Judging from what I hear, see, and read, there will once again be some controversy about who should be selected as the Most Valuable Players [MVPs] in baseball this season. Just to add my eclectic, econoclastic views, let me offer the following observations:
It is not completely clear what the criteria should be for determining the MVP in each league. Last year, when I first started blogging, I suggested that the most valuable player is the player who adds the most revenue to his team. I had in mind an economics concept similar to Marginal Revenue Product [MRP].
I realize that it is difficult to assess how much a particular player has added to a team's total revenue. The relationship between playing ability and wins is complex, and the relationship between wins and revenue is discontinuous, with discrete jumps depending on whether the team makes the playoffs and how far it advances in the playoffs. But, of course, whether the team advances depends not on just the player being considered for the MVP but on others on the team as well.
That's no different, though, from saying the MRP of labour depends on the amount of capital it has to work with. And not surprisingly, the labour that has better and/or more capital to work with gets paid more because it contributes more to the revenue of the firm. Why should it be any different for sports MVPs?
I also recognize that good players probably add more to the total revenues of teams in bigger markets or with national television audiences; I can imagine that this possibility would bias many people against adopting an MRP-based measure, at least explicitly.
Often, it seems to me, sports writers have in mind a concept analogous to Marginal Physical Product [MPP] when they vote for the MVP. When they discuss "who was the best player" or "who did the most to help his team win," they are implicitly asking about the addition to total wins resulting from the use of a specific person's playing ability -- a discrete version of marginal physical product.
But here's another wrinkle: what if the criteria are, "which player added the most to the wealth of his team?" In this case, we would want to know the additions to total revenue minus the additions to total cost (i.e. minus the player's salary above and beyond the salary of a replacement player).