Wednesday, February 10, 2010

On Football, Risk, and Poor Choices

Every Super Bowl has a one-sentence summary attached to it, and for last Sunday's game, that sentence was something along the lines of, “Saints Coach Sean Payton makes some risky moves that pay off.” If you watched the game, you'll recognize what those “risky decisions” were: going for it on fourth-and-goal from the one, that famous onside kick to start the second half, blah blah blah. What courage! What guts! What giant testicles!

It's been said many times in many places, but it's worth saying again: the mainstream football media, especially the announcers, are really bad at evaluating decisions. The classic case is the coach who decides to go for it on fourth-and-short rather than punting. If the attempt fails, the announcers tsk-tsk and talk about how the “safe” play is usually better. If it succeeds, they praise the coach for his confidence in his offence. Either way, they judge the decision by the results it generates, which is like excusing a night of drunk driving by saying, “Nothing bad happened.” Just because things worked out for the best doesn't mean that you made good, or less risky, decisions.

And just because some decisions are unconventional doesn't make them “risky.” Bill Barnwell of Football Outsiders says that the math was actually on Payton's side in each of his unorthodox “gambles,” which would technically make the decisions not risky at all, just precisely calculated choices.

Okay, maybe you don't care about probability-based decision making in football, but the larger point is this: when making choices, people consistently misjudge the risks they're taking.

To take another example from sports, the NBA trade deadline is coming up, which means the annual “trade rumors” are swirling around. For those of you not familiar with this phenomenon, trade rumors are articles written by sportswriters who gush about how exciting this all is and how many different teams are “in the mix” and who the “buyers” and “sellers” are this year. Then, inevitable, non of the swirled-about trades happen and everything pretty much stays the same. No notable players move, and none of the buyers and sellers have bought or sold anything.

One explanation for this is that making a trade always looks riskier than not making a trade, and the General Manager gets blamed for the trades he makes, not the trades he doesn't make, much like NFL coaches get blamed for any decision they make that doesn't seem 100 percent orthodox. It appears “safer” to do whatever everyone else is doing, and if you're a GM or a coach who is mostly just trying to keep his job, you usually want to do the safe thing,

Following the crowd, no matter how risky it objectively is, will always seem safer to us, and change will always seem terrifying and dangerous. Ever try to convince a 70-year-old to try Thai food? No matter how awful it is, people prefer the status quo, even if that status quo is actually very dangerous and unstable.

More serious example time: all those traders who traded sub prime mortgages back and forth to make a lot of money and eventually wreck the economy were taking on a lot of risk, but so was everyone else, and that sort of risk was acceptable. The strange, risky-seeming thing was to not play the market the way the majority of people were—just as the risky-seeming thing to do is go for it on fourth-and-one, even though that's a more high-percentage play than punting.

The problem isn't that people are too risk-averse, the problem is that too much of the time, we have no idea how risky our behavior is. And that sucks not just for our individual choices, but for big, public-policy issues. For a lot of people, changing the US health care system in drastic ways seems risky and expensive, but isn't keeping our current system—which is pretty much a disaster unless you live long enough to go on Medicare—just as risky? There's an old saying, “Better the devil you know than the devil you don't,” but that is pretty fucking awful advice in my book. If things suck, you should try to change them. That goes for NBA teams at the trade deadline, NFL teams at the goal line, and every single human on the planet.

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