Tuesday, June 17, 2008
Even more about replacement level
Referencing this article on VORP, some BTF readers make some curious statements, while JC makes some puzzling ones.
I made this post at both blogs:
Wins Above Replacement
x Dollars Per Win
x Years of Service Adjustment
equals SalaryWins Above Average times Dollars Per Win
+
Constant Dollars Per Playing Time Unit times Playing Time Unit
, all times Years of Service Adjustment
equals SalaryIt’s all about where to put that “constant”. But, it works out to the exact same thing.
(Note: in both cases, I forgot to add 390,000$.)
It was ignored by the BTF readers, and did not even get passed the posting filter at JC’s site. So, I’ll just make my comments here.
JC said this:
Are catchers really more valuable than equally-talented batters who play left field because of scarcity? There are plenty of catchers in the minor leagues and major-league teams often carry three catchers. Teams don’t normally carry nine outfielders, do they?
Yes, they are really more valuable because of scarcity. This is the core to the replacement discussion. Catchers are selected from a limited pool of players. Infielders (2B, SS, 3B) are selected from that pool, plus the infielders pool. And so on. It looks like this:
Pool A: Catchers
Pool B: Pool A + Infielders
Pool C: Pool B + Outfielders
Pool D: Pool C + Firstbasemen
Pool E: Pool D + Nonfielders
Pitchers represent their own pool (at the MLB level).
If you don’t accept the scarcity argument, clearly you won’t accept replacement level.
I suspect that catchers are more expensive because they offer a greater defensive contribution. After all, they are the only other player besides the pitcher involved in every pitch.
Here again, we are nowhere close to the same page. Or the same chapter. It is irrelevant that they are involved in every pitch. A batting tee is involved in every pitch too, but it doesn’t over any value compared to any other batting tee. Catchers are more expensive because they offer a greater defensive contribution that very few people can provide, while still being able to hit a ball.
Imagine that you had a DH for catchers as well. What do you think would happen? Catcher value would plummet. Now, you’ve opened up the pool of players far wider, since one of the requirements (being able to hit a little bit) no longer applies. Even though his fielding responsibility is still the same. It’s all due to positional scarcity.
Player value is determined by opportunity cost as determined by marginal revenue product (MRP). If a player generates many millions of dollars, his value is determined by this, not by how much he makes.
Last time I took Economics was in 1989 or so, so forgive me if I’m pedestrian in my analysis. As I understand the MRP model, you would keep adding workers to your workforce, and if he can generate revenue, he’s got MRP. Ideally, you’d pay him no higher than his MRP.
Now, if a baseball roster was 200 players per team, then the MRP of the 25th best player on the roster will surely be higher than 390,000$. But, this is not allowed in baseball. You are limited to 25 players for five-sixths of the season. (28 or so really, if you include DL players).
So, even if the 25th player has a positive MRP in a 25-team roster (however you would calculate that in a zero-sum environment), it’s irrelevant. Because he is only allowed to create value by displacing the 26th best player.
So, the MRP of the each player on the roster is relative to the 26th player. This is why we talk about wins above replacement (WAR).
The entire process to calculate WAR was presented on my blog a few months ago. And the passionate guys over at USSM did a bang-up job at going through their roster via a replacement-lens. I urge you to read both posts before commenting. Or in lieu of commenting. Just read them!
Like I said in my bypassed quote at the top, you don’t need to use the concept of replacement level. However, you will be calculating it indirectly anyway, since you will be introducing a constant to turns wins above average into dollars (and dollars is really dollars above zero, where zero is how much they’re paying the best guy not on their roster).
So, someway, somehow, you are using the replacement-level concept, if you are converting wins to dollars. If you are not converting to dollars, you do not need to worry about replacement-level so much, but you still need to worry about positional scarcity.
***
Notes: Bill James introduced (to me) the concept of replacement level, when he discussed Jim Rice v Ron Guidry and Clemens/Mattingly. The positional scarcity was also introduced as a concept by Bill with his Defense Spectrum. Marginal Dollars to Marginal Wins is my own concept, but has been done by many others, before and after me.
I gave up arguing with JC, - after I wrote a short essay on why positional averages weren’t useful comparisons, he said, “I can compare the mean at positions,” and it went downhill from there. It was almost as if he wasn’t reading anything I said - someone give me a sanity check here, but I really felt his arguement boiled down to, “Well, I can make all the adjustments you’re talking about without CALLING it replacement level.”
Which is true - call it freely available talent, or league minimum, or whatever. But to argue that it’s just hard to explain - and then insist that we use marginal revenue product, which I know comes up at the dinner table all the time in my house! - is… well, I don’t know what it is. That’s why I gave up.