Productivity in Baseball: How Babe Ruth Beats the Benchmark

Many statistics are used to measure the productivity of hitters in Major League Baseball, such as the number of home runs and the number of runs batted in a season. However, comparing the talent of individual players across time is difficult as rules and technologies change. In this paper, we propose applying a practice commonly utilized in the finance literature to compare the performance of individual stocks and other assets, namely, we “benchmark” the productivity of each player’s performance to players in the same time period. Applying our benchmarking strategy to annual Major League Baseball data from 1871-2010, we find that Babe Ruth is the greatest hitter of all time.