Take a sport where teams play in leagues and have a "final standing" each year, typically the proportion of games won, in which case the average over all teams must be 0.5. The regression effect predicts that, for a team with above average performance this year, say a final standing of 0.6, its final standing next year is likely to be >less than this year's 0.6.
(Analogously, for a team with below average performance this year, say a final standing of 0.4, its final standing next year is likely to be >more than this year's 0.4)
This effect will be more noticable for the best and worst teams of the year. The table shows data for the last 25 years. If we had made this prediction for each of the top 3 and bottom 3 teams, each year, how often would the regression prediction have been correct?
|Sport||Games||Teams||Predictions for||Proportion correct|
|U.K. Premier||38||20||Top 3||60%|
|Italy. Serie A||38||20||Top 3||68%|
|Spain. Primera||38||20||Top 3||60%|
|Germany. Bundesliga||34||18||Top 3||71%|
|Portugal. Europa||30||16||Top 3||53%|
|France. Ligue 1||38||20||Top 3||71%|
|Netherlands. Eredivisie||34||18||Top 3||64%|
"Games" is number of games per season; "teams" is number of teams in the league.
Data collected by Tung Phan, Fall 2009.