Economics and fantasy football go together like losing and the Cleveland Browns. If economic reasoning is nothing more than the persistent and consistent application of opportunity cost reasoning aimed at maximizing some sort of profit (which it is), then fantasy football will give you ample opportunity to apply economic reasoning to help your team win. It’s that simple. Here are some nuggets of advice to consider as you draft and manage your team this season.
Taking a kicker in the fourth round may not be as crazy as you think.
Suppose you are in a large league—say, 12 players—and, as luck would have it, you have the twelfth pick in your snake draft. You find yourself staring down at your well-prepared pre-draft strategy, and you realize that all the consistent scoring quarterbacks, running backs, and receivers are gone. Hey, why not go kicker with pick #48 and defense with pick #49? Wait! What?! Carilli! You’re out of your tiny little mind! Hold on one second. Here comes some reasoning at the margin…
Economics teaches us that the way we maximize profit is to engage in all those activities for which the marginal revenue (extra benefit) exceeds the marginal cost. Last year, Patriots kicker Steve Gostkowski scored 168 points, outscoring all but 7 running backs and all but 9 receivers. So that means if you chose Megatron (Calvin Johnson) with your third round pick last year, you earned a loss because you gave up more than you received. Megatron only scored 164 points last year. In fact, the Broncos defense outscored all but 14 receivers and running backs. Make the same case for drafting Gronk or Jordan Reed last year. If you look at the 2016 projections, you’ll find similar comparisons. Don’t give up the opportunity to get 10 points a week with a kicker if the best receiver available only gives you 9. You earn a loss of 1. It’s all about the opportunity cost.
Put a sticky note on your computer screen that says “SUNK COSTS ARE LOST!”
In the campy 1970’s movie Cannonball Run, as the cross-country car race began, the driver removed his rear view mirror and threw it out the window. His co-pilot looked on in horror as the driver explained, “What is behind me does not matter.” The driver understood that the only costs that matter are prospective. As you set your team each week remember the wisdom of that driver. What a player did or didn’t score last week doesn’t matter for this week. Sunk costs are lost!
Beware of the endowment effect.
Just because you spent a draft pick on Eddie Lacy doesn’t make him valuable. “Divestiture aversion” – the phenomenon of becoming overly attached to things you own – is a well-documented effect in economic and psychology literature. Be honest, you know you’ve valued something more highly once it’s in your possession. You probably found it more difficult to part with it than was to acquire it. Well, when it comes to fantasy football, don’t do it! Recognizing that this bias exists is half the battle, so when someone asks you for a running back you drafted (but have no plans to play in the future) in exchange for a wide-receiver (a position where you are weak), check your biases and think about the future.
Fantasy football teams are made up of complementary parts.
If you have taken my (bold) advice and drafted Gostkowski early, and somebody offers you Graham Gano for the best running back on your bench, don’t take it! In fantasy football, it isn’t just the points that matter, but the positions as well. Say you are building a four-wheel tractor and someone offers you a fifth wheel ($1000) in exchange for the steering wheel ($100). It may seem wise to accept the trade based purely on dollar value. But more important than the value of individual parts is the value of the tractor as a whole. A fifth wheel might make a cool-looking tractor, but you can’t drive without a steering wheel. Similarly, a second high-scoring kicker might look cool on paper, but a good team needs bench depth, not two kickers.
Conventional wisdom is for suckers. In fantasy football, it’s all about moving players around to get the biggest bang for your buck. So if you have to give up a wide-receiver who you expect to average 8 points a week to get a defense that you expect to score 11 points per week, then to heck with the conventional wisdom. Go ahead and get the defense. Think like an economist, and dominate your league.