Cool Papa directed us to Tango's response to complaints that the $/run (WAR) model might be broken. I did scan Tango's initial response, though not the comments yet.
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Re: Tango's having to address protests that the model is "broken" -- it seems a lot of people don't get what the model is. A person who asks whether the model might be broken, definitely does not understand the model, because it can't be broken.
That's okay. Here are a few things we need understand and $-per-run and inflation:
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1) What $4.5m per win means. It just means, here was the average cost ACTUALLY PAID.
It is crucial to understand that this is a description of what businesses did -- nothing more, and nothing less.
MLB, in past years, paid $450-500 million total for 1,000 runs* total. That's all $/WAR means. It doesn't mean a thing more than that.
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That $4.5 - $5.0 average can, and will, change next year. That doesn't break the model. It updates the model's data return.
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2) Or that the simple dollars-available-vs-runs-available calculation is very simple, and is 20 years old. John Benson CPA laid the process out in the 1980's.
In a considerably more sophisticated form, we might add. Benson's $/WAR model adjusts many times each winter -- to describe reality more dynamically.
$/WAR might be $4.5m for the 2008 offseason. But it also might be $4.0m in November, $5.0m in January, and $6.0m in February.
One figure is as "correct" as the other. They were never anything more than descriptions of what businesses are doing.
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This model can't be broken. You might as well say that trading sticks for carrots is broken. It's as fundamental as economics gets.
How do you "break" a model that says, on eBay, $200,000 were paid for 1,000 cuisinarts? And that on average, cuisinarts sold for $200 last year?
The only way you break the model, is to misuse that information. Notably by assuming that $200 is the "correct" price for the cuisinart you are looking at today.
For one thing, the average cost of cuisinarts has probably changed since last published. Right now, they're probably averaging $100 or $300 or something else. You want to use current information, right?
But there are many reasons that the average-cost-paid $200 cuisinart might be worth $175, or $225, to you. If cuisinart supply is down, and your wife really wants one, then the $200 average, that other people paid in the past, is meaningless to you.
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True, it would be a slight refinement on the model if you could FORECAST dollars available. And say, in 2009 teams will spend $1,200 million on free agents. Then you could just calculate and say, there are 2,000 runs available. That would tell you, in advance, that $6m per win would be the average paid.
That's what Benson does in a roto keeper league -- he knows how many $ are left in each team's budget. But I don't know how to guess what MLB teams will pay in the future, do you?
Even then -- $450k or $600k per FA run is only an average. It's information. It's not a traffic law.
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3) And many of the columnists definitely do not seem to get that AVERAGE cost paid does not equal CORRECT cost TO pay.
We're only too happy to scale that $4.5m down -- Chone Figgins should not be paid his $5m per win -- but for some reason v-e-r-y averse to scaling it up -- Figgins is worth more than $5m per win in this specific city under these specific circumstances.
If $5 is an average, and sometimes $4 is appropriate, then obviously sometimes $6 must be appropriate under proscribed circumstances.
Just not in my city, right? :- )
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