Testing for Competitive Balance
15 Pages Posted: 5 Apr 2014 Last revised: 29 Jun 2016
Date Written: January 5, 2015
We present two tests for the hypothesis that a league is competitively bal- anced, identifying in each case the appropriate statistic as well as its sampling distribution. We then apply these tests to Major League Baseball and the National Football League. We demonstrate how these tests can be applied to full sports leagues, or to just intradivisional play, and to both single season and multiple season outcomes.
We also show how one of our statistics is related to existing measures of competitive balance, and note the possibility that that, because our statistics have known sampling distributions, that knowledge may ultimately allow them to be transformed into measures that are comparable between leagues of different sizes and season lengths.
Keywords: Sports, Sampling
JEL Classification: C46, L83
Suggested Citation: Suggested Citation