Comparative Advantage

This team discussion encourages students to consider how the definition and implementation of the Ricardian model of trade apply to decisions faced by Billy Beane in his role as General Manager of the Oakland A's. Students will use the principles of comparative advantage and trade to determine the optimal allocation of resources. Choosing the player with an absolute advantage is not the best option, likely because that player is too expensive. Alternatively, picking the cheapest players is not a good decision because they may not be skilled enough to play professionally. Every input decision must contribute to the production process.

 

Play the following scene from the movie, where Billy Beane asks the team owner for more money following a disappointing end to the most recent season:

Worksheet Activity
(Download the handout)

Pass out the scenario and discussion question activity. The sheet contains a scenario framed in the same context as the video above. Students are given four possible decisions that they should consider as the general manager, but all framed in the context of the principles of economics. Students work in groups to consider which options are viable and which ones are not. They must also be able to explain with economic terminology what is right and wrong about the line of thinking for each discussion prompt. 

Any quiz on comparative or absolute advantage would work as a follow-up assessment to this activity. If time allows, the movie can be played during class and students can be asked to link back their decisions to what Billy Beane and the Oakland A's have actually decided to do. If there is not enough time for the whole movie, the trailer provides a broad enough overview to show students that Beane opted to use comparative advantage as the basis for selecting new team members.

Teaching Economics with 

Moneyball