This article is part of our Stathead Sagas series.
Every fantasy baseball league is its own economy.
Many people might think of economics as the study of international and domestic markets and market forces and boring things like that. But economics really is a simpler thing: the study of scarcity, and much like gold and diamonds and oil, good baseball players are scarce.
And thus, a new economy is formed with every fantasy league. Even in the simplest of redraft leagues a market is born -- perhaps the market for second baseman is bare whereas quality starters can be streamed at will. But these economies are mostly boring – everybody has the same preference (win this season at all costs) and so every trade you see is current value for current value. Perceptions can be different, but everybody who makes a trade in one of these leagues is sure they either won it or it was fair.
But things get interesting in keeper or dynasty formats. Now, things are different if you're in first or third or ninth or 14h. Teams load up on prospects or young major leaguers and others buy expensive veterans for a stretch run. Supply and demand! Economics!
This dynamic makes trading in a keeper league a bit more complicated. Until you've done it a few times, it can be difficult to work through the different valuations teams in certain positions can place on the same players. All of this goes to another important economic concept, known as "time preference."
In economics, time
Every fantasy baseball league is its own economy.
Many people might think of economics as the study of international and domestic markets and market forces and boring things like that. But economics really is a simpler thing: the study of scarcity, and much like gold and diamonds and oil, good baseball players are scarce.
And thus, a new economy is formed with every fantasy league. Even in the simplest of redraft leagues a market is born -- perhaps the market for second baseman is bare whereas quality starters can be streamed at will. But these economies are mostly boring – everybody has the same preference (win this season at all costs) and so every trade you see is current value for current value. Perceptions can be different, but everybody who makes a trade in one of these leagues is sure they either won it or it was fair.
But things get interesting in keeper or dynasty formats. Now, things are different if you're in first or third or ninth or 14h. Teams load up on prospects or young major leaguers and others buy expensive veterans for a stretch run. Supply and demand! Economics!
This dynamic makes trading in a keeper league a bit more complicated. Until you've done it a few times, it can be difficult to work through the different valuations teams in certain positions can place on the same players. All of this goes to another important economic concept, known as "time preference."
In economics, time preference (or "discounting") pertains to how large a premium a consumer places on enjoyment nearer in time over more remote enjoyment.There is no absolute distinction that separates "high" and "low" time preference, only comparisons with others either individually or in aggregate. Someone with a high time preference is focused substantially on his well-being in the present and the immediate future relative to the average person, while someone with low time preference places more emphasis than average on their well-being in the further future.
The losing owners have the "low" time preference; the winning owners the "high" preference. Imagine the shock when an owner first discovers he can't give up $200 later to get $200 now! The idea continues:
George Reisman (of the Austrian school) says that time preference arises because of the possibility of being less able (say through injury or the effects of aging) or totally unable (through substantial incapacitation or death) to enjoy the use of goods in the future. The further into the future someone considers, the less likely it is that this someone will be able to enjoy the goods as much as they can be enjoyed now.The root of time-preference in Reisman's view is an internal risk premium that is specific to the owner of the goods, in contrast to an external risk premium that is demanded when the owner invests them in a production process or lends them to another. He then points out that the scarcity of capital combined with the uncertainties he raises, means that time preference is unavoidable and hence a minimum rate of return on that capital (such as in interest and normal profit) is always going to be required by suppliers of capital.
This is all a bit wonky, I admit, but what Reisman describes is essentially the driving market forces behind keeper league trade markets. Prospects can have great value, but it likely won't be realized for two or three seasons. Injury is always a concern for players at any level. Aging makes otherwise valuable veterans worthless for lagging teams. And particularly with commodities that fluctuate as much as baseball players – both in terms of their true talent level and the luck and variation that determines their statistics – the pure uncertainty of the future makes individual prospects less valuable than their hypothetical peak performance.
It all circles back to the notion of scarcity. There are only so many players capable of putting up worthy fantasy numbers, depending on the depth or shallowness of different leagues. This is what kicks the trade market into gear in the first place.
Even though MLB's trade deadline is past, most fantasy leagues still allow trading until some time in August. To truly make out like a bandit, you'll need to understand the details that make up your market. What do your opposing owners value? What's cheap that maybe shouldn't be? What do you have that trade partners might overly covet?
All these things matter, but so too do the underlying forces that govern how time-oriented markets work. Understand this basic economic concept and you will be better served to make your trade deadline a championship-defining one.
UPDATE:Sorry you didn't have as much use for reading this as I did writing it. It's tough to use concrete examples because each league operates so differently. But here are a couple things I did this year in one of my leagues, a points league (some since this writing, a couple before).
I'm going for it, in 3rd place but within 200 points of first place (out of 13,000 roughly; points league where average scores are like 80 per day). In this dynasty league, there are only 12 teams, and probably eight actually competing for the top spot. That means prospects have to turn into legitimately awesome players to have an impact, not just league average guys. With that in mind, I dealt Jurickson Profar and Will Middlebrooks for a package of Justin Verlander, Dan Uggla, Alexi Ogando and Jim Thome.
Uggla is too expensive to keep next year most likely, but Verlander will stick around ($37 of $400). Profar's a huge prospect and Middlebrooks is cheap ($4 next year) but getting Verlander and fixing my MI with Uggla (in a points league, his average is offset by power/walks) was worth it.
I also dealt Matt Adams and Carlos Correa for Hanley Ramirez, who at $48 won't be a keeper next year. Correa I grabbed earlier this year specifically because I knew I'd be able to flip him -- a reminder that prospects have value in trades before we account for them even reaching the majors. Correa will have the same flipping power for his new owner as he did for me, but I felt like it was a bullet worth firing given my competitive situation -- if I don't get into first, I'm looking great for second, and that's a $200 increase in prize money.
