Economic Theory Explained by Football – Part 3 – Regression Theory

In the third article trying to explain famous Economic theories by using football as the model I am looking at the work of Francis Galton on Regression Theory.

After three games in the Premier League this season two teams could boast 100% records.  Top of the table on goal difference was Chelsea but level on points with them after three wins out of three was Swansea City.  At the start of the season, Swansea were 5^th favourites for the drop and faced Manchester United at Old Trafford on the opening day.  Even the most ardent Swans fan could have hardly predicted the start they would have made.

But realistically they were never going to stay at the top of the league, were they?  That is because there is a hierarchy in place, whether teams like it or not.  Swansea at some point in the season will lose three games in a row and essentially return to their natural level.  That effect is the basis of Francis Galton’s work on identifying Regression Theory.

The term “regression” was coined by Galton in the nineteenth century to describe a biological phenomenon. The phenomenon was that the heights of descendants of tall ancestors tend to regress down towards a normal average over a period of years.  But I don’t buy that.  What he was really predicting was the bouncebackability (he actually invented that word too) of teams who either punched above their weight or failed to meet expectations.

Swansea is an interesting case.  For years they have been a third or fourth tier side in English football.  Their main claim to fame was changing their name from Swansea Town to Swansea City to reflect the changing status of the town/city.  Back in the 1980’s they rose from the 4^th tier of English football to top the old Division One in a short space of time, relying on pay big wages to aging stars for one last hurrah (and pay packet).  As quickly as they achieved fame, they quickly slid down the leagues and only avoided the ignominy of relegation from the Football League due to a police dog biting a player (long, urban myth-based story which in reality has nothing directly related to staying up but, hey, the press loved it).  That is a prime example of regression theory.  Short term boost caused by internal (buying good, if old players) and external (traditional good sides becoming crap – reverse regression theory) factors, followed by longer term return to normality.

There is, however, one factor that “resets” the regression base line in football, and that is money.  Shed loads of it that is currently floating around the Premier League. A small team reaching the Premier League today is like a Charlie Bucket finding the last Willy Wonka’s Golden Ticket.  They will never be poor again and consequently, Galton’s theory is a load of old bumf.

And that, ladies and gentlemen, is Regression Theory in a nutshell.