“Leah said: God has given me an endowment...”1
-Parashat Vayetze, Bereishit 30:19-20
I really wanted Jeffrey Hammonds to be incredible.
I am a long-suffering fan of the Baltimore Orioles. And in spite of the Os finally having the hope of becoming a long-term model franchise due to the Moneyball-embracing Mike Elias (what used to be called “The Oriole Way”), the reality is that the Os still have not won a World Series since 1983, the year before I was born. So while I am cautiously optimistic, nothing is guaranteed, especially with the soap opera of our already terrible owners. 2
Back in the early 1990s, when the Orioles were also terrible, Jeffrey Hammonds was drafted in 1992 to be the future of the Orioles’ outfield, with some thinking that he would be the next Rickey Henderson.3 However, Hammonds never became what the Orioles hoped.
As a child, I always assumed that each season would be the season when Hammonds would finally become something he was never going to be. And while young Joshua Rabin did not follow Moneyball, the reality is that if I had been paying attention, I would have realized early on that a Hall-of-Fame career for Jeffrey Hammonds was unlikely to happen.
Today, I am asking a different question: Why did I invest so much emotionally and mentally over at least five years after it became unlikely to happen?
Enter the endowment effect.
Endowment Effect
Pull out your favorite t-shirt from your closet. I’ll wait.
Mine is a USY t-shirt from 1999 when I chaired Seaboard USY’s Fall Convention in Norfolk, Virginia (the theme was “USY Palooza,” in case you were wondering). Because I was a convention chair, I got my t-shirt for free.
Hypothetically, would I sell this t-shirt if someone came and offered me $500?4 On the one hand, it makes perfect sense that I should sell the t-shirt because I paid $0 for it and will make $500. However, I am unlikely to sell it for almost any amount of money, due to my emotional connection. And while my response may be predictable, it is not “rational.”
The essence of the endowment effect is that people tend to value things that they own more than if they needed to buy them on the open market. Our friends Daniel Kahneman and Richard Thaler, along with Jack Knetsch, identified the endowment effect in an experiment where participants were given relatively low-cost items such as coffee mugs as gifts, and then offered money to sell them. The authors found that “the value that an individual assigns to such objects as mugs, pens, binoculars, and chocolate bars, appears to increase substantially as soon as that individual is given the object.”5 This result contradicted the standard economic theory, pointing out that how much an object is worth depends on a person’s “reference positions.”6 Somehow, the intrinsic value of an object increases when it is ours, while the extrinsic value may stay the same.
(Of course, this is a different kind of endowment than the kind most Jewish leaders are familiar with,7 hence why certain kinds8 of endowments are dangerous.)
Every Jewish organization has programs, customs, traditions, and norms that often seem ineffective or superfluous to someone evaluating them from the outside. Why do so few organizations stop doing any of these things, even when someone points out all of the flaws? Because it is “ours” (i.e. the organization “owns it”). This is the endowment effect in action.
The Inside Game
But back to Jeffrey Hammonds.9
Baseball remains one of the best ways to learn Moneyball; the sport diligently tracks statistics and baseball actions are easier to measure than other sports.10 And if you are finding this newsletter enjoyable and want to get a great introduction to the larger concepts, consider reading Keith Law’s The Inside Game.11
Keith Law, now of The Athletic and formerly of ESPN, has always been one of my favorite baseball writers and someone who influences my writing, partially because he has such eclectic tastes. His personal website includes writing on books, board games, and music, all of which he writes with a similar style. Law wrote The Inside Game to teach behavioral economics through the lens of well-known baseball stories.12
Regarding the endowment effect, Law provides a variety of examples of trades made and not made in baseball to demonstrate the “illusion that what we already have is somehow worth more than its actual value to others,” primarily through the career of Pedro Martinez.13 Especially in sports, where there are already heightened emotions, Law argues that “getting” something that we own, like a player our favorite team drafted out of high school, “makes our brains increase our instinctive belief in that thing's value.”14
Jeffrey Hammonds was never going to make my childhood with the Orioles magical. That said, Adley Rutschman is doing a great job of making that happen for my son.
Weekly Links
The FTX Collapse and Philanthropy: If you have not been paying attention to the collapse of FTX’s cryptocurrency exchange, just know that any event compared to another Enron, Bernie Madoff, or Theranos is pretty terrible. However, this example has the added issue of Sam Bankman-Fried (SBF) being a leading donor in the effective altruism movement, the implications of which are outlined in this article in The New York Times.
Freeing Ourselves from the For-Vs-Not Profit Framework: The binary between for-profit companies and nonprofit organizations has always been murkier than it appears (did you know that Major League Baseball used to be a tax-exempt nonprofit?). I really enjoyed this article from Ariel Beery15 about creating a new framework and abolishing the binary.
The Disappearing Art of Maintenance: I find that many Jewish organizations need to be compared to infrastructure, as opposed to traditional businesses or nonprofits. And, unfortunately, infrastructure maintenance is a major issue in the United States. Here is a great article on why we need to discover the long-lost art of maintenance.
Complications of the Digital Nomad Lifestyle: Turns out that having more remote employees has new questions and issues that the market is currently sorting out. Read this article in The Wall Street Journal about the effect of remote work on workplace policies and law.
The Age of Social Media is Ending: Beware large pronouncements! People have been telling me the synagogue is dying for twenty years, and I’m still waiting. That said, we are at an interesting inflection point with social media, and this is a wonderful analysis of why.
Yes, believe it or not, I found a translation that translates the word זְבָדַנִי as “endowment” (JPS translates it as “choice gift.”).
New King James Version: “Then Leah conceived again and bore Jacob a sixth son. And Leah said, “God has endowed me with a good endowment; now my husband will dwell with me, because I have borne him six sons.” So she called his name Zebulun.”
But given the context, I don’t anticipate this quote being used to encourage planned giving any time soon.
In an amazing year for the Os with more hope on the horizon, Peter Angelos was still rated the worst owner in baseball by at least one website. Please, someone, buy them (I’m looking at you, David Rubinstein, Steve Bischiotti, or Kevin Plank ). Nothing is better than spending other people’s money.
Yes, if you look back at the newspaper clippings or click on this link, you will see people actually made this comparison.
Currently, I have about six duffle bags full of old USY t-shirts. Most would I absolutely sell if someone offered me $500, but this one I would not. That said, all of those t-shirts would probably be worth the same thing to someone else (i.e. almost nothing).
Daniel Kahneman, Jack L. Knetsch and Richard H. Thaler, “Experimental Tests of the Endowment Effect and the Coase Theorem,” Journal of Political Economy, Vol. 98, No. 6 (December 1990), 1325-1348.
Ibid.
For more information on the growth of the endowments in Jewish organizations, read Lila Corwin Berman’s recent book The American Jewish Philanthropic Complex.
At Moneyball Judaism, we are pro planned giving. I knew you were worried; it’s called “click bait” for a reason.
In the words of Matthew Berry, “Cue Jeffrey Hammonds minding his own business and saying, ‘C’mon man! What did I ever do to you!?!?!?’’ Still waiting for Matthew to name me the official rabbi of fantasy football any day now (listen below).
For example, everyone agrees what a strikeout is, and how to count it. A strikeout is a “true outcome,” one not dependent on anything else other than the pitcher, catcher, and hitter (and perhaps, the umpire). Ask basketball nerds how challenging it is to define an “assist” for statistical purposes.
Keith Law, The Inside Game: Bad Calls, Strange Moves, and What Baseball Behavior Teaches Us About Ourselves (New York: William Morrow, 2020).
Unlike me, Law was an economics major at a school in Boston (cough, cough…Harvard).
Warning for any Red Sox fans who read this newsletter: Law primarily does this through the indefensible decision of then Red Sox manager Grady Little in the 2003 ALCS.
Warning for Orioles fans: Law also isn’t a fan of Buck Showalter not bringing in Zack Britton in the 2016 AL Wild Card Game, prompting this incredible tweet from David Simon, creator of The Wire:
Those who get it, get it.
Footnote 11, page 144.
Fun Fact: Ariel was my Talmud hevruta for one semester with the incomparable Rabbi Charlie Schwartz, co-founder of Lehrhaus.