Thursday, January 26, 2012

The Moneyball Metaphor in Higher Education Administration

In a post on National Review's Phi Beta Cons Blog, George Leef writes:
Cal State trustees...think that they must increase pay levels for CSU presidents so they will “attract top talent.” Read about it here.

I recently saw the movie Moneyball, in which the general manager of the Oakland Athletics (Billy Bean, played by Brad Pitt) defies the conventional wisdom that you can’t field a competitive team without spending a fortune. In view of California’s terrible financial condition, shouldn’t they at least try to find people who can capably lead universities and are willing to do so at the substantial compensation that’s already offered?
Leaving aside the issue of compensation for the California State University System's campus presidents for the moment, Leef's is merely the latest in a long string of blog posts, articles, and essays I've run into over the last few months that attempt to make a metaphor out of Moneyball for whatever the hell the person wants to spend less money on.

Look, the "conventional wisdom that you can’t field a competitive team without spending a fortune" does not really exist; it is a straw man. The lesson of Moneyball is not that cheap baseball players are just as good as expensive baseball players; that's silly.

The lesson of Moneyball is more complicated if ever so slightly less sexy. Moneyball points out that useful skills and attributes are sometimes undervalued in the marketplace, and that, when such inefficiencies exist, they can be exploited by those who are aware of the inefficiency. The Moneyball As know that OBP is much more important than either BA or SLG for actually winning baseball games even though the marketplace values the latter two indicators of players' performance more than the first. So, the As can use their limited resources to hire a roster of players with high OBP that are, as a group (in expectation), better at winning baseball games on a dollar-for-dollar basis than a team that spends more money to max out BA or SLG. (Of course, as soon as word gets out about OBP, big money teams will just buy up the high OBP players and drive poor little Oakland out of the market it discovered.)

Is there Moneyball potential in higher education administration? Maybe. It depends on whether the marketplace for university presidents, provosts, and deans systematically undervalues qualities related to performance or overvalues qualities that are unrelated to performance. For example, if universityies value hiring alumni of elite institutions as administrators but administrators' undergraduate education is unimportant for their performance, then any given university could get better value for their money by hiring administrators who went to less prestigious colleges since they, on average, command lower market wages than their tweed-clad peers while performing just as well at deaning or provosting.

The trick, of course, is the ability to identify useful metrics of university administrators' performance and to have good models of of those indicators of success. Once those are in place, potential employers can more accurately assess the prospects for any given job candidate's success and can make more objective and efficient hiring and salary decisions. A particular decision to raise or lower funds available for a particular set of university presidents, though, gives us little information about how that money will be spent and whether Moneyball principles would be applied in hiring decisions.

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