Economists could learn something from the Houston Astros

Published 1:30 am Thursday, November 9, 2017

It is no secret that the Houston Astros won the World Series, their first ever. The city of Houston put on a parade for them that was big enough, loud enough and joyous enough to celebrate not just the team’s victory but the city’s spirit, undampened by hurricane Harvey’s flooding rains.

There was no real secret, either, about how they won the championship. It was the ingredient they added to the team they had put together: Chemistry.

For some years, the Astros were the major league team most fervently devoted to its belief in the power of analytics – the data-crunching statistical models that were behind baseball’s constant search for talent. A few years ago, though, Jeff Luhnow, the Astros’ general manager, came to the realization that statistics weren’t enough.

The use of analytics in sports is both overblown and misunderstood. A baseball player’s statistics are important, no doubt, but major league baseball’s history is littered with rookies with good “stats” who never quite lived up to their numbers. In earlier times, baseball’s history, of course, had lots of players who never lived up to their scouting reports, long before analytics existed.

Baseball, like all team sports to one degree or another, frequently makes a mockery out of “systems.” Even so, our need to find out how a team won a championship tends to look for a system to explain its success.

It is a human tendency for us to want to imitate those who succeed. It doesn’t matter much what field they are in, from sports to business to science or literature. In sports especially, though, we pore over the records. We send writers to interview players, coaches and managers to find out what winners did so we can copy it and win. In an indirect way, we want to use the equipment and systems they use so that we can look and act as they do.

We don’t know what Astros GM Luhnow was thinking about as he considered reshaping the team to be winners. Apparently, though, he recognized that baseball analytics, specifically “Moneyball,” was hyped and oversold. There was a big gap between what it promised and what it delivered. After all, it had not come up with a World Series game for the Oakland Athletics, its most ardent supporter and the subject of both a popular book and a Hollywood movie.

To produce a championship, the gap between analytics’ promise and delivery had to be filled, and Luhnow came to believe that chemistry could fill it.

Like most team sports, major league baseball is a sometimes uneasy coalition of individual and team effort. There are two imbalances in this coalition, though. One is that teams win games, not individuals. The other is that a team does not really exist as an effective entity as far as contracts are concerned. Contracts, and pay agreements are made with individuals and in compliance with union agreements. Bonus payments based on team wins are sometimes written into contracts as incentives, but it is not clear what impact, if any, this has on behavior or wins.

Luhnow decided to add chemistry to the formula that analytics provided on a prospective player. Essentially it was looking at a player’s on-field abilities and style, behavior under pressure, ability to work in a team environment, leadership – and, as importantly, “followship” skills – in an effort to predict how he would fit into the team and improve its chances.

All winners’ systems look and sound good to us, naturally. Back-to-back championships in team sports though, are especially challenging; a real test of a system. Next season, then, baseball fans will have a better look at whether analytics plus chemistry is the key to a championship baseball team.

Economics plays in a major league, too, and the competition among ideas is as intense as anything in big league sports. For economics teams winning means understanding the economy enough to produce forecasts that support sound economic policy.

Economics is older than baseball, of course, and threw data at its problems years before the process was given the name analytics. Some recent failures in economic forecasting, though, from the recession-spawning near collapse of the financial system to the most recent quarterly economic growth rates – have raised questions about what economics knows and doesn’t know about how our economy works.

If the government’s economics team is to get its mojo back, it has to realize that its analytics model is missing something to make it a winner. It may not be chemistry like the Astros, but it may be something like wisdom — as difficult to measure as team chemistry but the key ingredient in consistent winning. And when economics wins we all do. You don’t have to be a fan.

James McCusker is a Bothell economist, educator and consultant.