It is High, It is Far. It is….

Baseball announcers often have a signature home run call.  This is particularly true for radio announcers who have to “paint the word picture”. The great Mel Allen, called the “Voice of the New York Yankees”  called a home run a “Ballentine Blast”, named after one of the advertising beer companies.  John Sterling, the current radio voice of the New York Yankees,  also has a signature home run call of “It is high, it is far, it is gone! A homerun!. It is usually followed by  corny alliterative praise based on the name of the Yankee player hitting the home run.  An example of his home run  call can be found here.  (This is a particularly painful video for me since this home run happened in a World Series Game against my beloved New York Mets. You may now understand why the New York Yankees are the true Evil Empire.)

Unfortunately, Sterling often gets the call wrong. Instead of a long home run the ball is often caught and becomes an out.   Examples of this maladroit broadcasting can be found here.  To be fair and as the video shows,  Sterling is not the only broadcaster that makes this mistake. However,  he seems to do it so often Yankee fans are livid with him.  Why?

It seems to me the fans’ annoyance is an example of the endowment effect, a phrase coined by Richard Thaler, who was awarded the Nobel Prize in economics in 2017.  Thaler was a behavioral economist  and has collaborated with other luminaries in this field including Daniel Kahneman (winner of the Nobel Prize in Economics in 2002) and Amos Tversky (who unfortunately passed away before he could win the Nobel Prize).  The endowment effect is an extremely complex phenomenon, but one aspect of it might explain the irritation Yankee fans express at the blown home run calls.  Kahneman, Knetsch, and Thaler proposed the endowment effect is the result of loss aversion.  Foregoing something someone owns or possesses feels like a loss, and people are loss averse.  When Sterling then says he made a mistake, the runs the Yankee fans have already mentally accounted for (another Thaler concept) are suddenly ripped away from them. They sharply feel the loss and are outraged. 

Thaler also posited people derive utility not only from the value of an object (in this case the runs increasing the score) but also by the quality of the transaction, the so-called transaction utility.  What could be more dramatic, more meaningful in a baseball game than hitting a home run accompanied by a bombastic proclamation of “It is high. It is far. It is gone”? The transaction utility gained from the home run is also unceremoniously ripped away from the listener.  

 Even worse is the impact of prospect theory,  the brain-child of Kahneman and Tversky.  Under this theory, the Yankee fan quickly “owns” the home run and the change in the score of the ballgame.While the home run produces a great deal of utility for the fan, the loss of the home run is felt even more sharply under prospect theory. Kahneman and Tversky demonstrated that a certain amount of loss often generated more than twice the amount of utility an equivalent amount of gain would.  This is measured pain or utility is measured from a reference point. Imagine  it is a close game, where the teams are only separated by one or a few runs. A home run in a close game generates a lot of utility for the fans.  Taking it away could be traumatic. In other words, lets say the homerun generates one unit of utility.  A loss generates two units of disutility.  In a matter of seconds the Yankee fans  get one unit of utility from the reference point and then end up two units of utility less than the reference point. No wonder why Yankee fans get so crazed when this happens! 

There are many more everyday examples of the endowment effect. Let’s look at a very simple situation: taxation. The vast majority of wage earners receive an income tax refund when they file their annual tax return. The withholding tables are set so this happens.  Why?  There are a lot of economic reasons.  The U.S. government gets to use the money interest free until it must repay the overpaid taxes. It also doesn’t have to chase taxpayers at the end of the year for payment. I also believe the IRS understands the endowment effect.  People do not want to pay a lump sum of taxes at the end of the year if they have underwithheld.  The money is ripped out from under them, and they strongly feel the loss, even if they know they owe the taxes.  The endowment effect is so powerful that taxpayers will often make seemingly irrational choices. I have often counseled tax clients they should not overwithhold.  After all, most taxpayers I know could use the money during the year. Beyond that you are never assured of getting your refund. The U.S. government can divert the refund for a variety of reasons, including paying back taxes.  State governments have been known to simply credit the refund against future taxes. In short, there are a myriad of reasons why taxpayers may not receive their refund when they believe  hey will.  Yet,  loss aversion is so strong that taxpayers will routinely overwithhold to make sure they do not have to pay. They irrationally explain it as “forced savings”. 

Perhaps the endowment effect also explains one more phenomena we have frequently seen on television. Mr. Scott always overestimates the time it takes to fix the Enterprise on Star Trek. Now we may know why….

Update : On June 12, 2022 the Yankees announced Sterling would be working a reduced schedule. He will not be accompanying the team on its longer road trips. So far, I can’t find any Youtube videos on blown home runs calls by his replacements….

Works Cited in this Article:

Kahneman, Daniel; Knetsch, Jack L.; Thaler, Richard H. (1990). “Experimental Tests of the Endowment Effect and the Coase Theorem”. Journal of Political Economy. 98 (6): 1325–1348.

Thaler, R. H. (1985). Mental accounting and consumer choice. Marketing Science, 4(3), 199-214.