Thursday, January 17, 2008

Billy Beane on Statistical Analysis

A recent article from ESPN. A great guy, that Billy Beane.

For the uninitiated, the term "Moneyball" refers to Michael Lewis' book by the same name. The book attempted to explain why the A's, on a shoestring budget, managed to successfully compete against baseball teams with far bigger payrolls. The answer, in part, lays in the organization's use of statistical analysis as a means of finding undervalued players, be they prospects or established veterans.

"If you get the data, what you're trying to ultimately achieve is: What is the intrinsic value of this player's performance?" Beane said. "What is he paid, and what should he be paid?"

"I think the misconception about any statistical analysis is that you're not going to be 100 percent correct," Beane said. "What you're trying to do is create an arbitrage ... if you're right 25 percent versus 20 percent you've created a 5 percent arbitrage opportunity. That's really all you're trying to do

"Let's face it, every business has metrics that can be used," Beane said. "It's just identifying the metrics that have the greatest weight and the greatest correlation to ultimately winning. It's a work in progress, and I say this with a tremendous amount of respect [for soccer]."

"You don't create the template and then that's it," Beane added. "It's constantly evolving and changing as you try to ferret out things that can be applied. Statistical analysis is still very much fluid."

1 comment:

Andy Grabia said...

Sweet. I hadn't seen this. Thanks!