
contributions to the topic areas they write about. mental property and unowned (open access) property. The
Before discussing the chapters, a few points about the overall Eggertsson chapter explores the theoretical implications of
approach taken in the volume should be made. First, and most these alternative property rights arrangements from an eco-
importantly, this book presents the largely positive (rather than nomic perspective while De Alessi reviews the empirical studies
normative) economic approach to property rights: the approach testing, and supporting, the theoretical predictions. I must say
pioneered by Alchian, Demsetz, Coase, North, Furubotn and that one unfortunate aspect of this evolving literature is
Pejovich, Barzel, Libecap, Anderson and Hill and others. The illustrated by the title of Eggertsson’s chapter: ‘Open Access
economic theory of property rights is nicely and concisely versus Common Property’. Traditionally, common property
described in the author’s introduction to the volume. Modern and open access have essentially been synonymous. The
philosophers and many legal scholars who write about property widespread understanding of the ‘tragedy of the commons’, a
rights are not likely to find many references to their work in this la Hardin, illustrates the general acceptance of the term
volume (although they would benefit greatly from reading it, in commons to imply open access. In contrast, Eggertsson (and
the humble opinion of this economist), although Edwin West’s other writers) defines a pure open access situation as one in
fine chapter in Part I does discuss some early philosopher– which ‘everybody is authorized to enter and withdraw resource
political–economists’ (e.g., Smith, Hume) and utilitarians’ (e.g., units, but no person or group has exclusive rights otherwise to
Bentham, J. S. Mills) normative writings as they relate to manage or sell the asset’ (p. 74). A common property
property rights. arrangement, on the other hand, is one in which ‘members of
Part I of the volume leads off with a short introduction by the the common property regime not only have rights of entry and
editors, followed by West’s history-of-thought chapter, and a withdrawal, but also full rights of management and exclusion of
nice chapter by Yoram Barzel on the developments in the non-members’ according to Eggertsson (p. 74). Thus, Eggerts-
theory of the firm. West stresses the historical normative son and similarly inclined writers have decided to redefine

Copyright # 2004 John Wiley & Sons, Ltd. Manage. Decis. Econ. 25: 549–554 (2004)

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