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Vol. 46, Fall 2015 NEW YORK ECONOMIC REVIEW FALL 2015 NYSEA JOURNAL of the NEW YORK STATE ECONOMICS ASSOCIATION VOLUME XLVI NEW YORK STATE ECONOMICS ASSOCIATION FOUNDED 1948 2014-2015 OFFICERS President: MANIMOY PAUL SIENA COLLEGE Vice-President: XU ZHANG SUNY FARMINGDALE Secretary: MICHAEL McAVOY SUNY ONEONTA Treasurer: DAVID RING SUNY ONEONTA Editor: WILLIAM P. O’DEA SUNY ONEONTA Web Coordinator: ERYK WDOWIAK SUNY FRAMINGDALE Board of Directors: CYNTHIA BANSAK St. LAWRENCE UNIVERSITY KPOTI KITISSOU SKIDMORE COLLEGE FANGXIA LIN CUNY NEW YORK CITY COLLEGE of TECHNOLOGY SEAN MacDONALD CUNY NEW YORK CITY COLLEGE of TECHNOLOGY ABEBA MUSSA SUNY FARMINGDALE PHILIP SIRIANNI SUNY ONEONTA CLAIR SMITH St. JOHN FISHER COLLEGE WADE THOMAS SUNY ONEONTA JEFFREY WAGNER ROCHESTER INSTITUTE of TECHNOLOGY The views and opinions expressed in the Journal are those of the individual authors and do not necessarily represent those of individual staff members. NEW YORK ECONOMIC REVIEW New York Economic Review Vol. 46, Fall 2015 CONTENTS ARTICLES Estimating the Marginal Value of Agents in Major League Baseball Tyler Wasserman and Rodney Paul…………………………………………….……………..3 Immigrants Financing Immigrants: A Case Study of a Chinese-American Rotating Savings and Credit Association in Queens Xiaoyu Wu and Teresa D. Hutchins………………..………………...……………………....21 Issues in the Sustainability of the Medicare Program Larry L. Lichtenstein and Mark P. Zaporowski…….………………...………………….…..35 The Determinants of Political Participation Mark Gius……………………………………………………………………………...……..…53 Brownfield Assessments, Cleanups, and Development: How Do We Measure Success Christopher N. Annala and Ryan M. Smith………………………….………………...…….63 Public Housing, Rent Subsidy: A Comparative Panel Analysis on the Effects on Education and Earnings Diamondo Afxentiou………………..………………………………………………….…….…82 Referees………………………………………………...…………………………………….….……100 Final Program (67th Annual Convention-October 10-11, 2014)……………………….......….101 1 FALL 2015 EDITORIAL The New York Economic Review is an annual journal, published in the fall. The Review publishes theoretical and empirical articles, and also interpretive reviews of the literature. We also encourage short articles. The Review’s policy is to have less than a three month turnaround time for reviewing articles for publication. MANUSCRIPT GUIDELINES 1. Please submit three copies of a manuscript. 2. All manuscripts are to be typed, double spaced and proofread. Prepared on a IBM PC/compatible computer in Microsoft Word format, the computer disk should be submitted in addition to the three hard copies. 3. All charts and graphs must be reproduction quality (Microsoft Word or Excel). 4. Footnotes should appear at the end of the article under the heading of “Endnotes.” 5. Citations in the text should include the author and year of publication, as found in the references, in brackets. For instance (Marshall, 1980). 6. A compilation of bibliographic entries should appear at the very end of the manuscript under the heading “References.” Manuscript submissions should be sent to the editor, William O’Dea. Division of Economics and Business State University of New York College at Oneonta Oneonta, New York 13820 The NYER is cited in: Ulrich’s International Periodicals Directory Cabell’s Directory of Publishing Opportunities in Business and Economics ISSN NO: 1090-5693 Copyright 2015 New York State Economics Association 2 NEW YORK ECONOMIC REVIEW Estimating the Marginal Value of Agents in Major League Baseball Tyler Wasserman* and Rodney Paul** Abstract As advanced statistics are incorporated into baseball salaries, it may fundamentally change the role of the player agent as it relates to value. We aim to estimate the marginal value of player agents, given that advanced statistics allow for ease of comparison across players based upon both offensive and defensive attributes. Specifically, we construct a regression model to determine what an agent adds to player salaries above and beyond their client’s Wins Above Replacement (WAR). After accounting for WAR, age, and other factors, we find considerable differences in the marginal value of player agents for both hitters and pitchers. I. INTRODUCTION In 2003, Michael Lewis published Moneyball: The Art of Winning an Unfair Game, which forever changed the finances and economics of baseball. It began a movement towards using advanced statistical analysis to determine the value of baseball players, in order to build a roster that will win the most games at the lowest cost. The Moneyball movement has resulted in a multitude of new statistics that try to narrow a player’s value down to one number that represents his marginal revenue product, or his individual contribution to the team’s success. While we would expect that player production would be the major driver of salary, an additional part of the salary process is the role of player agents in salary negotiations. In this research, we try to isolate the impact that these agents, some more well-known than others, have on their clients’ salaries, independent from the player’s marginal contributions on the baseball diamond. Specifically, we attempt to identify what role, if any, a player’s agent plays in salary negotiations, given the wide advances in and general industry acceptance of advanced statistical measures of player performance. Unlike deals with the players associations in the NBA and NFL, Major League Baseball agent commissions are not standardized. We were not privy to the exact percentage that is earned by each agent, however, it is estimated that commissions are approximately five percent1 and competition keeps these commission fees in a tight range. If modern baseball statistics capture the true worth of a player on the field and this is agreed upon by both team management and the player (and his agent) it would appear that the agent would not have as much of a role in determining salary as the agent did in the past. When statistics were assumed to only * Falk College of Sport and Human Dynamics, 301 McNaughton Hall, Syracuse University, Syracuse, NY 13244, e-mail: [email protected]. ** Falk College of Sport and Human Dynamics, 301 McNaughton Hall, Syracuse University, Syracuse, NY 13244, e-mail: [email protected] , phone: 315-443-8165. 3 FALL 2015 capture part of a player’s value and the agent could argue for more money based upon factors statistics could not reveal, the agent may have had more power to influence salary than in the current statistics- obsessed baseball world. If both parties measure the marginal contributions of a player on the field by Wins Above Replacement (WAR), it would seem that agents would have a difficult time capturing additional salary dollars for their clients. In this research, we construct an empirical model to test for the marginal value of player agents. Through regression analysis, we use the present value of a player’s salary per year as the dependent variable and regress that on that player’s WAR in the previous season, his age, if the player re-signed with his previous team, the number of years remaining until free agency, the timing of the signing in the offseason, and dummy variables for each player’s agent. If the player agent offers his client value beyond the player’s performance on the field, the dummy for the individual agent should be positive and significant. If the agent does not offer additional value or takes less than what the player is truly worth, the agent variables will either be statistically insignificant or take a negative value. Beyond testing if agents have any value beyond WAR, this analysis will attempt to identify the best agents for bringing value to players above and beyond their on-field contributions. This research proceeds as follows. Section II presents a literature review on player salary studies. Section III explores if there is a relationship between particular agents and the best players in baseball. Section IV presents the regression model and results for the impact of agents on players’ salaries. The final section concludes the paper. II. LITERATURE REVIEW The main focus of this paper, estimating the marginal value of player agents, has not been studied in the literature surrounding baseball salaries. That said, there are various studies of baseball salaries in different frameworks that have influenced the approach of this study and the variables used in our regression models. The origins of economic studies of sports, in general, and baseball, in particular, date back to the work of Rottenberg (1956). His work on various elements of the sports industry and his investigations into the labor market for Major League Baseball began the process of identifying the unique characteristics of the sports industry and continues to this day. The research by Scully (1974) expanded upon the origins of the literature began by Rottenberg (1956) and investigated the link between performance and salary in Major League Baseball. He found that performance plays a key role in explaining salary, but also showed that racial discrimination existed for Major League Baseball players during the time period of this study. Black players with similar statistical performances on the field were shown to earn lower salaries than their white counterparts. Studies of possible racial discrimination in the Major League Baseball labor market continued. Using the openly available data on workers’ (players’) salaries in this field compared to other labor markets, studies of discrimination attempted to identify how and why discrimination may take place within this 4 NEW YORK ECONOMIC REVIEW market. Christiano (1986) found discrimination against black baseball players in a similar fashion to what was found by Scully (1974). His follow-up study, however, using data from ten years after his original study, found that this racial bias had been eliminated as the race variable was no longer found to be statistically significant (Christiano, 1988). Raimondo (1983) also found that racial biases did not appear to have a significant impact on salaries in his study of race and free agency in baseball. He discovered that bargaining power, not race, appeared to explain salary differences between players.
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