Sports Economics: Current Research

By John Fizel; Elizabeth Gustafson et al. | Go to book overview
Save to active project

production function, given their peculiar restrictions.

Our research provides some insight on the choice of models for estimating baseball production functions. Keeping in mind the theoretical issues of causal relationships between outputs, sharing of inputs, and correlation between disturbances, we conclude that none of the more complicated estimation techniques is clearly superior to using OLS to estimate the separate equations for winning percent and attendance. We examined a causal model that is simultaneous only if disturbances contemporaneously correlated and our empirical results do not support the simultaneity. Regarding our canonical regression joint production model, both theoretical and empirical considerations suggest the possibility of misleading estimates. We used GLS to correct the OLS model of winning percent for the baseball reality that average winning percent must always be 0.5. That correction requires the omission of one observation for each league each season, but the estimates are basically unchanged.

The existing baseball literature on production, winning percent, and attendance is mostly comprised of single-equation models that use OLS estimation techniques. Despite the theoretical and econometric problems that have often been raised in discussions among those who do research on the economics of baseball, our empirical results give these previous studies a relatively clean bill of health.

See Porter and Scully ( 1982), Kahn ( 1982) and Ruggiero, Hadley, and Gustafson ( 1995) for examples of baseball production that use winning percent as the only output. Horowitz ( 1994) and Scully ( 1994) use the ratio wins to losses as the output measure.
Whether these two inputs capture all is debatable. In particular, slugging percent captures the hitter's batting average and power, but potentially ignores their ability to drive in runs. Also, team speed and fielding percent is ignored. The ratio of strikeouts to walks perhaps captures pitcher's control, but does not necessarily measure the ability of pitchers to prevent runners from scoring. Kahn ( 1993a) and Ruggiero, Hadley, and Gustafson ( 1995) provide a more complete list of inputs.
Horowitz ( 1994) invokes the so-called "Pythagoras Theorem" to evaluate the performance of managers. The underlying basis for the analysis is a production relationship. Horowitz uses the wins-losses ratio as output and the runs-opposition runs ratio as the input. In fact, both variables are proxies for winning percent.
In the literature on baseball attendance, existing models include performance (winning percent) as a determinant of attendance. In the context of these demand models, inclusion of winning percent as an exogenous variable is appropriate. See Coffin ( 1996) for a further discussion. In a production framework, both attendance and winning percent are endogenous and are jointly produced.
It should be pointed out that the parameter estimates obtained in the solution of the canonical regression are not unique. All parameters could be multiplied by a positive constant without affecting the canonical correlation. The elasticity measures, however, are unique.


Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Cite this page

Cited page

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited page

Bookmark this page
Sports Economics: Current Research
Table of contents

Table of contents



Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen
/ 252

matching results for page

Cited passage

Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?