Media Type: Film Clips Topic: Opportunity Cost, The Firm

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Moneyball, a film based on Michael Lewis’ 2003 book, details the struggles of the Oakland Athletics, a major league baseball team.  The Oakland A’s overcome some seemingly impossible obstacles with the help of their general manager, Billy Beane (Brad Pitt), by applying innovative statistical analysis, known as sabermetrics, pioneered by Bill James.

The underlying theme of this movie revolves around basic economic principles, starting with the simple definition of economics.  Economics is the study of how people use their scarce resources to satisfy their unlimited wants or more simply, how choices are made when faced with scarcity.  Each major league baseball franchise would like to field a team of all of the best players in order to win championships, but they face a monetary constraint and cannot afford everything they want.  The Oakland A’s, one of the poorest teams in baseball during the years depicted, face a constraint that is more severe than many other teams as shown in the movie’s opening scene.

SCENE [1:02 - 7:19]: The scene opens with clips of the October 15, 2001 American League Divisional Series between the Oakland A’s and the New York Yankees.  The A’s possess an early lead in the game with the help of their best players, Johnny Damon and Jason Giambi, only to lose the game and the series to the New York Yankees who go on to compete in another World Series.  Making matters worse, during the post-season the A’s best players are wooed away from them during the free agency period.  We begin to sense Billy Beane’s frustration as he tries to figure out how to win championships against the Yankees, a $114,457,768 team, with his limited funds of $39,722,689.

QUOTE (Stephen Schott, Oakland A’s owner): “Bill we're a small market team and you're a small market GM.  I'm asking you to be okay not spending money that I don't have.  And I'm asking you to take a deep breath, shake off the loss, get back in a room with your guys and figure out how to find replacements for the guys we lost with the money that we do have.”

Additionally, the idea of technological change as a catalyst for increasing productivity plays a key role in this film.  Improvements in the quality of resources used, discovering new ways of using resources more efficiently, or making changes that free up resources for other uses are all methods of enhancing productivity.  Since the Oakland A’s finances remain fixed, Beane begins thinking about approaching his team’s productivity issues in a new way.  He happens upon a young Yale economist (Peter Brand in the film, Paul DePodesta in real life) who has new ideas about applying statistical analysis to baseball in order to build a better team.

SCENE [8:31 - 11:52]: The traditional baseball scouts who utilize experience, intuition and subjective criteria to evaluate potential players surround Billy Beane as they meet to strategize about their next season.  Their old-fashioned methods include taking into account anecdotal evidence about players such as, “he’s got a baseball body”, he’s “clean cut, got a good face and a good jaw” or even the “ugly girlfriend test” which lends them insight into a player’s confidence level.  Beane, a heavily recruited high school player who failed to have a successful professional career, knows first-hand that this method of scouting does not guarantee success.  He points out that in a game where there are rich teams and poor teams, the poor teams need to think differently in order to find a way to win an unfair game.

SCENE [18:35 - 21:27]: Beane meets Peter Brand (Jonah Hill) while trying to negotiate a trade with the Cleveland Indians.  When cornered, Brand explains that sabermetric principles, evaluating players based on statistical analysis, allow us to think about a baseball players’ marginal product in ways that disagree with the status quo.

SCENE [25:48 - 28:53]: Brand, newly hired to join Beane as an Assistant General Manager for the Oakland A’s, briefly explains his methodology for evaluating players and how the A’s can build a championship team.

QUOTE (Peter Brand):” It's about getting things down to one number.  Using the stats the way we read them, we'll find value in players that no one else can see.  People are overlooked for a variety of biased reasons and perceived flaws.  Age, appearance, personality.  Bill James and mathematics cut straight through that.  Billy, of the 20,000 notable players for us to consider, I believe that there is a championship team of twenty-five people that we can afford, because everyone else in baseball undervalues them.”

Another economic concept found in the film is the idea of opportunity cost.  The opportunity cost of a decision is the highest valued alternative that you give up when you make your choice.  Billy Beane was faced with a choice between a professional baseball career versus going to college.  In high school, he was highly sought after as a potential world-class baseball player and he was also academically gifted enough to be awarded a four-year scholarship to Stanford.  He chose to pursue baseball but did not live up to the potential that the scouts foresaw in him.  For Beane, the opportunity cost of his failed baseball career was a college degree from Stanford or, at the very least, the pursuit of a college degree.

SCENE [21:50 - 23:33]: In a flashback to Billy Beane’s high school years, we see the baseball scout and Beane’s parents discussing his future.  At first, his parents think that their son can pursue both opportunities, a baseball career and a college degree, but they are told that he must choose between them.

QUOTE (Scout to Beane’s Parents): “Unfortunately he can't do Stanford and professional baseball.  He would have to pick one or the other.  If he wants to be the center fielder for the New York Mets, if he wants to be a baseball player, he really needs to accept this as life's first occupation, a first career.  We're all told at some point in time that we can no longer play the children's game, we just don't... don't know when that's gonna be.  Some of us are told at eighteen, some of us are told at forty, but we're all told.  But this is a once in a lifetime opportunity, we want you badly and we think that this amount of money expresses that desire.”

Later in the film, we see the idea of opportunity cost again as Billy Beane faces another pivotal decision.  Beane must choose between continuing as the GM of the Oakland A’s or accepting a new job offer as the general manager of the Boston Red Sox.  The opportunity cost of staying in Oakland is the 12.5 million dollar offer from Boston as well as external validation of his efforts to reinvent baseball.  The opportunity cost of leaving for Boston is the contract offered by Oakland, the team he invested himself in over the past season, and most importantly losing the relationship Beane has with his teenage daughter who he shares with his ex-wife in California.

SCENE [1:55:45 - 2:01:00]: Based on his innovative use of statistical analysis, Beane is offered 12.5 million dollars and the opportunity to join Bill James, the father of sabermetrics, in rebuilding Boston’s team.  When he returns to Oakland and shows Peter Brand the offer Brand tells him that it would make him the highest paid manager in baseball history.  We learn that Beane declined the offer and when asked to explain he states, “I made one decision in my life based on money. And I swore I would never do it again.”

QUOTE (John, Boston Red Sox Owner): “For forty one million, you built a playoff team.  You lost Damon, Giambi, Isringhausen, Pena and you won more games without them than you did with them.  You won the exact same number of games that the Yankees’ won, but the Yankees’ spent 1.4 million per win and you paid two hundred and sixty thousand.  I know you're taking it in the teeth out there, but the first guy through the wall, he always gets bloody, always.  This is threatening, not just a way of doing business, but in their minds, it’s threatening the game.  But really what it’s threatening is their livelihoods, it's threatening their jobs, it's threatening the way that they do things.  And every time that happens, whether it's the government or a way of doing business or whatever it is, the people who are holding the reins, have their hands on the switch.  They will go bat**** crazy.  I mean, anybody who's not building a team right now and rebuilding it using your model, they're dinosaurs.”


Official Movie Site:

Michael Lewis Book:

Also of interest:

“MoneyBART” Simpson’s Episode:

Society for American Baseball Research:

This clip and write up were provided by: 

Kim Holder, University of West Georgia

Adaptation from student work submitted by A. Harber, J. McEnery, P. Acker, R. Stowe, B. Stevenson, and A. Martinez (ECON 2105-05, FALL 2011)

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