As I read through my Economics text this weekend about comparative advantage and specialization, I was amazed the textbook used a sports analogy to explain the situation.
For all of you that have not had the pleasure of taking MBA 812, and at the risk of sounding like a text book, the Principle of Comparative Advantage states that “everyone does best when each person concentrates on the activities for which his or her opportunity cost is lowest.” Opportunity cost is defined as the value of the next-best alternative that must be given up in order to perform the activity.
Okay, back to sports: The book gives a great example of how baseball players no longer hit .400. For all of you not familiar with baseball, hitting .400 involves getting four hits for every ten at bats. This may seem easy, but the average for the entire league in 2008 was .264! That means that only 26.4% of the time that someone walks up to the plate, they would get a hit! Can you imagine if we could slide by with a 26.4% on an exam?
Ted Williams was the last person to hit over .400 in a season, and that was in 1941. The book states specialization as the reason for .400 batting averages not occurring in recent times. Basically, instead of being a jack of all trades, MLB pitchers are now becoming specialized in how they pitch. You have relievers, closers, left and right handed pitchers for specific situations, and the starter is not forced to pitch an entire game. This makes it much more difficult for hitters, as they may face three or four different pitchers in a game!
It all makes sense! Concentrate on the activities which you perform best relative to others, and you will succeed! Now, the question is, which activities do you perform best?