This is the 26th installment of Lighthouse, my monthly column for BLink, a supplement of the Hindu Business Line.
Is there anything that cricket can learn from economics? Over the decade-and-a-half that I have written on both these subjects, I’ve come to believe that understanding and applying the principles of economics can enrich the way we live our lives. It follows, then, that all economic concepts can also be applied to cricket.
This is especially relevant at the time of writing these words, when the Twenty20 World Cup has just come to an end. I was delighted that West Indies deservedly won the cup; and saddened that a number of teams, including India, made basic errors because they did not understand one fundamental economic concept: Opportunity Cost.
The term ‘opportunity cost’ was coined by the 19th century economist Friedrich von Wieser, and its simplest definition is: ‘the loss of other alternatives when one alternative is chosen.’ The online site Investopedia defines it as “the cost of an alternative that must be forgone in order to pursue a certain action.” Let me illustrate that with an example.
Say you step out of your office one muggy evening, and have Rs. 300 in your pocket. You feel like drinking a refreshing frappe at a nearby café; and you also feel like taking an AC cab home instead of your normal bus-train routine. The thing is, you only have enough money for one of them. So you go for immediate gratification and get that frappe. The opportunity cost of the frappe is the cab ride home.
Every banal decision in our lives involves opportunity cost. Do I watch TV or read a book? Do I go out with friends or spend time with family? When I choose to spend an evening watching Batman vs Superman, the cost of that decision is not just the price of the ticket and the popcorn, but all the things I could have done with that time.
Understanding opportunity cost is important because it helps us navigate the one fundamental truth about this world: scarcity. Everything is scarce: there is never enough money; or enough time; or enough energy. We have to negotiate scarce resources, which is why all our decisions carry costs. And as the economist James Buchanan said, the concept of opportunity costs “expresses the basic relationship between scarcity and choice.”
Cricket is no exception to these laws of nature. Within a cricket match, there are two kinds of scarcity that a captain or coach must contend with. One is a scarcity of time. The match can only last either five days or 50 overs per side or 20 overs per side. The second is a scarcity of resources. A team can only have eleven players.
Strategy in cricket boils down to negotiating between these two constraints of time and resources. For example, if a team needs 250 runs to win a Test match with two full days in hand, and are 18 for 2 against fired-up new-ball bowlers, they should be more worried about running out of batting resources than about running out of time. That would be a good time for careful consolidation. In contrast, in an ODI, if a team needs 15 to win in one over with eight wickets in hand, they are running out of time but not batting resources. This is a time to hit out and run for everything, and not to preserve wickets.
Every decision carries an opportunity cost. When a batsman shoulders arms to a ball outside off stump, that decision carries the opportunity cost of the runs that might have been scored off it. When he tries to drive it and instead edges it to slip, his action bears the opportunity cost of the runs he might have scored later had he not played that shot. These are opposite actions, and to evaluate which is appropriate in any situation, you need to consider the relative scarcities of time and resources.
Now, here’s where it applies to T20 cricket. Each side gets 20 overs to bat instead of the 50 they would in an ODI; but they still have 11 players! The balance between resources and time has shifted – but many teams haven’t adjusted to this. They apply the ODI innings-building template to T20s: hit out in the powerplay, taking care to consolidate if early wickets fall, then build the innings till the slog overs, then have a slog. This is wrong. It is a waste of resources – and it also allows the bowling side to allocate bowling resources optimally, with specialist death bowlers bowling at the end. What would they do if every over was a slog over?
The teams should adjust to this new dynamic by ‘frontloading’ – a concept I first wrote about in this context a couple of years ago. They should go for their strokes right from the start. If catastrophe comes and four wickets fall in the space of 10 balls, they can dial it back and look to bat all 20 overs so as not to waste the resource of time – but otherwise, they are wasting the batting resources available to them.
The optimal approach in a T20 game is to treat your first three overs as if they’re the last three. On average you will make as many as you would in the last three. Sometimes you will click and the momentum continues. Sometimes wickets will fall, and you can adjust accordingly, and still not make less than you would have with the traditional strategy.
Teams are wisening up to this, and both the finalists of this T20 World Cup frontloaded through the tournament – but India did not, to my dismay. In their semi-final, India made 192 for 2 and the wicket column alone tells you what was wrong with their approach. By losing only two wickets, consider the strokeplaying resources India left unused: Raina, Pandey, Pandya, Jadeja, even Ashwin at 9. Our middle overs were consumed by Ajinkya Rahane making 40 off 35, which was a criminal waste. Consider the opportunity cost: had Rahane been out while on 20 off 18, do you really think that this army of hitters would not have made way more than the 20 off 17 he eventually added?
This is not Rahane’s fault per se: he is a fantastic Test player, but he doesn’t have a fourth gear and this is the best he can do. It’s the fault of the selectors and the decision makers within the team who ignored this key lesson of T20 cricket. (To be fair to MS Dhoni, though, CSK usually frontloaded in the IPL under him.) It is also the fault of those pundits who will praise an innings of 50 off 40 without considering the opportunity cost, and the unused resources in the pavilion.
Teams will learn, though, and T20 cricket will continue to flourish. This is the future of the sport. Indeed, Test cricket might die out altogether, for reasons that can also be explained by economics. As the number of options to spend our time keep increasing, so does the opportunity cost of watching Test cricket. What is five days worth to you?
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The lesson from this IPL: Front-load your innings (2014)
Never Mind the Bullocks, Here’s the Lamborghini (2015)
The New Face of Cricket (2015)