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The Law of Diminishing Marginal Returns
Authored by Andrew Perna - 1st May, 2008 - 10:44 pm

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If you look in any introductory economics textbook and flip to the glossary you’ll likely find an extremely technical definition for the law of diminishing marginal returns.

Maybe even something like the explanation printed in The Columbia Encyclopedia: “the law of diminishing returns in economics states that if one factor of production is increased while all others remain constant, the overall returns will relatively decrease after a certain point.”

You might be wondering what this could possibly have to do with the world of sports, and more specifically, basketball. I realize that if you wanted a lesson in economics you would have paid attention in college or picked up the Wall Street Journal instead of Sports Illustrated but bear with me – you just might learn something.

In the average business this economic concept weighs heavily in numerous ways. For one, you don’t want sixteen people working on an assembly line if twelve people could do the job just as well or even more efficiently. That’s just bad business and poor use of your limited bank account.

The NBA equivalent of this would be the 2004 edition of the L.A. Lakers , who employed a quartet of Hall of Fame players but ultimately fell at the hands of the much-less historic Detroit Pistons in the Finals. When the Lakers added Gary Payton and Karl Malone, the value of the team’s output decreased because only one player could handle the ball at any given time, keeping Los Angeles from capturing yet another NBA Title.

Just one less veteran, for this example let’s use Payton, may have shifted the Larry O’Brien trophy back over to the Lakers rather than helping Detroit enter the conversation as one of the best “teams” of this generation. While the Lakers’ downfall was the overuse of ‘star power’, the average company often reduces their returns by working an employee too hard.

As difficult as it may seem, you can draw parallels between the Carmelo Anthonys of the NBA and the John Does of the world, who log fifty hours of work a week to take home just enough money to keep their families afloat.

In fact, some players even begin to drag at the end of their workday just like you and me.

A company can experience ‘diminishing returns’ (as known as productivity) from an employee when they either place too much of a burden on said employee or expect too many hours from a worker.

A foreman might ask his laborers to put in a long streak of consecutive twelve-hour days, something that in the long run is going to decrease his companies’ productivity rather than increase it. The same concept loosely applies to the NBA.

Not everyone can be LeBron James, who is averaging a league-high 9.1 points in the fourth quarter this season. Some players appear to rundown at the end of the game, specifically in the final period. For example, David West scored just 3.7 of his 20.6 points in the fourth quarter for New Orleans this season.

What I have done is grouped together 52 NBA players, who have all met four strict requirements. In order to make my list, a player must have “qualified” to appear on the NBA’s scoring list (having appeared in 70 games or notched 1,400 points), averaged more than fifteen points, and have logged more than 300 minutes in the fourth quarter during the 2007-08 season.

I opted to include the points and minutes per game requirements to legitimize the sample set of data compiled. A player who spends thirty or more minutes on the court per night has a better chance of “tiring” out or being used past his effectiveness than someone who spends just a dozen or so minutes on the floor. Also, maintaining a scoring average above fifteen points per game allows for an analysis that carries more weight.

Quite simply, who cares if a player only scores two points in the fourth quarter when he averages just nine or ten a game?

For a player to be perfectly consistent throughout a game, 25 percent of his scoring must come in each quarter. Such consistency is extremely rare. In fact only three of the 52 players I analyzed scored one-fourth of their points in the fourth quarter, never mind holding the average over the other three periods.

Admittedly, there are a few factors that keep this data from holding true to the economic essence of ‘the law of diminishing margin returns’. No one game, let alone possession, is the same in the NBA over the course of a season. Also, certain players scored less in the final period because of outside variables. For example, Paul Pierce, Ray Allen, and Kevin Garnett all notched less than 23% of their points in the fourth quarter this season.

It’s not hard to envision a player posting lower numbers in the final twelve minutes when their team often has a victory locked up well before the buzzer sounds, as the Celtics have dozens of times this season.

The lot of 52 players that I analyzed, however, should be considered at the very least moderate stars. That means that, by the common definition of a ‘star’, they should be expected to produce when the game hangs in the balance (i.e. the fourth quarter).

That is why Carmelo Anthony’s 4.9 points per fourth quarter stand out. Denver’s stud averaged 25.7 points per game this season, which means that just 19% of those came in the final period when each basket matters the most.

Such a decline in production at the end of games might explain part of George Karl’s discontent with his young star. However, it could also indicate that Karl is asking for too much from the former Syracuse standout throughout the game (Anthony played 36.4 minutes a night). Denver fans would probably contend that Melo wouldn’t have a problem playing for a majority of the game if he had the physique of say, LeBron.

Seven of the players I studied produced 20% or less of their scoring in the fourth this season, with four of them having averaged roughly twenty points a night.

Player, Scoring Average, 4th Quarter Scoring, Percentage in the 4th:
David West, NOH: 20.6, 3.7, 18%
Peja Stojakovic, NOH: 16.4, 3.1, 19%
Carmelo Anthony, DEN: 25.7, 4.9, 19%
LaMarcus Aldridge, POR: 17.8, 3.5, 20%
Kevin Garnett, BOS: 18.8, 3.7, 20%
Josh Howard, DAL: 19.9, 4.0, 20%
Dwight Howard, ORL: 20.7, 4.2, 20%

Notice anything about those seven players? None play exclusively on the perimeter and most spend a decent amount of time banging in the paint. At 6’7” and 210 pounds, Josh Howard is the smallest member of the group.

Like Boston, New Orleans got used to having a comfortable lead in the final quarter. They outscored their opponents by roughly eleven points in victories this season. That might partially explain the low numbers Stojakovic and West posted late in games, but teammate Chris Paul failed to follow the same line of thinking.

Paul’s production didn’t diminish as he scored 5.5 points in the fourth quarter (26% of his 21.1 per game average) for the Hornets.

If 25% is the benchmark for consistent scoring production per quarter, then 25 of the 52 players I isolated provided their teams with diminishing returns (including the eight featured above) this season. Listed below are the eighteen players from my data set who scored 21-24% of their points in the fourth quarter.

Player, Scoring Average, 4th Quarter Scoring, Percentage in the 4th:
Andre Miller, PHI: 17.0, 3.5, 21%
Jason Richardson, CHA: 21.8, 4.5, 21%
Antawn Jamison, WSH: 21.4, 4.5, 21%
Corey Maggette, LAC: 22.1, 4.7, 21%
Allen Iverson, DEN: 26.4, 5.7, 22%
Richard Jefferson, NJN: 22.6, 4.9, 22%
Tim Duncan, SAS: 19.3, 4.2, 22%
Carlos Boozer, UTA: 21.1, 4.6, 22%
Kevin Martin, SAC: 23.7, 5.2, 22%
Chauncey Billups, DET: 17.0, 3.8, 22%
Ray Allen, BOS: 17.4, 3.9, 22%
Rip Hamilton, DET: 17.3, 3.9, 23%
Chris Bosh, TOR: 22.3, 5.1, 23%
Mike Dunleavy, IND: 19.1, 4.4, 23%
Mike Miller, MEM: 16.4, 3.8, 23%
Paul Pierce, BOS: 19.6, 4.6, 23%
Al Jefferson, MIN: 21.0, 5.0, 24%
Kevin Durant, SEA: 20.3, 4.9, 24%

This group of eighteen players is only experiencing a slight decrease in production, but as we have seen this season, a few points here and there can cost a team a handful of wins. In the West this season, an additional loss might have meant a trip to the lottery rather than the playoffs (just ask the Warriors).

Of the 25 players who produced diminished returns for their teams in the fourth this year, quite a few played sparingly in the final twelve minutes. As mentioned above, teams like the Celtics, Hornets, and even the Pistons often entered the final stanza with sizable leads. In order to decide which of these seven players (from the aforementioned three teams) actually “struggled” at the end of games, I decided to calculate their points per minute averages.

Player, Points Per Minute, PPM In 4th, Percentage Difference:
Garnett, BOS: 0.573, 0.493, (14%)
Pierce, BOS: 0.546, 0.514, (6%)
West, NOH: 0.545, 0.470, (14%)
Billups, DET: 0.525, 0.639, +22%
Hamilton, DET: 0.515, 0.526, +2%
Allen, BOS: 0.485, 0.484, (0%)
Stojakovic, NOH: 0.465, 0.418, (10%)

As you can see, both members of the Pistons remained equally (if not more) productive while the rest suffered a decline in their scoring rates. The most glaring differences were obviously seen in Garnett, West, and Stojakovic. Once again, these three players spend more time in the paint than the other four members of the lot, furthering the belief that big men and post players are susceptible to the steepest decline.

Thus far I have only highlighted the players who seem to crumble or lose effectiveness when it matters most, but there are nearly an equal amount of players from my data set that actually excel in the final twelve minutes.

Of the players I studied, 22 scored more than 25% of their points in the fourth quarter while Vince Carter, Leandro Barbosa, Stephen Jackson, and Tracy McGrady all put up exactly 25% of their offensive production in the final period.

Player, Scoring Average, 4th Quarter Scoring, Percentage in the 4th:
Hedo Turkoglu, ORL: 19.5, 6.2, 32%
Jason Terry, DAL: 15.5, 4.9, 32%
LeBron James, CLE: 30.0, 9.1, 30%
Steve Nash, PHX: 16.9, 5.1, 30%
Deron Williams, UTA: 18.8, 5.6, 30%
Ben Gordon, CHI: 18.6, 5.4, 29%
Michael Redd, MIL: 22.7, 6.3, 28%
Joe Johnson, ATL: 21.7, 6.0, 28%
Kobe Bryant, LAL: 28.3, 7.8, 28%
Baron Davis, GSW: 21.8, 6.0, 28%
Rudy Gay, MEM: 20.1, 5.4, 27%
Brandon Roy, POR: 19.1, 5.1, 27%
Jamal Crawford, NYK: 20.6, 5.5, 27%
Dirk Nowitzki, DAL: 23.6, 6.3, 27%
Manu Ginobili, SAS: 19.5, 5.2, 27%
Danny Granger, IND: 19.6, 5.2, 27%
Rashard Lewis, ORL: 18.2, 4.8, 26%
Amare Stoudemire, PHX: 25.2, 6.6, 26%
Andre Iguodala, PHI: 19.9, 5.2, 26%
Chris Paul, NOH: 21.1, 5.5, 26%
Monta Ellis, GSW: 20.2, 5.2, 26%
Josh Smith, ATL: 17.2, 4.4, 26%

The above list officially confirms my suspected trend: on average, big men simply slow down at the end of games and wind up providing their teams with diminished returns.

Stoudemire is the only player of the 22 on the list that predominantly plays in the paint. Nowitzki is without a doubt a ‘power’ forward, but he spends a significant amount of time on the perimeter, thanks to his incredible shooting range and the offensive style of the Mavericks.

Aside from those two, you’ll find a litany of guards among the most productive fourth quarter performers. Players like James, Bryant, and Paul simply take the fate of the game into their hands while guys such as Terry, Gordon, and Ginobili aren’t often on the floor for the opening tip but get serious runs during the minutes leading up to the final buzzer.

While it’s obvious that some players simply aren’t productive at the end of games, at times it’s not their fault. Karl might want to lean a little heavier on guys like Allen Iverson and J.R. Smith in the fourth next season, instead of leaning too heavily on Anthony.

As the game continues to enter into the statistical era, it’s not out of the realm of possibility that we’ll see coaches start to make critical decisions based upon data similar to what I have compiled in my study.

Just for fun, here are some interesting differences in the points per minute averages for players in the fourth quarter compared to over an entire game.

Player, Points Per Minute, PPM In 4th, Difference:
Nash, PHX: 0.493, 0.626, +27%
Turkoglu, ORL: 0.528, 0.662, +25%
Redd, MIL: 0.605, 0.745, +23%
James, CLE: 0.743, 0.914, +23%
Paul, NOH: 0.561, 0.689, +23%
Billups, DET: 0.525, 0.639, +22%

D. Howard, ORL: 0.549, 0.449, (18%)
J. Howard, DAL: 0.550, 0.458, (17%)
Barbosa, PHX: 0.529, 0.448, (15%)
Richardson, CHA: 0.568, 0.448, (14%)
Garnett, BOS: 0.573, 0.493, (14%)
West, NOH: 0.545, 0.470, (14%)
Aldridge, POR: 0.510, 0.442, (13%)
Anthony, DEN: 0.706, 0.624, (12%)


Andrew Perna is a Senior Writer for RealGM.com and would love to hear what you think about his analysis inspired by the ‘Law of Diminishing Margin Returns’. Feel free to e-mail him at Andrew.Perna@RealGM.com
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