ECONOMIC ANALYSIS & POLICY, VOL. 39 NO. 3, DECEMBER 2009 Who Is The Best Formula 1 Driver? An Economic Approach to Evaluating Talent Reiner Eichenberger* and David Stadelmann Department of Economics, University Freiburg, CH-1700 Fribourg, Switzerland (Email:
[email protected]) Abstract: Who is the best formula 1 driver? Until today it was impossible to answer this question because the observable performance of a driver depends both on his talent and the quality of his cars. In this paper, we for the first time separate driver talent from car quality by econometrically analyzing data covering 57 years of Formula 1 racing. Our estimates also control for the number of drivers finishing, technical breakdowns and many other variables that influence race results. While Michael Schumacher is often believed to be the best driver, he is overtaken by Juan Manuel Fangio and Jim Clark. I. INTRODUCTION Who is currently the best Formula 1 driver? Who was the best Formula 1 driver in history? And what about the Australian drivers? Many people are more interested in such questions than in the very important research puzzles commonly dealt with in economic journals. Fortunately, these questions can be answered thanks to the tools used by economists. A Formula 1 driver is fast, if he is talented and has a good car. Moreover, his racing success depends on a large number of additional factors. Individual success is determined to a large extent by factors such as the competitors’ talents and the quality of their cars, the number of competitors in a race, weather conditions during the race, and pure racing luck.