The Hot Hand Is Real
The Hot Hand Is Real
(Bloomberg Opinion) -- Anyone who watches basketball knows that players can get hot, seeming to score every time they touch the ball. Yet, a generation ago some very smart people cast doubt on the idea and it fell out of favor. That is, until economist Joshua B. Miller, this week’s guest on Masters in Business, showed that the so-called “hot hand” is real.
Back in 1985, Thomas Gilovich, Robert Vallone and Amos Tversky wrote a paper suggesting that streaks appear to be more important than they really are, and that they’re merely a case of the human tendency to see patterns where none exist, a device we use to try and impose order on randomness. Thus arose the theory of the Hot Hand Fallacy.
Then Miller and Adam Sanjurjo came along. Their paper on the statistical probability of streaks caused a big stir in both economics, statistics and basketball circles. I learned of Miller when he contacted me after Gilovich discussed the hot hand — or its absence — with us on an earlier MiB.
Their research was on whether one’s probability of success changes after recent success or failure. Miller and Sanjurjo had been watching the National Basketball Association’s three-point shooting contest at the All-Star Game when they decided to test the hot-hand theory.
Their insight was novel: When reviewing a basketball game or a session of coin flips retrospectively, selecting a shot (coin toss) after a streak means you are choosing from a smaller set of “hits” (heads). Back out those streaks, and the remaining misses outnumber the hits — the made shot or heads probability turns out to be not even, but instead is about 40 percent. The probability theory behind it opened up a new area of statistical research. When Miller and Sanjurjo first released the research, it caused a sensation in the press: ESPN, WSJ, NYT, Vox, Slate, Forbes, The Conversation, The New Yorker and more.
Miller’s favorite books are here; here is the transcript of our conversation.
Next week, we speak with author Michael Lewis about his latest projects.
To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.net
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Barry Ritholtz is a Bloomberg Opinion columnist. He founded Ritholtz Wealth Management and was chief executive and director of equity research at FusionIQ, a quantitative research firm. He is the author of “Bailout Nation.”
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