Dan Klein on Moneyball

by Don Boudreaux on September 25, 2011

in Competition, Complexity & Emergence, Creative destruction, Movies, Sports

My GMU Econ colleague – and EJW‘s – Dan Klein sent me by e-mail his thoughts on the movie Moneyball.  I share Dan’s thoughts with you here:

I [Dan Klein] confess that I’m a sucker for Brad Pitt (esp. Troy and Legends of the Fall). I enjoyed Moneyball.

It’s got a remarkable amount of econ/pro-commerce stuff in it, as well as Smithian themes about moral sentiments in commercial society.

They throw in a lot, and it often felt clumsy. Sometimes the dialogue even speechifies. But many of the topics touched are topics usually far beyond the reach of a movie, so it strikes as very original. The whole is remarkably bold.

There is no love interest, which was good.

Here’s a quick list of some of the topics it touches (and always in a good, if clumsy, way):

•    Radical innovation, especially as born of extreme adversity (see Reuven Brenner).
•    The hostility to radical innovation, especially at a deep level of selfhood and of the cultural ecology (Schumpeter 1911/1934).
•    Some speechifying by the Red Sox owner about how the resistance problem also applies to government.
•    Honest profit (which is in part based on prices) as a validation of personal worth.
•    But also honest profit as less than paramount. In the end Brad Pitt got the validation but declined the offer.
•    The destructive element in creation, but moreover the destructive impulse, as he was, as it were, getting back at baseball (Schumpeter again).
•    Thus, also, success in rivalrous competition as one avenue to personal redemption.
•    A general sense that the system is ineluctably vast and anonymous, that each person is situated within a vast and mysterious set of forces. That people don’t really know what will happen, or why, and must stoically accept constraints.
•    Technology and nerd smarts; “skill-biased technology” issues.
•    How better methods discover value and help those otherwise less valued.
•    Family as naturally cardinal and often challenged by the forces of modern/commercial society.

Now I really want to see this movie!

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SweetLiberty September 25, 2011 at 12:27 pm

I saw the movie and don’t think I’m spoiling anything that Dan Klein doesn’t allude to above when I say that Brad Pitt’s character, once his formula for success had been demonstrated, turned down a very lucrative offer in favor of staying with Oakland. The movie showed Pitt going through tremendous angst regarding the offer, insisting the reason he worked so hard was never about the money. But what if it had been? Would that have been so bad? The results he obtained are independent of his personal motivations. Pitt’s cohort, played by Johan Hill, explained that the money offered by the other team should be viewed as an indication of Pitt’s success, not something he should feel guilty about.

To be sure, there are many factors beyond money which motivate people – location, the type of work, etc., but successful people should never feel guilty about accepting more money for being productive. Unfortunately, much of society prefers to link financial success with guilt – something Pitt’s character seemed somewhat tortured by in the end.

Invisible Backhand September 25, 2011 at 12:34 pm

While the dramatic tension between the emotionless and the emotional (think Spock and Dr. McCoy) is well known, I’m always astounded, not at the inability of the emotionless to understand the emotional, but that they can’t comprehend other people have emotions at all. Sweet Liberty’s world is a lonely one, but he doesn’t know it.

SweetLiberty September 25, 2011 at 12:42 pm

It’s not emotion vs. emotionless, but rather rational vs. irrational that’s a problem. Sadly, IB, your world which celebrates the irrational is quite well populated. Perhaps one day you’ll be crowned king.

Greg Webb September 25, 2011 at 1:01 pm

IB, everyone is emotional. The difference is between the responsible and the irresponsible. A responsible person knows that every decision involves trade offs because there is no perfect (i.e., utopian) decision. Thus, the responsible person does not dwell on what other people may think of him if he left to accept employment that is more lucrative. Rather, he is focused on doing what is best for himself and his family. An irresponsible person worries about what other people think of him, and thus, often makes a poor decision for himself and his family.

SweetLiberty September 25, 2011 at 1:21 pm

Very rational.

Stone Glasgow September 25, 2011 at 6:32 pm

No no no Greg, if you make decisions that are not designed to benefit other people and the “greater good” you’re a bad bad man… and rich people are immoral because they have not used their wealth to fight evil.

You’re evil unless you’re a selfless, reckless, ostentatious “superhero” who uses violent coercion… taking, stealing and destroying… to get what is “good and just.” You must judge all others and violently smite them if they do evil.

If you are humble, peaceful, and cautious… and act to honestly provide for yourself and your family, without violence or coercion… if you trade and produce, and are tolerant of others with whom you may trade… you’re obviously an evil, evil man.

Statists think like violent comic-book vigilante heroes. The rest of us grew up a long time ago.

ArrowSmith September 27, 2011 at 4:04 pm

You seem to forget Captain Kirk who balanced emotion with logic.

Methinks1776 September 25, 2011 at 12:46 pm

but successful people should never feel guilty about accepting more money for being productive.

I have a difficult time putting the word “should” in front of how people feel. Each person is unique and will feel what he feels. There is never a correct feeling about anything. That I feel differently about something doesn’t mean it’s more correct.

SweetLiberty September 25, 2011 at 12:53 pm

Yeah, I get that people feel what they feel. But is there an objective, rational reason to feel guilty about accepting more money for being productive?

Methinks1776 September 25, 2011 at 5:21 pm

No. But, feelings are not objective and rational. They aren’t thoughts. They are feelings. Rationally, you know that a loved one who died after a long and painful illness is better off dead than suffering, but you still feel the emotional pain and mourn the loss.

People feel differently about their successes and failures and it often seems irrational to us. It doesn’t to them and it always stands as a reminder to me how little we know, how little we can control and how little we should aim to meddle.

SweetLiberty September 25, 2011 at 6:37 pm

It is the meddling, manipulation, and exploitation of emotions which I object to most, from preacher to politician to the public school teacher who plants the ideas that one should feel guilty about accepting more money for being productive. As Greg Webb said, “…everyone is emotional. The difference is between the responsible and the irresponsible.”

Methinks1776 September 25, 2011 at 9:42 pm

Public school teachers plant ideas of accepting more money for incompetence! :) actually, :(

Stone Glasgow September 25, 2011 at 6:50 pm

Well said. However, I feel that “should” is just another way of saying “I feel this way, and I want others to feel feel this way too.” I don’t see a problem with the desire to have others share one’s views; the problem only arrives when violence and coercion are used to fulfill that desire.

ArrowSmith September 27, 2011 at 4:05 pm

The more correct thing is – “government should never punish people for being more successful”. If a person feels guilty about it, or if other people want to guilt-trip, that’s their business.

Methinks1776 September 27, 2011 at 4:09 pm


Steve_0 September 25, 2011 at 2:06 pm

I saw the movie at an advance screening and I laughed out loud, clapped, and had a few tears jerked from my eye. I saw lessons that I’ve been talking about with my students in almost every scene. I will definitely be recommending the movie to them.

One very short moment that really got me was the last split second in Hatteberg’s house, when he hugs his wife and realizes their life has changed. I cover Myers-Briggs pretty heavily in the first couple of weeks as a tool to describe and recognize differences in people. And coincidentally, we watch “Field of Dreams” to talk about the four basic Temperaments, and the mythological idea of the transformation journey, coalition building, and internal reconciliation. One of the themes is the importance of “home” as differentiated from “house”.

In that scene, heavily steeped in the emotions of “home”, Hatteberg’s family has just be resurrected by Schumpeterian destruction. The exact opposite of what we usually think of. A year from now, I will be working for a global IT company, with most of my talent team being in India. I think of Scott Hatteberg as being “India” in this movie. The modern buggy-whip manufacturers in the US would be the star players we can no longer afford. Someone loses (temporarily), but many more people gain.

This is just a slice of the lessons I saw in this movie. I highly recommend it.

Kent Gatewood September 28, 2011 at 4:07 pm

I think the star players lose permanently.

Brad Hutchings September 25, 2011 at 3:06 pm

The best endorsement I’ve seen of the movie comes from Michael Lewis, himself.

LowcountryJoe September 25, 2011 at 3:07 pm

The book Moneyball: The Art of Winning an Unfair Game was brilliant. I’m not sure how the movie is going to do the book justice. As a lifelong fan of the Oakland Athletics, the book was a mixed blessing. It was informative and gripping but it revealed to the rest of the baseball community too many strategies that removed the advantages they were experiencing. Those other teams would have eventually caught on but it probably happened two seasons before it had to — two seasons where Oakland could have pushed past the other American League teams in the post season.

One thing is for sure, Michael Lewis can tell stories about important things which will keep the reader engaged and flipping pages. Gladwell does this, too, but has nothing on Lewis.

ohioralph September 25, 2011 at 5:07 pm

I have read this book,”Moneyball” and immediately went to see the movie on opening day. The analogy to Austrian Economics is what I find fascinating. With the use of sabermetrics, data is compiled with allows the team to measure past performance using a variety of metrics. With this data they field a team that excels which is reasonable using proven analytical skills. The big variable which is a tribute to human behavior is trying to continue predicting outcomes once you have all this data. This, of course, is impossible which leads to the merger of scouting and sabermetrics which is the approach that most teams use now. At the end of the movie this was acknowledged and leaves me wondering if you could ever devise a series of outcomes based on past scenarios on the field. It no doubt will change the way to view a game.

Anyway it is a great movie for a fan of the game or aspiring economists wanting a case study in the futility of measuring human behavior.

Stone Glasgow September 25, 2011 at 7:16 pm

After seeing him turn down $12.5 million to move to Boston, I immediately thought to myself “there must be a reason he stayed, I wonder how much Oakland offered him.”

Turns out that Oakland offered him 2.5% of the team’s ownership, worth about $4 million and $175,000 per year at the time. Today his share of the company is worth $8 million, his dividends are $375,00 per year. The $12.5 million dollar offer was a five-year contract ($2.5 million/year).

His decision was not the “heroic” or “selfless” and tortured decision made by Brad Pitt in the movie. It was a rational “greedy” choice with him and his family in mind.


LowcountryJoe September 25, 2011 at 8:07 pm

The money would have been guaranteed had he taken the Red Sox GM position. The valuation of the Oakland Athletics is highly unpredictable. If they are not allowed to move where they really want to go — San Jose — the valuation of Beane’s share is going to take a hit…because many lame fans in Oakland certainly don’t appreciate the team enough to properly support it.

Methinks1776 September 25, 2011 at 9:48 pm

The $12.5 MM contract was not the entirety of his opportunity cost of accepting the Oakland deal. What would the 2.5MM earn annually if he invested all but $175K of it every year?

I haven’t even attempted to do the math, but that should be in your calculation.

Stone Glasgow September 25, 2011 at 10:14 pm

Agreed. My point was to show that the decision was a close one; he was not declining $12.5 million and accepting a low salary as the movie implied. He was making a decision to accept ownership and risk in Oakland instead of employment and stability in Boston.

He chose to gamble and stay home, likely perceiving his team to be undervalued, and confident in his ability to continue its improvement. It appears that he was partially correct. Although the value of his team has doubled, $8 million is still short what $12 million invested in assets of similar volatility over the last nine years might be worth today.

Methinks1776 September 26, 2011 at 11:37 am

Oh, I got you point.

The other point is that he may have preferred Oakland. The difference in the pay packages my not have been enough entice him go give up his lifestyle in Oakland. And really, Northern California or freezing cold Boston? Blech.

I still have no idea what this movie is.

Stone Glasgow September 26, 2011 at 10:25 pm

Yep, he probably didn’t want leave Oakland, friends, family, players and coaches that he knew well… and the extra money was not worth the trouble.

JS September 27, 2011 at 9:16 am

Every human has physiological differences and has been exposed to varying levels of emotional conditioning regarding values. For example, two people can perform the same act but feel different emotions over it pertaining to pride and shame, and other subtle emotions derived from them. Philosophers over the years have reduced these emotions into two categories, pleasure and pain.

It is generally held that every person seeks to maximize his pleasure, which after his base needs of survival are met, such as obtaining food and warmth, everything else that he desires is based upon obtaining psychological pleasure, or as the Austrians said, ‘psychic revenue’.

The error of a few posters on this topic, about the movie, is that they make value judgments and impose them on others. To do this would mean that people have the capacity to act other than they actually do, and we judge them based on their choices of right, wrong, etc. We think that Brad Pitt did the right thing, or the wrong thing, but those are all fallacies. He did the thing that brought him the most pleasure, or what maximized his psychic income.

Viewed as such, having wealth merely competes with other things that provide pleasure and satisfaction to people. Due to our inherent feelings of envy being coupled with our innate need for social recognition, the pursuit of wealth always comes with a risk of being disliked.

A man desires social recognition for being successful. That is often measured in terms of money. In his quest for wealth he calculates that he must stop at some point and give some back if he seeks to preserve his social reputation. If he combines enough philanthropy with his greed correctly, he will gain the reputation he aimed for, and maximize his feelings of pride.

Regarding freedom of choice (free will), Von Mises agreed with Nietzsche that we are not free to choose other than what we value highest at the moment of action. That is one of the foundations of Austrian Theory. We can be educated/conditioned to different values which cause changes in future actions, but each act is always based upon current valuations, despite the protestations of the actors afterwards

So, after all is said and done, a movie was made about a man who did what he was going to do all along.

ArrowSmith September 27, 2011 at 4:06 pm

Anyways lots of good comments and this seems like a movie I’ve got to see!

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