Now that we have gone through the basic elements of our initial "formula," we can revisit the basic premise of this site and provide something of a wrap-up overview. There are still numerous items to discuss--extensions of the analogy, its limits, etc--but we thought it might be good at this point to restate the idea.
Theorizing in any discipline is about abstraction: you try to penetrate to the essential elements of something so as to understand it. This is what economists do: to get a handle on the complexity of economic activity, they seek the core characteristics (or, sometimes, laws)--supply and demand, marginal utility, revealed preference, etc.
In recent years, economists have expanded their purview beyond what we might see as "purely" economic elements. The book Freakonomics, for example, applied economic analysis to all manner of issues that were not traditionally seen as economic issues. But because economics is basically about human behavior and choice, it makes sense that economists would extend their disciplinary boundaries. I have certainly learned more from Steven Landsburg and Tim Harford than I ever did in a college macroeconomics course.
Our aim here is also abstraction, but hopefully in a more colloquial language: that of baseball. We're not saying that every single moment in a baseball game has its economic analogue, nor that every single economic situation has a parallel in baseball. (And we're happily open to reader suggestions for questions or interesting problems to explore.)
We're saying that when you boil down baseball--the on-field game, not the business of it, another growing topic in the past few years--to its essential elements, you get rules, uncertainty, interaction, and complex and perpetually novel outcomes. The same, we submit, is true of economic activity. Now, those seem rather obvious, especially if you simply think about them for a few minutes. But one thing that has surprised us as we have followed economic and financial discusions in the media and some of the academic literature is how remote those seem to be from what actually goes on in the economy.
Rules, of course, are mentioned all the time, as we constantly muse over economic laws and policies. Pick up any book or article written in the last few years on economic issues and you will undoubtedly find a sentence about an "age of uncertainty" or growing uncertainty as to the direction of the economy. Uncertainty is treated as something discrete, like a comet that passes by occasionally. Interaction is the dominant fact of human life in all facets but, until recently, seemed foreign in the economic literature. The steadily growing field of behavioral economics recognizes the importance of interaction, but still retains a focus on stand-alone individuals. Remember the charts from economics class, the business cycle and the production possibility frontier? Quite abstract, but they didn't really convey the dominant fact of economic activity: complex and perpetually novel outcomes. (One of our future posts will be a greater discussion of this, because it is so important.)
So there you have it: in our casting about for different ways to understand the economy, we hit upon baseball. There are probably a lot more people out there who understand at least the basics of baseball than could say they understand the economy and how it changes and develops. We're not experts, but we hope you share our growing understanding through baseball.