The 'Moral Hazard' of NBA Strategy

In his lengthy dispatch exchange with ESPN's Bill Simmons, New Yorker writer and bestselling author Malcolm Gladwell endorses wholesale changes to the NBA draft. Specifically, he wants to erase the incentive for bad teams -- he wants all teams, elite and awful, to have a shot at the best players in the draft.

Gladwell has most recently been the talk of basketball blogs for another opinion, that NBA and college teams need to embrace the full-court press as a legitimate strategy. Frankly, these two opinions don't make sense coming from the same person.

The press, Gladwell argues, helps underdogs compete against more talented teams by adding a bucket of variability to the matter. If Sacramento can't beat Cleveland because of a (vast) talent disparity, Sacramento needs to get Cleveland off its game. The press is one way to do this. Though Gladwell's argument on this matter has (well-investigated) holes, it makes sense: 'tis better to die tryin' than go quietly.

But this is a risky strategy. If an average team (say, Chicago) tried to press all year, there's a chance opponents would figure it out and the Bulls would fail. Using the press full-time in the NBA is innovative, but risky. There is no real data base -- the effectiveness and unforeseen impacts of using it in the NBA is mostly a mystery. All but the worst teams would be risking disaster to implement Gladwell's strategy.

But here's Gladwell, in the next breath, arguing that risk should not be rewarded:

I think, for example, that the idea of ranking draft picks in reverse order of finish -- as much as it sounds "fair" -- does untold damage to the game. You simply cannot have a system that rewards anyone, ever, for losing. Economists worry about this all the time, when they talk about "moral hazard." Moral hazard is the idea that if you insure someone against risk, you will make risky behavior more likely. So if you always bail out the banks when they take absurd risks and do stupid things, they are going to keep on taking absurd risks and doing stupid things. [...]

No economist in his right mind would ever endorse the football and basketball drafts the way they are structured now. They are a moral hazard in spades. If you give me a lottery pick for being an atrocious GM, where's my incentive not to be an atrocious GM?

Beyond the dishonest implication that any team with a lottery has "an atrocious GM" (every team in the league has had a high lottery pick in the last 12 years), isn't this diametrically opposed to Gladwell's endorsement of the press?

The draft structure rewards risk. This is bad, says Gladwell. A lack of innovative strategy -- seen as risky -- is a problem, says Gladwell. Do you want risk, or not?

In 2007, the Grizzlies fired Mike Fratello after a bad start. Tony Barone took over. Memphis was clearly going nowhere fast. Barone decided to employ a risky, somewhat innovative (if not mind-blowing) strategy -- push the ball at every opportunity. It did not work. Memphis got killed most nights, and finished with the worst record in the league. By Gladwell's draft logic, Memphis should not have been rewarded for trying to innovative route. By Gladwell's strategy logic, Memphis should be encouraged to do things like this. Which is it? I can't figure it out.

(I'll also use this opportunity to note Simmons' ridiculous line of logic regarding how awful it is that great college/international players have to get drafted by bad teams smacks of elitism. Or, he had no problem hoping for Kevin Durant to come to a truly embarrassing Celtics team two years ago. Guess what? Fans in Washington, D.C., Sacramento, Minneapolis, and the non-Laker side of L.A. matter too. Never mind the actual impact of high picks improving their teams. See: all teams currently remaining in the playoffs except for Boston and L.A.)