What the Spurs Can Teach Us About Inequality

What the Spurs Can Teach Us About Inequality

The cruel irony of team sports in present-day America is that they're mostly about individuals. Indeed, in a country obsessed with superstars, there are few places where inequality is as obvious or accepted as it is on the basketball court. We profess to care about winning and losing, but mostly, we celebrate singular feats of personal brilliance.

Can you blame us? As humans, we're hardwired to interpret events in terms of the narrative of the individual. It's why novels are more compelling than textbooks, why data fights an uphill battle against anecdote, why anything bad that happens in the United States is Barack Obama's fault. Our need for protagonists is matched only by our propensity to create them.

You certainly can't blame the players. They're just rational agents responding to an incentive system that rewards selfishness. Why pass the ball when contacts are awarded for points per game, not winning percentages? To the victor goes fame, fortune, and, with any luck, a spot in SportsCenter's Top 10.

What's more, the distorting lens of celebrity colors our interpretation of outcomes. From the playground to the pros, the more comfortable we become with inequality, the more we've come to interpret it as an indispensable ingredient of success. Take the NBA. Because recent championship teams were led by one-in-a-generation talents (see Jordan, Michael), conventional wisdom became that you couldn't win without a Big One, and preferably you'd have a Big Three. Balance begets bland mediocrity. History is written -- and tickets are sold -- by heroes, not committees.

Call it the superstar myth. And no one questioned it -- until now.

With their historic thrashing of the Miami Heat, four games to one, in the recently concluded NBA Finals, the San Antonio Spurs dispelled the conventional formula for NBA success, demonstrating not only that teamwork can be a winning strategy, but also that it can be just as fun to watch. In the process, they sent a resounding message about the limits of inequality and virtues of teamwork.

There's No I in Team
There was a time, not too long ago, when the Spurs would never have been a trending topic. In contrast to the pizzazz of the LeBron James-dominated Heat, the Spurs were about fundamentals, not flash. The players -- generic and sometimes anonymous -- performed functions rather than feats. Their most charismatic asset was their black-and-gray jerseys.

But the 2014 Finals were different. As the Spurs' side of the scoreboard lit up like fireworks in Times Square, America fell in love with the virtues of constant movement, crisp passing, and high percentage shots. Suddenly, efficient was exciting -- and effective.

Watching the Spurs dismantle the Heat, I wondered if there was a more general lesson. If San Antonio could thrive through equality, could other teams, too? More importantly, might these lessons apply to society more broadly? After all, the parallels between the evolution of the NBA and the evolution of America's economy are hard to ignore. Both have been characterized by rising inequality driven mostly by outsized gains among superstars. Both have seen lapses in progress and lulls in popularity. The question is: Does equity enhance performance?

Does Passing Prevent Failing?
To answer the NBA-specific part of the question, I compiled data from basketball-reference.com, focusing on the 2013-2014 regular season.

A neat overall measure of a basketball player's production is a statistic called "win shares" (WS), which estimates the number of wins each player contributes to his team. The average NBA player had 2.6 win shares last season.

To assess inequality, we need a sense of how these wins are distributed. One useful measure of dispersion is the Gini coefficient (most famously used to calculate inequality in the income distribution). The Win Shares Gini indicates how wins are allocated among team members. A WS Gini of 0 means the team is perfectly balanced -- all players contributed exactly equally to the team's success. A WS Gini near 1 represents high inequality: Wins are concentrated among a player or two.

For 2013–14, the average NBA team had a WS Gini of 0.56. Not surprisingly, the Spurs had the lowest WS Gini, at 0.33, while the Philadelphia 76ers had the highest, at a near-max of 1.00. (Negative values are somewhat more common for win shares than they are for incomes, and thus the WS Gini coefficient can be greater than 1.) Miami was slightly above average at 0.59.

So what is the relationship between equality and success? One way we can see it is by plotting wins against the WS Gini. As the picture below shows, the results are striking. All the way up in the left-hand corner are the Spurs, far and away the league's most equal team, and also its best, with 62 wins. More generally, there is a strong negative correlation (-0.43, to be exact) between wins and inequality. A decrease in inequality by 0.1 WS Gini points -- roughly the difference between teams at the 25th and 75th percentiles of inequality -- is associated with a gain of 4.8 wins. (Dropping the Spurs and the 76ers as outliers reduces the effect, but only to 3.6 wins.)

Figure 1

Five wins is a big deal. In the Eastern Conference, it was the difference between being the seventh seed in the playoffs (Charlotte) and being the third (Toronto).

Of course, the relationship between team equality and team success is one of association, not necessarily causation. Omitted variables correlated with team inequality that also influence wins could be driving the results. For example, inequality and age may go together. As it happens, the Spurs are the fifth-oldest team (the Heat are first) and the 76ers are the youngest. Older players with fewer remaining chances to win championships may be more inclined to sacrifice personal stats for team goals. And more experienced players may also be more effective players, thus directly impacting wins. In this scenario, success is a function of age, and equality merely its marker.

Another possibility is that the causality runs in reverse. Maybe top teams, by virtue of their abundance of success, are more willing to share the glory. If winning can be contagious, happier players will be more generous.

Such complications are familiar to economists who study economic growth. But as with development economics, we can turn to theory to guide our interpretation of the results. As it turns out, inequality on the basketball court is an illustrative metaphor for inequality writ large.

For one, balance reduces volatility, resulting in more consistent team performance. It makes a team more difficult to defend against -- or, in economic terms, more resilient to shocks. Exhibit A is the Finals, where the Spurs outscored the Heat by 70 points, the largest margin in NBA history. During the playoffs, the Spurs had eight players score 7+ points per game; the Heat had four. To stop the Heat, you stop LeBron James. To stop the Spurs, you have to mind everyone on the court (as well as a few more on the bench). There is evidence to suggest the same applies to economies: More equality means more stability.

Equality also carries psychological and emotional benefits -- and can even improve physical well-being. When players have better opportunities to develop and showcase their skills, they may experience increased job satisfaction and improved cohesion, as is true of workers more generally. The prospect of upward mobility is a powerful incentive -- just as it is in the job market. In turn, team success expands the opportunity set. Improvement becomes contagious. A seemingly finite pie becomes a growing one; the specter of conflict is replaced by the promise of camaraderie. Lack of opportunity, by contrast, can lead to despair and diminished performance.

At the same time, however, we wouldn't want to take the case for equality too far. Balance is hardly beneficial if it means all the players are terrible -- just ask the egalitarian Bucks. Too much equality can undermine motivation. Nor is equality necessarily a prerequisite for winning. The Oklahoma City Thunder and the Los Angeles Clippers had the second- and third-highest win totals, despite ranking fifth and sixth in inequality. Superstars do make a difference, even if they are paid too much. Finally, as with most interdependent systems, we should bear in mind what economists refer to as "general equilibrium effects." One team's roster is not independent of the other teams'; nor are its win totals. If all teams pursued a strategy of greater equality, presumably the benefits of equality would diminish.

With these caveats in mind, it's pretty clear that equality is an ingredient for success in the NBA. But as comforting as it is to know that all those clichés about teamwork actually have some empirical grounding, the most important message from the 2014 Spurs is that this lesson extends far beyond the basketball court. Indeed, the relationship between teamwork and wins bears striking resemblance to the relationship between the income distribution and economic strength.

Teamwork in the Real World
To examine the link between inequality and prosperity, I conducted a simplified version of the type of analysis development economists have been doing for decades: a cross-country comparison of income levels and growth of GDP per capita. Using data primarily from the Penn World Table, I constructed a dataset of 167 countries (both advanced and developing) over six decades, 1960–2010.

The picture below illustrates my main result: There is a negative association between income inequality and economic development. Richer countries tend to be more equal.

Figure 2

As was the case with the NBA, correlation is not the same as causation. The perils of cross-country comparisons are well known to development economists. Both inequality and affluence are affected by many factors, and each influences the other in complex ways. This, along with poor data quality and national idiosyncrasies, can create spurious results.

To address some of the most obvious confounding factors, I conducted a more detailed econometric analysis, regressing average decadal growth in real GDP per capita on average decadal inequality, as measured by the Gini coefficient of income. In contrast to most previous studies, which rely on market incomes, the Gini I used measured net inequality (after taxes and transfers), thanks to Frederick Solt's relatively new Standardized World Income Inequality Database. My model controlled for level of national income, population, educational attainment, democratization, trade openness, and investment and government spending as fractions of GDP, as well as decade-specific factors, economic growth in the prior decade, and whether or not a country is located in Sub-Saharan Africa.

As the picture below shows, inequality remained a statistically significant negative predictor of economic growth, even after controlling for these other factors. (Technically, it is a graph of the portion of growth unexplained by other factors in the model against the portion of the Gini coefficient unexplained by the other factors in the model.)

Figure 3

Although the literature on inequality and economic growth remains splintered, my findings match the general consensus that has emerged in recent years (this recent paper by the IMF provides a nice review). All else equal, inequality hurts growth. And because levels of income are the long-run outcomes of growth processes, the evidence suggests this link becomes stronger over long time frames (as shown in Figure 2).

Why is this the case? Theory points to at least four reasons. First, inequality diminishes the poor's access to health and education resources, which reduces the economy's human capital and productive potential. Second, the resulting economic and political instability undermines private investment (investors are hesitant to invest in risky countries), which is absolutely critical to growth. Third, inequality leads those holding the short end of the stick to clamor for greater redistribution, and redistribution can impair economic efficiency. At the same time, the affluent may become preoccupied with maintaining their place, diverting resources from productive activities to rent-seeking (e.g., lobbying, bribes). Finally, when inevitable crises strike, society lacks the social fabric necessary to reach consensus for decisive action.

On the flip side, it's important to remember that inequality can, in some circumstances, help growth. The prospect of extraordinary rewards spurs innovation. And if the winners save larger fractions of their income than the poor, aggregate investment increases, stimulating further growth. Indeed, as Angus Deaton chronicles in The Great Escape, inequality goes hand-in-hand with progress. As is the case with basketball, the goal should not be to eliminate inequality, but rather to keep it at reasonable levels.

Ultimately, it seems the relationship between inequality and progress is nonlinear. When things are mostly equal, modest increases in inequality can be a positive sign. But taken to excess, inequality undermines performance, be it in the economy or on the basketball court.

The Spurs changed the conversation in the NBA, and fans liked what they saw. Policymakers would do well to take heart. As inevitable and intractable as economic inequality may seem, we must hold steadfast in our devotion to the fundamentals of growth, confident that the political arena, too, will one day be conquered by the power of teamwork.

Mike Cassidy is a policy associate at the Century Foundation.

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