Social Econ Blog

I wonder if there isn't something particularly American in the preference for "best" over "better" strategies. I might be pushing things here. But both the U.S. health-care system and the U.S. educational system are exclusively "best" strategies: They excel at furthering the opportunities of those at the very top end. But they aren't nearly as interested in moving people from the middle of the pack to somewhere nearer the front.

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The consistent failure of underdogs in professional sports to even try something new suggests, to me, that there is something fundamentally wrong with the incentive structure of the leagues. I think, for example, that the idea of ranking draft picks in reverse order of finish -- as much as it sounds "fair" -- does untold damage to the game. You simply cannot have a system that rewards anyone, ever, for losing. Economists worry about this all the time, when they talk about "moral hazard." Moral hazard is the idea that if you insure someone against risk, you will make risky behavior more likely. So if you always bail out the banks when they take absurd risks and do stupid things, they are going to keep on taking absurd risks and doing stupid things. Bailouts create moral hazard. Moral hazard is also why your health insurance has a co-pay. If your insurer paid for everything, the theory goes, it would encourage you to go to the doctor when you really don't need to. No economist in his right mind would ever endorse the football and basketball drafts the way they are structured now. They are a moral hazard in spades. If you give me a lottery pick for being an atrocious GM, where's my incentive not to be an atrocious GM?

I think the only way around the problem is to put every team in the lottery. Every team's name gets put in a hat, and you get assigned your draft position by chance. Does that, theoretically, make it harder for weaker teams to improve their chances against stronger teams? I don't think so. First of all, the principal engine of parity in the modern era is the salary cap, not the draft. And in any case, if the reverse-order draft is such a great leveler, then why are the same teams at the bottom of both the NFL and NBA year after year? The current system perpetuates the myth that access to top picks is the primary determinant of competitiveness in pro sports, and that's simply not true. Success is a function of the quality of the organization.

Another more radical idea is that you do a full lottery only every second year, or three out of four years, and in the off year make draft position in order of finish. Best teams pick first. How fun would that be? Every meaningless end-of-season game now becomes instantly meaningful. If you were the Minnesota Timberwolves, you would realize that unless you did something really drastic -- like hire some random sports writer as your GM, or bring in Pitino to design a special-press squad -- you would never climb out of the cellar again. And in a year with a can't-miss No. 1 pick, having the best record in the regular season becomes hugely important.

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Or how about eliminating the draft altogether? I'm at least half-serious here. Think about it. Suppose we let every college player apply for and receive job offers in the same way that, oh, every other human being on the planet does. That doesn't mean that everyone goes to L.A. and New York, because you still have the constraints of the cap. It does mean, though, that both players and teams would have to make an affirmative case for each other's services. So you trade for Steve Nash or Jason Kidd, because they make you instantly attractive to every mobile big man coming out of college. Instead of asking the boring question -- which team is going to be lucky enough to draft Derrick Rose? -- we ask the far more interesting question: Which team, out of every team in the league, should Derrick Rose play for? Or suppose you're the T-Wolves, and you've been a doormat for years. You could say, "From now on we're a clean-living, Christian organization. We have prayer meetings before every game. We are home by 11. We never do drugs." Then you'd have the inside track on every clean-living college basketball player in the country. Are there enough quality religious players out there to win a championship? There must be! (By the way, why has no one ever put together the all-time clean-living starting five? And how great a name for a franchise is the "Minnesota Christians?")

The bigger point here is that what consistently drives me crazy about big-time sports is the assumption that sports occupy their own special universe, in which the normal rules of the marketplace and human psychology don't apply. That's how you get the idea of a reverse-order draft, which violates every known rule of human behavior.

Here's another example: We now have pretty good epidemiological evidence that the long-term health consequences of playing in the National Football League are considerable. The life expectancy for former NFL players is 20 years lower than it is for the general public. Part of that is due to the type of person that plays football. But a big part of that is also due to the consequences of playing football: concussions, and the raft of health issues that come with being obese, which -- let's face it -- the NFL basically requires most players to be. This is the kind of issue that, say, the companies who ran coal mines dealt with 50 years ago. And yet somehow the NFL -- which has a thousand times more resources than coal companies ever did -- gets to pretend this problem doesn't exist. Huh?

// posted by BW @ 3:35 PM