An In-Class Experiment to Teach Marginal Revenue Product Using the Baseball Labor Market and Moneyball
Wooten & White (2018)
In this paper, we describe a class project exploring principles of Marginal Revenue Product, Labor Markets, and estimation of firm profits through the professional baseball labor market. The goal of this project is to give the student a better understanding of MRP through the process of collecting and analyzing data about professional baseball free agents. This task highlights a key learning objective in many economics courses with an activity that increases student engagement. The project culminates in an in-class draft and season simulation activity that allows the students to apply the information they have collected in order to make decisions based on their work.
The simulation files are available for direct download below and include a zipped file containing a copy of our working paper for instructional purposes, the project instructions for students, a 2017 spreadsheet of available free agents for the simulator, and a printable version of the spreadsheet for student use.
Download the program
Other files of interest:
The Economic Evaluation of the Moneyball Hypothesis (Hakes & Sauer, 2006)
Hakes & Sauer test the portion of Michael Lewis's book, Moneyball, that evaluates the impact of on-base percentage (OBP) and slugging percentage (SLG). The authors create an Index, which is used in the Moneyball Project to estimate the value of an individual free agent. This paper is the foundation of the project and gives a great overview of valuing a player in Major League Baseball using simple statistics that students can collect from ESPN and USA Today.
Assistant Teaching Professor of Economics
Department of Economics
The Pennsylvania State University
315 Kern Graduate Building
University Park, PA 16802