Are the Pelicans heading for the best of times or for the worst of times? If you asked Dell Demps and most die-hard fans, I believe they would predict the former while realizing the latter is certainly a possibility. However, the national media (generally) seems to be concrete in their belief that the Pelicans and Anthony Davis are heading down the worst of times path.

Some of the noisiest authorities have speculated that Dell Demps, the Pelicans General Manager, has so grossly mislead this team that Anthony Davis and Pelicans are doomed to mediocrity.

"The Pelicans fell into a once-in-a-generation NBA talent in 2012 — and then proceeded to screw things up beyond belief"

In fact, those same writers have seen this season with such darkness as to speculate that Anthony Davis will leave after his rookie contract is over. Most of this analysis is premised on the philosophy that asset stocking draft picks is good and doing anything else is bad. The analysis below is not an attempt to negate that initial impression; rather, it is an attempt to explain why people in and outside the NBA react this way. i.e. why does the NBA value draft picks higher than proven talent?

The Long Voyage

In an article written by ESPN True Hoops Network's Ethan Strauss, Mr. Strauss compares the dueling philosophies of the Philadelphia 76er's General Manager, Sam Hinkie, and Dell Demps. Strauss does a terrific job of laying out the stratagem of each GM:

In a nutshell, Hinkie is trying to game the NBA draft system by evicting the Sixers roster of discernible talent in exchange for draft picks. Consequently, Hinkie has ensured, due to NBA rules pretty much guaranteeing the team with the worst record a high draft pick, that the Sixers will get a top four pick in the upcoming draft, and perhaps a few others. That lottery pick will join four other lottery picks from the previous two drafts: Michael Carter-Williams, Nerlens Noel, Dario Saric (currently overseas), and Joel Embiid. The 76er's also have the rights to Miami's 2015 first-round draft pick (protected) and about one dozen second round draft picks.

Comparatively, Dell Demps has eviscerated the Pelicans first round draft picks and bench talent in order to acquire young veterans. As a result, the Pelicans have one of the better starting five lineups in the NBA, well, at least on offense. The Pelican's major acquisitions included Jrue Holiday, a 23-year-old former All-Star point guard, Tyreke Evans, a 24-year-old former Rookie of the Year, and Omer Asik, a 28-year-old defensive minded center.

This year, the Pelicans are 17-16, and currently sit one game behind Phoenix for the 8th seed in the vaunted Western Conference. Meanwhile, the 76ers, who play in the garbage dump that is the Eastern Conference, are 4-28 and have the worst record in the NBA. Despite this, Strauss, along with other members of the national media, seem to believe that the 76ers have the better long-term prospects. The logical explanation being that draft picks and rookies have higher value than young veteran players as seen on the Pelicans.

"In trying to win, the Pelicans lost. Their only reason for hope is Davis and players to be added after the cap leaps higher in 2016." - "In contrast, the Sixers have possibilities . . . The present is despair, but the future is rich in potential."

This led me to wonder, why are draft picks and rookies valued so highly?

The Old Curiosity Shop

A large part of the reason draft picks are valued higher than even younger established players has to do with the theory of sunk costs. This theory sets out the idea that individuals do not factor in the value of the costs already expended.

For example, you stroll over to Ikea in order to buy a TV stand. After an hour of searching and comparing similar and substitute products, you finally find the perfect TV stand. Unfortunately, the clerk tells you that your desired TV stand is sold out. However, it is your lucky day as the clerk tells you he got permission to sell you the display model for a 20% discount. This kind situation happens fairly often -- display models are considered used, and discounted accordingly. However, the cost to the store for the display model should be more than the any non-display model: the store has to pay for the hours a worker took to set up the TV stand and the stand itself takes up valuable shelf space.

The theory about sunk costs can also be applied to the NBA. For example, when one measures a trade that involves an NBA player for draft picks, it's not often that we think about the cost incurred to create that particular NBA player's skill set. Such costs might include a draft pick, practice time and coaching effort along with many others. Still, all of these expenditures have some ascertainable costs to the organization, but the costs simply aren't measured because there is no way to recoup them. As a result, when comparing the NBA veteran to the draft pick, there is a tendency to value potential as a "free" benefit to which the draft pick has and the NBA player does not. However, this is patently false because it will take substantially similar costs that were incurred to develop the NBA veteran that it will take to develop the potential of the NBA draft pick. Hence, NBA GM's, the media, and NBA fans, often find themselves falling into what is known as the paradox of value.

The paradox of value is an idea that helps us understand why we always think the grass is greener on the other side. Even if that proverbial grass is a heaping pile of flaming garbage as in the case of the 76ers. The paradox of value is the idea that wants we have satisfied are less valuable than the wants we have yet to satisfy. In short, when a team satisfies a want, for example getting a superstar player, the value of a superstar player to that particular team is diminished. Likewise, the team's value for the type of player it does not have, say a true center, is increased.

As a consequence of this paradox, fans, media, and GM's alike, start to assign increased value to draft picks because they represent the satisfaction of an unfulfilled want. That increased value is assigned even though there is no assurance that those costs will ever return any value in the form of a star or quality NBA player. At most, there is only a probability of an assurance.

To put these probabilities in mathematical terms, back in 2012, Ryan Schwann over at Bourbon Street Shots examined the probabilities of the then Hornets (now Pelicans) of landing a star caliber player with their 1st and 10th picks in the 2012 draft.

Mr. Schwann found that if a team has a #1 pick in the NBA draft, they have about a 57% chance of landing a star player. (Someone who averages a 20+ PER over multiple seasons). However, after the first pick, teams odds to get a star drop dramatically. From picks 2-5, those odds fall to 34% chance of landing a star player. Outside of the top 5 picks, the team has less than a 17% chance of landing a star player. Moreover, once a team gets outside the top 10 draft picks, teams are more likely to get someone who is a bottom of the barrel guy (Below a 10.0 career PER) than any player who can contribute.

To put this in perspective, last year the Pelicans traded the 6th pick in the 2013 draft and the 10th pick in the 2014 draft for Jrue Holiday. If one simply looked at the probabilities together, and ignore the persons drafted, the Pelicans traded two 17% chances of landing a star player for Jrue Holiday. It's also worth noting that Jrue's PER has increased every season and currently sits just outside "star" territory at 18.3.

This year the Pelicans traded their 2015 draft pick for Omer Asik. As it currently stands, the Pelicans would have the 14th pick in this year's NBA Draft. If those standings hold up, the Pelicans will have traded a draft pick that is more than twice as likely to be out of the league after his rookie contract expires for a 16 PER starting center.

Finally, when grading the true value of lottery picks, consider this: in the past five years, 14 different teams have been in the lottery a majority of those years (3+ years). Of all 14 teams, only four are projected to make the playoffs this year. Two teams, the Washington Wizards and Golden State Warriors, drafted a superstar and successfully built through the draft. Three others, the Houston Rockets, Cleveland Cavaliers, and Toronto Raptors, traded the rights to their lottery picks for veteran star players. About half (six) of the teams: 76ers, Utah Jazz, Sacramento Kings, Detroit Pistons, Minnesota Timberwolves, and Charlotte Hornets, will be stuck in the Draft Lottery for the foreseeable future. The three remaining teams, the Pelicans, Phoenix Suns, and Milwaukee Bucks, are border-line playoff teams.

A Message from the Sea

As NBA fans, we experience this paradox of value daily; it is why so many of are on NBA Trade Machine until ungodly hours at night . But contemplate this: when given the choice between 100 dollars today or 100 dollars tomorrow, just about everything we have come to understand about basic economics tells us that 100 dollars today is inherently more valuable. In this case, time offers no enhancement of value but instead is an obstacle to actualizing true value. By analogy, we can deduce that a good team today is more valuable than the same caliber of team tomorrow. Hence, saying that the Sixers are in a better position today than the Pelicans because the Pelicans are in a "win now" mode while the Sixers are in a "win later" mode, must be considered categorically wrong.

The expectations of when a team is supposed to be successful has little bearing on if the team will be successful. In reality, those expectations only affect when others can start criticizing a team for not being successful. For example, take this years Dallas Cowboys. For years the Cowboys had high expectations and failed to live up to them. However, this year, the Cowboys were universally expected to be terrible. Contrary to those expectations, the Cowboys had their best year in a decade.

When comparing the Sixers and the Pelicans, there is no comparison. While it may satisfy some insatiable need to say the Sixers have potential, they lack something that is less based on strategy and more based on luck: drafting a true superstar. Not having a superstar doesn't mean that the Sixers strategy won't pay off in the long run. In fact, pot odds statistics would suggest that given enough time, the Sixers can draft their next superstar. But, it just hasn't happened yet, and, due to the laws of independent probabilities, it may never happen.

So national media, the next time you want to compare the Pelicans to the Sixers, do us all a favor, take a deep breath, and don't.

If you made it this far, big shout for reading all of my article. If you have an opinion about something I wrote, be sure to leave it in the comments below. There will likely be a follow up piece in the coming weeks that takes a more defensive position on why GM's should trade lottery picks. For more brilliance you can follow me on twitter @jdbillio.