Unit 5: Term Project RoThis paper must be in ATo this point, you have submitted the topic, the outline and the bibliography.  I've attached everything I did up to this point, and now I must create a r

Running Head: PAY AND PERFORMANCE IN MAJOR LEAGUE BASEBALL 0

Purpose statement and model

This study will try to examine whether there is a relationship between the payment and performance of a team. Performance is the dependent variable measured by wins of a team in the 2010 Major League Baseball (Tao Y. et al, 2016). This is the suitable dependent variable since the wins for a team can be influenced by many factors and the final results are the main target of every team (Scully G., 1974). The primary independent variable is payroll which the totals pay of the team (Wiseman F. & Chatterjee S., 2003). This is suitable in determining whether there is relationship between pay and performance due to the fact that a higher anticipates higher performance since many challenges for the team can be solved by financial stability (Sommers P. & Quinton N., 1982).

The general form of the model will be;

Wins = b0 + b1Payroll + b2Attendance + Error (

Definitions of variables

The variables used in this study are wins, payroll and attendance. Win is the dependent variable measuring the number of games the team wins. Its scale of measurement is ratio. Payroll is the primary independent variable measuring the revenues for the teams in million US dollars. It is a continuous variable and has a positive impact on the dependent variable implying a positive coefficient. Attendance is an independent variable measuring the number of people who go to watch the games for the teams in millions. This is suitable since the attendance can increase the number of tickets sold and hence revenue generation. The fans can increase the morale for the players. It is a continuous variable and expected to increase the number of wins hence positive coefficient.

Data description

The data is obtained in Baseball Stats website (Devi Ramanan, 2016). The dataset contains 30 Major Baseball Leagues where their data were collected on League they play, Wins, ERA, BA, HR, SB, Errors, Built, Size, Attendance and Payroll. The data is taken from the Team column, Wins, Attendance and Payroll columns for 2010 competitions.

Presentation and interpretation of results

Multiple regression analysis was performed to determine whether there is a significant relationship between the variables. The following tables show the analysis performed for the variable.

Table 1: Model summary

Table 2: ANOVA test

Table 3: Coefficients tests

From the analysis, the adjusted R2 = 0.20. This implies that 20% of the variation in performance is explained by Payroll and Attendance. This is a lower percentage which can translate to a model that is not much reliable.

The model however, was significant at 0.05 level of significance where F (2, 27) = 4.63, p = 0.02.

The coefficient table reports individual impact of the independent variables on the dependent variable. The equation for the model becomes;

Wins = 62.14 + 0.011Payroll + 7.36Attendance

This implies that holding other factors constant, a team is expected to have 62 wins in the league. When payroll of a team is increased by $1M, there is an increase of 0.011 wining chances holding other factors constant. Increasing attendance by 1M will increase the wins by 7 games.

The coefficients for payroll and attendance were insignificant where t (27) = 0.17 and t (27) = 2.02 respectively which are less than the critical t-value (2.05). We can therefore conclude that there is no statistical significant relationship between pay and performance of the team.

Works cited

Research:

Scully, G. W. (1974). Pay and performance in major league baseball. The American Economic Review, 64(6), 915-930.

Sommers, P. M., & Quinton, N. (1982). Pay and performance in major league baseball: The case of the first family of free agents. The Journal of Human Resources, 17(3), 426-436.

Data:

Tao, Y. L., Chuang, H. L., & Lin, E. S. (2016). Compensation and performance in Major League Baseball: Evidence from salary dispersion and team performance. International Review of Economics & Finance, 43, 151-159.

Wiseman, F., & Chatterjee, S. (2003). Team payroll and team performance in major league baseball: 1985–2002. Economics Bulletin, 1(2), 1-10.

Devi R. (2016). Data.world. Baseball Stats. Retrieved September 25, 2019 from https://data.world/deviramanan2016/baseball-stats