Monday, January 07, 2008

Hail to The Redskins! (Curse); Hail Victory!! (For the incumbents)

Did you know that when the Redskins LOSE their LAST HOME game, the INCUMBENT party has LOST every presidential election since 1936? Isn't that spooky!

Well, not really. It's more silly than spooky, I think we can all agree.

Plus, George W. Bush ruined the streak in 2004, so the "Redskins Curse" is over.
For those who are interested, Snopes (the site dedicated to debunking or validating urban myths) has more on the subject.

But it's still fun to see how our superstitious minds can craft tales of curses and omens and lucky charms that predict the future.
Let's take a look at the Redskins curse in greater detail for a moment and see how Behavioral Finance would explain the development of this myth?

Q: Why the Redskins?

A: The Availability Bias. We tend to use the information that is most handy when we make decisions/predictions. Washington is a political town where people pay more attention to elections. The 'Skins are the local team. It stands to reason that they'd notice a political or 'Skins related anomaly. (In Green Bay... not as much.)

Q: Why the last home game?

A: The Recency Bias. In a series of events we tend to remember the events that occurred in the beginning and, even more so, those that occurred at the end. (Let's face it, who could remember the statistic if it occured in week 5 of the season?) Plus, we remember events that carry greater emotional weight. Home games are more likely to be attended by the politically interested fan base. When you leave a stadium, you remember a win - as well as a loss. (Epecially if that loss was to the &*$#*@! Cowboys).

Q: Why did Redskins Curse exist at all, why the anomaly?

A: Probability. We know that the incumbent party has a natural advantage. We also know the home team in football has a natural advantage (usually at least 3 points according Las Vegas). It should come as no surprise that two events will tend to occur simultaneously when the probabilities are greater than 50%.

The question of predicting future events based on past events is an important issue for today's trader given the popularity of "back-testing" strategies (plugging in your future strategy to past events to see if it would have worked). Numerous online brokerages currently touting this method as tool for validating trading models. And it can be. But there is a fine line between back-testing and data mining. The key is recognizing that correlation does not equal causation.

Since the Redskins Curse is dead. I think it's time to come up with a new, cool curse. Doing so means engaging both sides of the brain. MarketPsych has provided a model below.

The Pittsburgh Steelers Curse for Democratic Candidates

STEP 1: Mine The Data (Left Side of the Brain - The Correlation)

First, you're going to need a stat, a several standard deviation event that makes for an interesting coincidence. Fortuntately NFL records provide a mountain of data in which to go mining. As you would with a stock screen, sort through every Steelers season on election years since 1936. Eventually, the screen will turn up some anomaly - a particular week, a particular stat - that has consistently correlated with Democratic Party victories. Let's say that this particular data holds up for week 7. (I.e., When the Steelers LOSE the 7th game they play in a season, the Democrats always LOSE the presidential election.) Got your stat? Good. Proceed to step 2.

STEP 2: Create A Narrative Around It (Right Side of the Brain - The Causation)

The left side of the brain will do the math. But the right side will "tag" it with a story. (More on this and other fascinating brain explanations in my colleague Richard Peterson's brilliant book.) The story needs to create some sort of plausible context that would support a potential reason for the anomaly. And the spookier, the better. Sometimes, the numbers do this for us. (Lucky number 7, hooray! The number 13, booo!). But there are many ways to create a deeper meaning for the numbers. Use your imagination! Tie it to a disgruntled player (maybe he wore #7 !) who's uncle was the Republican nominee. The Steelers traded him on week 6 and ever since that fateful day....

Personally, I like this one: The owner (Who owned the team before Art Rooney?) was an enthusiastic supporter of Franklin Roosevelt, and invited FDR into the locker room to address the team on week 7 back in 1936. FDR, fine orator that we was, gave the 'boys a major pep talk. He ended it with a promise. He told the assembled players that "If you win today, I'll guarantee you a victory in November... as well as lower taxes on steel products, moustache wax, and Polish Sausages!" (Hey, all politics is local, y'know?) Well, don't you know the Steelers rallied to defeat a powerful Chicago Bears team with a miracle last second pass. And ever since that fateful day...
Feel free to create your own. Just don't bother using the Jets. The whole franchise is already cursed.

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