Tuesday, July 27, 2010

Keeping it Simple

I have been reading “The House Advantage” by Jeff Ma. The book explains the importance of incorporating data into the decision process. Ma uses examples from his background in sports and as a member of the MIT blackjack team; he was the central character in the best-selling book “Bringing Down the House”.

In one chapter, Ma writes about the approach he takes when consulting with businesses, whether sports-related or not. He summarizes it without using any complex statistical terms, but as taking information from the past to make decisions about the future. Whether in sports or business, that process creates an edge.

This applies to most sports decisions, whether for free agency or the draft. What trends are in a player’s past that bode well for their future? That track record may be long and consistent with plenty of data, as with Albert Pujols or Tim Duncan. Or it could be brief, such as the case of a young lefty relief specialist or a college freshman entering the NBA Draft. Generally speaking, the more the data, the easier it is to project performance going forward.

The quality of the data is also important. When projecting Ubaldo Jimenez’s performance for the season’s final two months, his impressive won-lost record through July is not all that helpful. His ERA is more valuable, but still not the best predictor. The best projections come from examining Jimenez’s walks and home runs allowed, the percentage of batters he has struck out, and factors like left on base percentage and batting average on balls in play. Performance in previous seasons matters too, as that is all part of his track record.