Casey at the Bat And in the Field

Casey at the Bat (And in the Field? ) An Economic Analysis of Baseball’s Designated Hitter Rule Forthcoming in 90 Boston University Law Review __ (2010) Steve Calandrillo University of Washington School of Law Seattle, WA stevecal@uw. edu Dustin Buehler University of Arkansas School of Law Fayetteville, AR dbuehler@uw. edu 1 1

History of the Designated Hitter Rule § Pitchers dominated in the late 1960 s / early 1970 s, leading to low scores and decreased attendance § AL adopted the designated hitter rule in 1973; teams can designate a player to hit in place of the pitcher § NL has refused to adopt § AL experienced an increase in offense and attendance § But there have been more hit batsmen in the AL 2 2

Q: Does the DH Rule Create “Moral Hazard”? § “Moral hazard” = persons insured against risk are more likely to engage in dangerous behavior § DH rule as moral hazard § AL pitchers do not hit § Not deterred by the full cost of making risky, inside pitches—namely, retribution during their next at bat! § Thus, DH rule realigns the cost-benefit analysis of pitching inside, increasing hit batsmen 3 3

Economists Debate Moral Hazard Effect § “Classic moral hazard”: DH rule causes 10 -15% increase in hit batsmen (Goff, Shughart & Tollison) § Criticism and alternative explanations: § “Batter composition theory”: more batters worth hitting (DH sluggers replace weak-hitting pitchers) (Trandel, White & Klein) § No deterrent effect: NL pitchers are rarely victims of direct retaliation (Levitt) 4 4

Conclusion: Some Moral Hazard Exists § Two recent studies use game-level data rather than aggregate yearly statistics (Bradbury & Drinen, 2006 & 2007) § Results support both moral hazard and batter composition theories § Evidence of both direct and teammate retaliation § Bottom line: moral hazard explains about half of the 15% difference in hit-by-pitch numbers between the leagues 5 5

Incentives Have Shifted in Recent Years Since 1993, hit-by-pitch rates have spiked in both leagues, and the disparity between leagues has narrowed. Why? § League Expansion: NL expansion in 1990 s = asymmetrical dilution of talent § “Double Warning” Rule: after first “intentional” hit, both teams are now warned that next hit will lead to ejection § This new rule creates moral hazard because pitchers in both leagues now have one free hit! 6 6

Cost-Benefit Analysis – DH Rule § Benefits: § Increased offense and attendance § Prolongs careers; gradual recovery from injury § Costs: § Potential for serious injury, bench-clearing brawls § Alters managerial strategy § Conclusion: Benefits likely outweigh costs (although this might not be true in NL, due to differences in fan preferences) 7 7