Proper Analysis of Salary vs. Performance?
Got an email from Mebane Faber who noted the roughly inverse correlation you currently see in salaryper, and asking about whether I’d done proper year-end analysis. The response follows:
I threw the project together as sort of a fun thing out of curiosity, and haven’t taken the time to do a proper analysis. However you can see in the previous years that the inverse relationship happens each year at the beginning of the season, and then as it progresses, the big market teams tend to mow down the small guys. Or at least those that are successful–the correlation between salary and performance at the end of a season is generally pretty haphazard. In fact, it’s possible that the inverse correlation at the beginning of the season is actually stronger than the positive correlation at the end.
I think the last point is kinda funny, though I’d imagine there’s a less funny statistics term for that phenomenon. Such a fine line between funny and sounding important.
