Football Freakonomics: Incentives

I recently helped the Freakonomics folks and NFL Network with an installment of 'Football Freakonomics', the series of mini-documentaries on interesting wrinkles in fabric of football. This particular feature is on incentives, particularly big contracts and Super Bowl championships. They air periodically on NFL Network, I believe on GameDay Morning on Sundays.

Here is the feature.
 
After watching it, ANS readers will quickly say 'Wait! What? That's it? What about concepts like regression to the mean or the winner's curse? Wouldn't they explain what we see in the data? We did cover those considerations in detail on camera, but they just didn't make the cut. In defense of the producers, they only have a few minutes to tell an interesting story, and it has to appeal to a broad audience. It's just the nature of the medium.

For those curious, here's a brief discussion on why we see performance decline after big contracts:

• Total performance actually tends to increase (total yds, total TDs).
• But per play performance, which is a better measure for several reasons, tends to decrease.
• This is likely due to 'regression to the mean', which is an inescapable tendency in any measure with a random component: Teams give big contracts to players who have 'breakout' seasons, expecting outlier performance to continue. In reality, big seasons are nearly impossible to repeat because so much depends on factors beyond a single player's control--offensive line, opponents, scheme, random luck.
• Also, teams may feel compelled to give a newly signed star RB more carries than perhaps they should to justify their investment in him. This would explain why total cumulative stats increase, while per play stats decrease.
• The Winner's Curse: This is a phenomenon of auctions, widely studied in behavioral economics. Signing (or re-signing) FA RBs is basically an auction for his services. In auctions, the bidder who is most likely to mistakenly overestimate the value of the prize is the one who ends up winning the auction. This is why teams (and their fans) are so often disappointed in big-name FA players.

And the decline in performance for skill players the year following their first Super Bowl victory can be at least partially explained by regression to the mean:

• By definition, SB winning team naturally peaks in a championship season due to a confluence of factors--health, age, opponents, luck, etc. There's no reason to expect those factors to repeat themselves. If they did, we might see the same team win the SB year after year.

That's not to say that 100% of the decline is due to natural factors. Incentives certainly play a very large role in all aspects of human performance. It's just that we can't really tell exactly what's going on just with one look at the numbers.

I can't say enough good things about the producer I worked with and those behind the scenes. They genuinely worked hard to get all the numbers and ideas right. When I get my own series I promise to do a two-episode special on riveting concepts like regression to the mean. Can you say 'Ratings Bonanza'? Cha-ching...talk about incentives!