Why Baseball Players and Bankers Make So Much Money

Michael Lewis is a journalist and the best-selling author of Liar's Poker, The New New Thing, Moneyball: The Art of Winning an Unfair Game, and The Blind Side: Evolution of a Game. He writes for Portfolio and is a columnist for Slate.

  • Transcript


Michael Lewis: Moneyball was about how people get misvalued and how then, in turn, warped value systems encourage warped behavior in people. But it's primarily about people being misvalued and how a perfectly free market—what market could be freer than a market of professional athletes—can completely screw up people’s valuation. There are all these biases that infect the human mind when it’s making intuitive judgments, value judgments, especially about other people—we overvalue handsome people; we overvalue tall people. 

Malcolm Gladwell wrote an article in The New Yorker a long time ago and there’s this little fact in it that the Oakland A's loved.  And it goes something like this: only 3% of the adult population in America is male and 6 feet or taller, but 50 or 55% of the CEOs of Fortune 500 companies are male and 6 feet or taller. The Oakland A's front office read that and thought, “Okay, when we invest money in the stock market, we’re not going to invest in any company that has a CEO who’s male and 6 feet or taller because what’s happened is he’s there because he’s male and 6 feet or taller rather than actually knowing what he’s doing. We're gonna look for, you know, short, portly, homely CEOs because they’re more likely to know what they’re doing. Moneyball wasn’t so much a prescription for how to succeed as it was as… prescription for, say, how baseball players should succeed as it was as for how someone who’s evaluating other people should go about doing that. 

Having said that, I think that it resonated with people because a lot of people feel misappraised, and Wall Street people in particular—it really resonated with Wall Street people.  And I kind of wondered at the time when it came out, if it didn’t resonate with Wall Street people because they were in the middle of the single greatest madness of appraisal of human abilities and human contribution in the history of the world.  The people are being paid huge sums of money all around them or maybe they themselves are being paid huge sums of money to do things of dubious social utility. So that they could see that this was possible kind of thing, that often when people get paid, makes no sense at all.