Friday, September 29, 2017

Adapting to Changing Technology: Juiced Baseball Edition

NPR had a nice story about some economics of juiced baseballs. Yes NPR. 

There have been a record number of home runs this year, approaching 6,000. The evidence suggests that, due to changes in how the balls are being made, hits are going an average of seven extra feet. How do players and teams react to this?

More players now swing for the fences. Non-sluggers used to be content with just getting on base. Now they have a better shot at rounding the bases. We know this because there is also a record number of strikeouts.
SIEGEL: But given the number of strikeouts and given all the talk about the launch angle of the baseball as it leaves the bat, it seems that more baseball players are going up to the plate trying to hit a home run.
KERI: Well, that's certainly true. But it has to do with incentives. You know, if you hit a bunch of home runs and you strike out, there's nothing that's going to get you fired from your job for that. And Aaron Judge is a classic example of this. Aaron Judge has more than 50 home runs. He's going to win the AL Rookie of the Year, maybe MVP. He struck out more than 200 times this year. Only six players ever in the history of baseball, including Judge, have done that. And we don't say, Aaron Judge, tisk-tisk (ph), all those strikeouts. We say, Aaron Judge, what an exciting player.

Also, the premium teams pay for sluggers is likely to fall. Being able to hit 20 home runs a year used to be pretty rare. But the supply of pseudo-sluggers has just increased, causing the price to fall.
If you look at some other sluggers that have gone out on the open market and will this offseason, it's a supply and demand issue. If everybody's hitting home runs, why bother spending a lot for home runs?

2 comments:

  1. In reading the textbook, we’re taught that if a factor other than price is changed, the demand curve will either increase or decrease (Froeb, McCann, Shor, & Ward, 2016, p. 96-99), and after reading the NPR article, I see how it makes sense that an increasing number of sluggers in the market is going to shift demand and encourage teams to pay less for long hitters in the short-term. However, I’m wondering if it really will have any long-term impacts of change on the sport (or rather, long-term impacts of salaries for athletes within the sport) due to other factors at play.

    Athletes today are faster and stronger than athletes from previous decades because of the incorporation of technology into training and competition - Kevin Loria at Business Insider outlines some basic ways this has happened (Loria, 2015). We’ve also seen an increase in pay for athletes over the decades (Stephenson, 2014), so it just makes me wonder if having more sluggers will really create a dent in the pay we’re seeing for these athletes in the long run. Eventually, these longer hits are just going to become the norm. This also isn’t the first time the ball in baseball has changed (Calcaterra, 2017), and likely won’t be the last.

    References
    Calcaterra, C. (2017). A second study confirms that home runs are up due to a change in the baseball. Retrieved from http://mlb.nbcsports.com/2017/06/29/a-second-study-confirms-that-home-runs-are-up-due-to-a-change-in-the-baseball/

    Froeb, L. M., McCann, B. T., Shor, M., & Ward, M. R. (2016). Managerial economics: A problem solving approach (Fourth edition ed.). Boston, MA: Cengage Learning.

    Loria, K. Science is creating super-athletes — and making sports unrecognizable to previous generations. Retrieved from http://www.businessinsider.com/how-science-and-technology-are-changing-sports-2015-8

    Stephenson, D. (2014). When did athletes start getting rich? Retrieved from https://www.firmex.com/thedealroom/when-did-athletes-start-getting-rich/

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  2. In an article I read on USA today regarding the increase in homeruns, Commissioner Rob Manfred said, “I think the game ebbs and flows. We’re in a period where we have bigger, stronger, faster athletes, like all sports. You think about it — everybody has bigger, stronger, faster athletes. I don’t think it’s surprising that given that development, there’s an emphasis on power pitching, which produces strikeouts, and there’s an emphasis on power hitting, which gives you a lot of home runs and less balls in play. I think that someone will figure out a theory which they use to win with a little different approach to the game, and I suspect that the game will adjust once that happens” (Ortiz, 2017). The article also talked about the “juiced baseball” that is addressed in the NPR story. Either way, having such a spike in the number of homeruns this year will have effects on the MLB as a whole. Starting with the players. The NPR article mentions that due to the supply of pseudo-sluggers increasing, this will cause the price to fall. This correlation is described in the text Managerial Economics. The book says “If something other than price causes an increase in demand, we instead say that the demand shifts” (Froeb, McCann, Shor, & Ward, 2016, pg. 69). After looking at examples in the text this all makes sense, as home run hitters increase and become more common, they won’t be as much of value as demand isn’t as high. This causes a shift in the curve as price will decrease. It will be interesting to see if the strikeouts will have an impact on pay as it sounds like as of now it isn’t when using Aaron Judge as the example.
    References:
    Froeb, L. M., McCann, B. T., Shor, M., Ward, M. R. (2016). Managerial Economics a Problem Solving Approach. Fourth Edition. Boston, MA: Cengage Learning.

    Ortiz, J. (2017). Why MLB players are hitting home runs on a record pace. USA Today. Retrieved from: https://www.usatoday.com/story/sports/mlb/2017/09/19/mlb-home-runs-record-pace/682632001/

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