Understanding the Trade Market: the Problem With Redundancy Redundancy

Published: February 11, 2014

Picture this. You’re playing an NBA video game and you’re creating a player. You have no limits on the amount of skill points you assign to him. If you’re me and you’re 13 years old, you’re cranking the created player to a 99. You’re 7’2 and you move like Russell Westbrook, you shoot like Steph Curry, and you block shots like Anthony Davis.

Why does this matter? Well, when talking about redundancy on an NBA roster, it is very important to understand the obvious concept that no skill in itself is undesirable. Given unlimited power, you maximize all skills, but of course, that’s not how it works in the NBA: the cost of improving Skill X is often giving up the opportunity to develop Skill Y.  Whether you want Anthony Davis to have the capacity to drill 3 pointers at sometime in his career is irrelevant: what he’d be giving up to work on that aspect of his game is what’s relevant. Time is finite, and every moment practicing one skill is a moment not practicing another.

No NBA player is perfect, and the best coaches find ways to maximize the talents of their players and hide their flaws. But the task is much tougher when players have overlapping skill sets in certain areas.

In economics, there is a concept of the law of diminishing returns, and here is a definition that I poached from Wikipedia: “The law of diminishing returns states that in all productive processes, adding more of one factor of production, while holding all others constant (“ceteris paribus“), will at some point yield lower per-unit returns.”

Brittanica Example

In the classic example of the law, a farmer who owns a given acreage of land will find that a certain number of labourers will yield the maximum output per worker. If he should hire more workers, the combination of land and labour would be less efficient because the proportional increase in the overall output would be less than the expansion of the labour force. The output per worker would therefore fall. This rule holds in any process of production unless the technique of production also changes.

Diminishing Returns In Basketball (this section is via Nick Lewellen)

“Let’s say you have a pick up team with your friends. Your team is pretty good, but you’re getting killed on the boards. So you recruit a big guy who loves to rebound. Your team gets 10 more boards a game. Hooray! Let’s say you find out this guy has a twin. You recruit him too, because being able to grab more rebounds is desirable. Except now you need to take a starter off to make room for your new player. So you take that one guy off and add the twin. He gives you 6 more rebounds a game and his brother starts averaging 8 instead of 10.

 Now, we’d expect him to get 10 a game just like his brother, because all else is equal, right? But of course, that wouldn’t happen. There are only going to be so many available rebounds per game. The two twins will overlap each others skill set, and the other team may even come up with a strategy that takes advantage of these overlapping skill sets. In the end, your team did improve at rebounding by adding the second guy, however it didn’t improve as much as when you added the first guy. So the first guy had a return of 10 rebounds. The second guy of 8. There is a diminishing return to adding another rebounder. Lastly, consider that you’d have to replace another player with the twin. If you take off your only shooter for a second rebounder, the loss in scoring might not be worth the gains in rebounding. “
Diminishing Returns Matter in NBA Basketball: The Case of the Houston Rockets
Our own Jason Calmes alluded to the example of Dwight Howard and Omer Asik to illustrate the concept of diminishing returns. Each is a monster rebounder and known as an excellent interior defender. However, their on-court time together was not exactly a success: in an admittedly small sample size of 93 minutes, the duo registered a paltry -18.3 points per 48 minutes. [This article was written with information before 2/10]

This statistic comes with all sorts of caveats, most related to the small amount of minutes.. but it is hardly surprising. After all, there were questions regarding the effectiveness of that pairing far before it took the court. The rebounding, of course, was not the issue: the team rebounding percentage of 51.4% is just slightly below their regular season percentage of 51.5 and is still comfortably above the league average for teams. I’d argue that, with time, it would climb.

This is why diminishing returns in NBA units is a problem: when bona-fide skills don’t complement one another, maximum team value is not attained. In this case, one of the costs of putting these two players on the floor together is offensive efficiency. Neither player is effective away from the basket on offense, and the Rockets rely on a spread offense for James Harden and co. to pick apart defenses. The rebounding is not worth the drop in offense.

It should be noted that having multiple 3 point shooters on the floor can actually lead to increasing returns, meaning that the effectiveness and volume of 3 pointers can actually increase when there are several of these shooters. Put multiple lethal shooters next to a good post player or driver and you can see incredible results.

Diminishing returns play into NBA trades because a team with diminishing returns from a certain skill often look to trade one of the redundant players to yield a more effective team: why waste a marketable skill when it is not being used to its full effect on a team and there are other glaring needs?

We can return to our Houston example to see this in effect. Houston has been trying to trade Asik to generate a better team. Their diminishing returns on defense and rebounding made Asik’s market value exceed the value he generated for their actual team on the court.. yet a trade has still not been made. This is because, although Houston is getting diminishing returns from Asik’s defense/rebounding, they haven’t found a trade partner that will give them the trade haul that they are seeking. Diminishing returns don’t mean a team has to make a trade, they just mean that there could potentially be another franchise who could make a trade that is mutually beneficial.

Understanding the Trade Market is a series started by Nick Lewellen and will feature several of our writers. To read the other articles in this series, click here.


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