New Research by Turner College Economist Applies Babe Ruth's Exceptional Baseball Career to a Model for Evaluating Managerial Performance

The setting of roles within a firm by comparative advantage—even for versatile star-employees—has been an important managerial capacity in and out of sport and across eras. According to Marcus Buckingham, a leading management consultant with expertise in matching employees to roles, a primary role of effective managers is to “…tweak roles to capitalize on individual strengths.” Of central importance to such managerial allocations is the concept of comparative advantage, which maximizes group productivity via optimal specialization. As important as the concept of comparative advantage is, it is perhaps equally subtle or tricky. When a firm has a star employee or star employees—ones who possess absolute advantages at all tasks—it may be difficult to reconcile her (his, their) optimal role(s). At the same time, employees often learn their comparative advantage during early career and pursue that advantage by matching to firms/managers accordingly. These reinforcing effects suggest that employees—through movement across firms, efficient managerial task assignment, or a combination—are expected to become more productive by matching to strengths, being matched to strengths, or both.

New research by Turner College economist Frank Mixon and Syracuse University's Shane Sanders explains how Babe Ruth’s baseball skills were not only epically deep but also epically broad. His career batting average of 0.3421 is the third highest of all time among batters with more than 10,000 plate appearances. For this same group of batters, Ruth’s career on-base and slugging percentages of 0.4739 and 0.6897, respectively, exceed all others. Ruth’s 714 career home runs rank third all time, while his 1,356 career extra base hits rank him fifth all time. Ruth’s career offensive statistics are nearly matched by his pitching statistics. For example, his career earned run average of 2.277 and his career winning percentage of 0.6714 each rank 17th in Major League Baseball history. ESPN also ranks Babe Ruth as the best right fielder in MLB history. As Mixon and Sanders explain, it is Ruth’s overall or comprehensive prowess, however, that, paradoxically, posed a challenge to the field managers who were responsible for using his skills to win baseball games, particularly those who managed the Boston Red Sox and the New York Yankees. From 1914-1919, the Boston Red Sox made primary use of his pitching skills, while in the years that followed the New York Yankees and Boston Braves settled on employing Ruth as an everyday position-player to capitalize on his prowess as a hitter. Which organization, or organizations, employed Ruth’s skills optimally?

As Mixon and Sanders point out, retrospective adaptation of a set of relatively recently developed advanced performance metrics in professional baseball makes ideal evaluation of managerial performance possible for a high-stakes case like that of Babe Ruth. Their study provides theoretical models that utilize these metrics in empirical analyses that include estimation of polynomial models of Ruth’s labor-related production possibilities frontier and season-level isoquants to determine where his comparative advantage resided and how his skills could be optimally employed. The results of their empirical analyses translate to an optimal season-level usage of Babe Ruth wherein he made ~689 plate appearances and had 0 innings pitched. Thus, while the Red Sox utilized his pitching services during his tenure with the team, the Yankees and Boston Braves, by using him as a fielder so as to capitalize on his batting prowess, had Ruth’s optimal usage right. From here Mixon and Sanders further consider Ruth’s metamorphosis as the possible result of a two-way match. The literature finds that employees learn their comparative advantage during their career and pursue that advantage by matching to firms/managers accordingly. There is evidence that Ruth came to prefer hitting to pitching and that he was not surprised that his unprecedented salary demands with the Red Sox led him to the Yankees, who valued him for everyday hitting.