Saturday, October 8, 2011

"Moneyball" - The Rise of the Planet of the Quants

Imagine a situation characterized by fierce competition over valuable, but limited, resources. The rich few, with the deepest pockets, indifferent to questions of cost, have no problem paying for and monopolizing the best that is available. Meanwhile those in the middle, not to mention those at the very bottom of the economic ladder, are locked out from participation, and must content themselves with the scraps that the wealthy leave behind.

Along comes a man, armed with reason and with numbers, daring to apply dispassionate analysis to this vexing problem in a last-ditch effort to level the playing field for everyone involved. His deliberate, calculated approach, though, is decried as soulless and is called a desecration of tradition, an attack on the established way of doing things that, according to those well-off, is "working just fine, thank you."

Ironically, the abundant criticism leveled at him includes that from the ranks of the disadvantaged, who, it would seem, would be his natural allies. So besotted are they with the mythology that surrounds the status quo, that they fail to appreciate that the system, as it is constructed, is pushing them to the margins more and more each day.

Theodore Roosevelt
Undeterred, our hero presses on, like Theodore Roosevelt's man in the arena, "who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."

The above, which could have been a description of Barack Obama championing his health care reform plan in the more promising days of the spring of 2009, works well as a set-up for the events that unfold in the baseball bio-pic Moneyball, directed by Bennett Miller.

The man in the arena here is Oakland A's general manager, Billy Beane (Brad Pitt), and the arena is the world of baseball at the end of the 2001 season, a world in which rich teams like the New York Yankees raid lesser ones, like Billy's, luring away superstar talent with offers of astronomical salaries that owners of teams like the A's could never dream of matching.

As Moneyball opens, we find a desperate Billy seeking guidance from his "wise men" council of baseball scouts - a gaggle of aging men who look like a misplaced assembly of Mafia consiglieri and sound like a post-modern Greek chorus fated to intone endless baseball cliches in response to Billy's pleas for useful advice. Frustrated by their disregard to the peril that confronts them - and the game of baseball itself - Billy heads off to Cleveland, home of baseball's Indians, in a hail-Mary attempt to wheel and deal his way to a team that will keep him in contention.

Jonah Hill as Peter Brand
in Moneyball
There he encounters an unlikely muse in the person of 24-year-old Peter Brand (Jonah Hill, in a breakout role worthy of a supporting-actor Oscar nod). Peter is a recently minted Yale economics graduate and a savant of baseball statistics and finance, a major-league quant, if there ever was one. He has been spinning his wheels working in the Cleveland front office where his insights about the game have been largely ignored. Unlike his Cleveland counterpart, though, who is sitting flush, Billy's mind is keenly focused by the impending execution of his 2002 playoff hopes, and so he is open to ideas from any quarter. A passing remark by Peter in a crowded meeting draws him to Billy's attention, and the rest, as they say, is history - baseball history.

What Peter has figured out, to put it simply, is that you don't need stars to put together a winning team. Indeed, a roster players each of whom gets on base a significant fraction of the time will generate, in aggregate, the number of runs necessary to win games. Their skills on the field, it turns out, are not of much consequence. What is more, such often overlooked or cast-aside players - hobbled by injury or long past their prime, but eager to stay in the "show" - are available at bargain-basement prices.

Billy, who is one smart cookie himself - we learn that he turned down a scholarship at Stanford to pursue his ill-fated major-league dream - groks Peter and his new thinking and is able to see beyond the received baseball wisdom which blinds his own scouts and coaches to the statistical truth. And thus is born a professional partnership between the two men, as well as a burgeoning friendship. Their Mutt and Jeff relationship adds a nice buddy-movie wrinkle to Moneyball, and the story, in a small way, becomes a rite of passage for Peter, providing the young man with the opportunity to be taken seriously for the first time in his life, but also forcing him to confront the burdens that come with leadership.

What I liked most about Moneyball, though, is that it is a refreshing and welcome inversion of what I call the American heart-head parable. These are tales in which embattled heroes triumph by choosing to rely on feelings instead of brains when facing challenges and vanquishing foes.

Luke Skywalker on his final approach
in "Star Wars"
Perhaps nowhere is this elevation of heart over head better captured in a film, than the in the climatic battle scene in the first Star Wars movie in which Luke Skywalker, at the urging of his mentor Obi-Wan Kenobi, turns off the targeting computer in his X-wing fighter and "uses the Force" in order to direct the shot that will destroy the planetocidal Death Star.

"Liberty Valence" movie poster
Yet the heart-head trope has a distinguished pedigree in American cinema, supported by both an enduring distrust of (dithering) intellectuals and a admiration for (determined) men of action in the culture at large. A notable example is the classic 1962 Western The Man Who Shot Liberty Valence, in which Jimmy Stewart plays an educated and earnest, yet ultimately ineffectual, attorney, committed to the rule of law, and John Wayne, a rancher and his school-of-hard-knocks doppelganger, who understands that there are times when, the law be damned, a man's got to do what a man's got to do.

For the generation coming of age during the Cold War this film served as a cautionary tale of the inadequacy of law and, by extension deliberative analysis, in confronting genuine evil in the world. Its lesson was one well heeded by those, like Dick Cheney, who advocated for such scurrilous tactics as unwarranted surveillance, water-boarding and extraordinary rendition in response to the 9/11 attacks on this country.

Sadly, the American love affair with political figures who are suspicious of book-learnin' and rely on God and guts as lodestones for their decision-making catapulted the intellectually incurious George W. Bush to the highest office in the land. Hundreds of thousands of innocent deaths and the undermining of the international legal order testify to the destruction left in the wake of this two-term cowboy President. Lest we think that Bush's abject failures at home and abroad have led Americans to reassess the relative value they assign to heart and head when selecting their leaders, Sarah Palin's exhortation to the Tea Party Convention in February, 2010, that "we need a commander-in-chief, not a professor of law standing at the lectern," demonstrates the currency that the world view of Liberty Valence has in American politics.

Doctor and Boy Looking at Thermometer
(Norman Rockwell, 1954)
Erstwhile presidential hopeful Palin herself figures prominently in our ongoing Moneyball moment, that is the debate over healthcare reform, which calls us as a nation to come to grips with the increasingly inequitable distribution of an increasingly costly shared resource, namely medical services. Educated and caring men and women, seeing the failure and imminent collapse of the current system, have entered this arena armed with numbers and with reason. Their approach has been decried as cold and unfeeling, and their plans to allocate resources based on a compassionate weighing of costs and benefits - replacing the arbitrary and unregulated rationing in effect - have been shamelessly misrepresented by Palin and her supporters as "death panels." Furthermore, these champions of rational health care policy have been called out as iconoclasts, intent on undermining the cherished close personal relationship between doctor and patient, a tradition which persists in the paintings of Norman Rockwell's idealized version of mid-twentieth-century America life, complete with house calls, but nowhere else today.

So Moneyball proudly steps up to the plate and, for a change, celebrates a man, Billy Beane, who, when faced with a seemingly intractable problem, is not afraid to turn to numbers and analysis when traditional approaches have failed. Billy represents of a new kind of American hero, one who feels passionately about thinking things through, an intellectual, who, like Roosevelt's man in the arena, is not afraid to "dare greatly." In a time when it is crucial for America and its leaders to abandon gut feelings and received wisdom as ways to address the dire problems that we face and, instead, to bring to bear innovative thinking based on a scientific understanding of the world, Moneyball offers us a sorely needed updating of our long-discredited heart-head mythology.

Creative Commons License
"Moneyball" - The Rise of the Planet of the Quants by Marc Merlin is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
Based on a work at thoughtsarise.blogspot.com.

1 comment:

Ernie Croot said...

Thanks for the review, Marc. I shall have to see this film at some point. My first thought about it, after seeing the movie posters, was, ``Oh great.... another baseball movie.''

I think rational, mathematical analysis can certainly help with games like baseball and football, and also situations like scheduling traffic lights, apportionment, and various other highly-constrained scenarios. And I think it can help with more complex situations too, like predicting stock performance and the global climate, provided one is extra-mindful of the underlying assumptions involved and provided that the level of confidence one places in the model is warranted. For example, perhaps a bank's loan risk model ASSUMES that whether or not individuals can pay back their loan is independent of whether the other borrowers can; however, that assumption may not actually be true, and whether or not the bank goes under may hinge on just how close to being true it is. This gets into the issue of ``black swans'': as Nassim Taleb rightly points out in his book ``The Black Swan'' (an interesting read, if a little pretentious), if ones investment strategy (or plan in general, financial or otherwise) is such that a one-in-a-million event leads to total disaster, then one needs to reconsider ones strategy, because such events are bound to happen eventually!

Of course, the problems I just described are not actually a failure of rational and dispassionate analysis; on the contrary, they are examples of where being even MORE rational is what is needed. But I do think there is a tendency to overestimate what one can do with numbers. Usually in the financial world (or so I've read), the fault doesn't lie with the quants who make the models, but to those who apply them without reading the caveats and assumptions.

...

Incidentally, several years ago some GT math people applied their powers of mathematical analysis to football rankings. I thought you might appreciate it:

www.ams.org/notices/200408/fea-mucha.pdf