How Much Is an Ace Pitcher Worth? Evidence From Major League Baseball Betting Markets

ABSTRACT Can efficient markets reveal information about worker productivity and compensation? This paper exploits variation in pre‐game betting‐market prices for Major League Baseball (MLB) games to estimate the marginal productivity of ace pitchers. Because starting pitchers operate on a rotation, teams can be observed with and without their most productive worker, which allows identification of each ace's contribution to win probability as priced by the market. Since a pitcher's scheduled start is known in advance, efficient markets should incorporate his expected impact into pre‐game odds. Using betting‐market data and pitcher statistics from 2008 to 2017, I find large and statistically significant ex ante productivity estimates for ace pitchers. These market‐based estimates strongly predict subsequent contract valuations and rival the predictive power of ex post performance metrics such as Win Probability Added, suggesting that prices in speculative markets efficiently aggregate information about worker value ex ante.