In his conversation with Simmons, Gladwell- who previously raves about how much he liked Moneyball-- has fun throwing his own economics analysis at professional sports.
is it enough to say that GMs behave this way because it's more fun? An economist would say that people pursue high-risk strategies when they are protected against the consequences of failure. The technical term for this is "moral hazard": When the federal government agreed to guarantee the safety of deposits in savings and loans, the savings and loan industry in the 1980's went crazy and made tens of billions of dollars in ridiculous loans. Their thinking was: If we score, we score big. If we lose, the government bails us out. That's the moral hazard of insurance. Don't general managers have the same kind of moral hazard problem? If you hit a home run, you're a genius. If you screw up, the dumb owner you worked for prior to the dumb owner you work for now will always give you another chance. So why not just always swing for the fences? It's the old boys club in the front offices that causes the problem. Somebody out there is going to give Thomas and Babcock another chance, and so long as that's true there's no incentive for any GM to behave better.
The idea that GMs face no costs for failed personnel decisions is more convincing if you believe, as Gladwell quips here, that there will always be another owner to hire you. With a limited number of franchises in the NBA, and a fair amount of longevity among executives, that next job can be a slow train coming. John Gabriel and Jerry Krause, just to name two winners of the NBA Executive of the Year award, have been sitting home unemployed for years. I wonder if they would describe swinging for the fences in the same way.
Gladwell's earlier observation that he would be a better GM than Isiah Thomas by avoiding all but the most conventional wisdom may be accurate. His approach, however, seems more appropriate to settings where finishing in the middle of the pack is good enough. In the stock market, for instance, the overwhelming majority of the time your investments don't lose money if the next guy takes a high-risk gamble that pays off. Over the last several decades the average returns for most benchmarks have been enough to provide for most people's ideas of retirement. In the NBA, however, following Gladwell's approach gets your solid team bounced in the first round of the playoffs for the next decade. As he freely acknowledges this dynamic in his discussion of his own hypothetical GMing it's a little strange that it doesn't seem to register as an alternative explanation to his application of moral hazards to GM behavior.
Ah, well, perhaps I shouldn't take too seriously an email exchange that is clearly in good fun. Gladwell strikes me as very talented at coming up with riveting images and descriptions of situations. This is obviously an important, and relatively rare, skill for a writer to have. His comparison of employer-sponsored health care to the New York subway has stayed with me longer than 99% of what I read in February.
No comments:
Post a Comment