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Friday, October 28, 2005

Bernanke on Baseball

Just found out courtesy of the SABR-L list that Bush's nominee to head the Federal Reserve Board, Ben Bernanke, is a baseball fan. There was a short discussion on NPR of Bernake's view on ERA on "All Things Considered".

Bernanke's view is that ERA is not a "fair" measure by which to gauge relief pitchers. In the NPR piece Dwight Jaffee, the Willis Booth Professor of Banking Finance and Real Estate at the Haas School of Business at the University of California at Berkeley discusses how he an Bernanke came to this realization but never really developed anything better.

Of course this realization has occurred to many people over the years and a few of the ways to correct for it I mention here. Our Fielding Independant Pitching (FIP) statistic on THT is another way to correct for it.

Bernanke's interest in baseball was also discussed in the October 26th New York Times.

"Perhaps the best way to establish transparency, Mr. Bernanke has written, is to set up an easily understandable process. It is in many ways the opposite of the image that Mr. Greenspan has helped cultivate, that of an oracle.

He will probably work toward depersonalizing monetary policy,' Mr. Gertler said.

A useful analogy is to Bill James, the baseball writer whose books Mr. Bernanke has discussed with fellow economists. Mr. James's work, which often argues for statistical analysis over intuition, 'was always a topic of conversation,' Mr. Gertler said.

He remembers Mr. Bernanke's being especially interested in finding statistics that forecast future performance. In the same vein, he has argued that central bankers should rely as much as possible on the enormous amounts of economic data now available and less on hunches.

The hope eventually is to come up with a statistical formula that processes this information and gets the best forecast,' said Jean Boivin, a Columbia economist who has done research with Mr. Bernanke. 'Once you do that, the question is how much is left over for judgment.'"

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