Since 1997, Major League Baseball teams from the American League and National League have played each other during the regular season. The talk of fans these days is of the terrible beating the National League has taken.

Resident Scholar Kevin A. Hassett

They performed especially dismally against the best American League teams. Four American League teams were 12-2 or better against the National League; only two National league teams have winning inter-league records.

In the past, the records for inter-league play have been much more even. But this year's lopsided play isn't exactly an isolated phenomenon. The American League won seven of the 10 World Series between 1996 and 2005. The so-called junior circuit hasn't lost an All-Star game in nine years.

If baseball games were random events with evenly matched teams, they would be like a coin toss. While runs of “heads” or “tails” might happen, over time the two would even out. Is the American League's run a sign that the competitive balance has been upset? Maybe the National League should officially be declared a minor league? Or is it all bad luck?

Economic Mismatch?

Economics can shed light on the question. The first place to look is to see if there is an economic mismatch. Do National League teams operate under a natural disadvantage because they serve smaller metropolitan areas? The short answer is no.

Data from the U.S. Census suggest that the cities for the two leagues are about the same size. The average 2004 population for American League metropolitan areas was 5.8 million. The average for National League cities was 5.6 million. (Since my numbers come from U.S. sources, I have excluded Toronto from this and following calculations). A small difference, but not enough to matter.

Nor is population distributed differently between the two leagues. Of the five smallest cities in baseball, two are in the American League, three are in the National League.

Do National League teams operate under a disadvantage because their cities are less prosperous? Once again, the differences don't appear large. The average per capita income in American League cities in 2004 was about $44,000, while the average in National League cities was $43,000. The average gross metropolitan product of American League cities was $263 billion in 2004. It was about $245 billion in National League cities.

Average Revenue

Revenue data also suggest that the two leagues should be on fairly equal footing. Average revenue for American League teams in 2005 was $159 million. Average revenue for National League teams was $156 million. The small edge for the American League is entirely due to the New York Yankees, by far the highest-grossing team with revenue of a whopping $277 million in 2005. Excluding the Yankees, American League teams actually average about $6 million a year less in revenue than their National League counterparts.

One would expect, based on the economics, that over time teams from both leagues would have success in inter-league play with about equal frequency.

So why the disparity? The best candidate for an explanation is clearly the main rule difference between the leagues: the designated hitter. In games in National League parks, the pitcher bats. When games are played in American League parks, a much better hitter bats for the pitcher.

Stiffer Competition

Imagine if you got to choose whether the other team's pitcher would bat or a designated hitter. You would make the pitcher bat every time. It would be much easier to stop their offense. American League pitchers who pitch against American League lineups face much stiffer competition. They don't get an easy out at the bottom of the lineup.

Here, the principles of economics apply: Competition works. National League pitchers coast against weaker lineups, and then get shredded when they face the big boys. American League pitchers are tested by designated-hitter-laden lineups, and are forced to find ways to survive in a much tougher environment.

When the two are brought together, it's as if an invasive species is let loose on an island. National League teams are Hawaiian birds, and American League teams are foreign snakes from a harsher place that hitched a ride on a cruise ship. It's not fair.

If anything, it's a surprise that it's taken this long for the strong differences to emerge. Going forward, it seems unlikely that the situation will be reversed.

Which means that there really are three futures before us. In one, the National League adopts the designated-hitter rule. In the second (the one preferred by purists), the American League drops the designated hitter. In the third, the National League dissolves into a minor league.

Kevin A. Hassett is a resident scholar and director of economic policy studies at AEI.