Market Efficiency of Major League Baseball Player Salaries: A Look at the Moneyball Hypothesis Ten Years Later

Date
2013-05
Authors
Rubin, Seth
Journal Title
Journal ISSN
Volume Title
Publisher
University of Delaware
Abstract
Moneyball (2003), written by Michael Lewis, is about the Oakland Athletics’ path to success in the early 2000’s focusing on the 2002 season. This senior thesis investigates the impact of Moneyball. Namely, the hypothesis that after Moneyball more weight has being given to the statistics of on-base percentage and slugging percentage when it comes to evaluating players to determine their salaries, as well as other statistical measures. To evaluate this hypothesis, regressions were estimated to improve upon those by Hakes and Sauer (2005), who looked at the impact of on-base percentage and slugging percentage on salary. Next on-base percentage, slugging percentage, on-base plus slugging percentage, weighted runs created, win shares, and wins above replacement were evaluated to determine their impact on the natural log of salary. Models were first estimated individually for the time period of 1996 to 2002 and then for 2003 to 2011. Then standard tests were conducted to determine if the changes in the coefficient estimates were significant. The results are evident that on-base percentage, slugging percentage, on-base plus slugging percentage, weighted runs created, win shares, and wins above replacement are more strongly related to salary in the evaluation of Major League Baseball player salaries since the release of Moneyball.
Description
Keywords
Citation