Milton Friedman said it best: “Unless the behavior of businessmen in some way or other approximated behavior consistent with the maximization of returns, it seems unlikely that they would remain in business for long. The process of ‘natural selection’ thus helps to validate the hypothesis [of return-maximization].”
The first thing Romer did was analyze every fourth down during the first quarter of every NFL game between 1998 and 2000. (He had help from a computer program.) Then, he figured out the fluctuating value of a first down at each point on the football field. After all, a first down was more valuable for a team if it occurred on an opponents two yard line than on their own twenty yard line. The next thing Romer calculated was the statistical likelihood of going for it on fourth down under various circumstances and actually getting a first down. He also calculated the probability of kicking a successful field goal from various spots on the field.
But if kicking a field goal or punting on fourth down is such a bad idea, then why do coaches always do it? To explain the consistently bad decisions of NFL coaches, Romer offered two different answers. The first is risk aversion. If coaches followed Romer’s strategy, they would fail about half the time they were within ten yards of the endzone. This means that instead of kicking an easy field goal and settling for three points, they would come away empty handed. Although that’s a winning strategy in the long-run, it’s hard to stomach. (As Daniel Kahneman notes, “Worst case scenarios overwhelm our probabilistic assessment, as the mere prospect of the worst case has so much more emotional oomph behind it.”) After a long drive down the field, fans expect some points. A coach that routinely disappointed the crowd would quickly get fired.
The second reason coaches stink at making decisions on fourth down is that they stink at statistics. As Romer politely writes, “Many skills are more important to running a successful football team than a command of mathematical and statistical tools…It may be that individuals involved want to make the decisions to maximize their teams’ chance of winning, but that they rely on experience and intuition rather than formal analysis.”
So how have coaches reacted to this data? In 2001, before Romer published his findings, the average team went for it on fourth down 15.1 times per season. During the 2010 season, the average NFL team went for it on fourth down…15.125 times. Perhaps 2011 will be the year coaches start to maximize profits. But I’m doubtful.
There are a few sad lessons here. For one thing, it appears that NFL teams don’t closely follow the behavioral economics literature, even when it directly involves the sport. But the lack of change in fourth down decision-making is also a depressing reminder that human biases are exceedingly hard to fix. When the game is on the line we default to our lazy hunches and instincts, even when the rational choice couldn’t be more clear.
Irrationality cannot be changed overnight even with strong evidence. Partly because it takes time to fix things and partly because it may not be aware of the hard fact (i.e., poor marketing). The most reliable way of change comes from a few early adopters. Cite this as evidence of merely pointing out biases and anomalies helps little.