Last night I found myself watching Steve Waldman’s talk at the 2011 Economic Bloggers Forum at the Kaufman Foundation. I’m a big fan of Waldman’s blog Interfluidity. His talk was interesting and thought-provoking, like his writing. I suggest you watch it.
After expressing outrage at the failure of control systems and the political system after the financial crisis, Waldman asks the question, why are we where we are? His answer: there’s a monopoly of power in this country even as information itself is increasingly available. The monopoly of power is extremely correlated, of course, to the rising wealth inequality, beautifully visualized in this recent video (h/t Leon Kautsky, Debika Shome) by Politizane.
The solution, he hopes, may include the blogosphere (although it’s not a perfect place either, with its own revolving doors, weird incentives and possibly conflicts of interest). The work of bloggers is valuable social capital, Steve argues, so how do we deploy it?
Steve introduced the concept of policy entrepreneurs, which have three characteristics:
- They are sources of information in the form policy ideas. They possible even write laws.
- They have some kind of certification in order to cover the policy maker’s ass.
- They exert some kind of influence on policy makers, to create incentives for their policy goals.
In other words, a policy entrepreneur is someone in the business of shaping policy makers’ agendas.
If you stop there, you might think “lobbyist,” and you’d be right. But the problem with our current lobbyist system is not the above three characteristics, but rather that it’s a such a closed system. In other words, you essentially need to be rich to be an influential lobbyist (or at least, as an influential lobbyist, you are backed by enormous wealth), but then that increases the monopolistic nature of political power. It doesn’t solve our “monopoly of power” problem.
The question becomes, is there a way for normal people, or groups of people, to be policy entrepreneurs?
One possible solution, Waldman suggests, is to from a parliament of bloggers. Since groups are taken seriously, can bloggers form official groups in which they gain consensus around a topic and issue policy?
An intriguing idea, and I like it because it’s not really abstract: if bloggers decided to try this, they could literally just form a group, call ourselves a name, and start issuing policy proposals. Of course they’d probably not get anywhere unless we had influence or leverage.
Does something like this already exist? The closest thing I can think of is the hacker group Anonymous - although they might not be bloggers, they might be. They’re anonymous. I’m going to guess they are active on the web even if they don’t specifically blog. In any case, let’s see if they qualify as policy entrepreneurs in the above sense.
- They don’t issue specific policy proposals, but they certainly object clearly to policies they don’t like.
- Their credentials lie in their unparalleled ability to take control of information systems.
- Likewise, their leverage is fierce in this domain.
In all, I don’t think Anonymous fits the bill – they’re too devoted to anarchy to deliver policy in the sense that Waldman suggests, and their tools are too crude to make fine points. This might have to do with the nature of hackers in general (keeping in mind that Anonymous stand for something far more extreme than the average hacker), which I read about in an essay by Paul Graham yesterday (h/t Chris Wiggins):
Here’s another problem: aren’t bloggers in general kind of their own 1%? Is policy via a “parliament of bloggers” not enough of an improvement to the current system of insiders?
What about if Occupy got into the idea of being a vehicle of policy entrepreneurship? Even though we tend not to support specific political candidates in Occupy, we do consistently think about policy and decide whether to endorse a given bill or policy proposal. Could we, instead of commenting on existing policy, start thinking about proposing new policy, even to the point of writing new laws?
On the one hand such work requires enormously long discussions and difficult-to-obtain consensus, but on the other hand we have the knowledge, the abilities, and the moral persuasion. Do we have the influence? And would Occupiers think exerting influence on policy in the current corrupt system tantamount to selling out?
I’m pretty sure you guys know this already, but I love my regular readers and commenters. It’s a large part of why I blog – I feel like I’m having a super interesting cocktail party every morning in my underwear. I’m investing in the quality of the rest of my day, stealing a moment before my family wakes up so I can articulate one single idea. The payoff is, most of the time, dependably good conversation that lasts all day, or even more than a day, as your comments and emails come in.
Of course, there are sometimes nasty people and comments in addition to thoughtful ones. Not everyone interprets me as trying to figure stuff out, they think I’m being intentionally asinine or manipulative. Or sometimes they just don’t agree with me, and instead of explaining their reasoning they just yell. Or sometimes they are just jerks, getting out their aggression on a stranger.
My first rule is to allow comments that disagree with me, as long as the reasons are articulated and as long as the comment isn’t abusive. Rude is ok, “you are stupid” is not ok.
My second rule is to have a thick skin. I can completely ignore the sentiment of an abusive commenter calling me names, because first of all I’ve heard it all before and second I’m pretty sure it’s not about me.
I’m not saying it doesn’t bother me at all, because obviously it’s a pain to have to go through my email and make sure people are being civil.
For example, whenever I get onto the top 10 of Hacker News, which has been a few times now, I’ve noticed a huge wave of nasty comments. Of course this could be a direct result of how many people I get (thousands per hour), but I don’t think so – the ratio of interesting to abusive comments coming from Hacker News traffic is tiny. It creates nasty work for me, which I feel compelled to do because letting nasty comments stay on my blog makes me feel violated and intentionally misunderstood.
This morning I found this article via Naked Capitalism regarding reader comments, and how nasty ones make subsequent readers evaluate the message differently, and in particular, more negatively. In other words, my intuition was right – it’s super important to curate comments.
My experience with Hacker News has also given me sympathy for Izabella Laba‘s position that she doesn’t accept comments on her blog (read this post for example). She puts herself out there, with strong opinions, and many of her posts are important and thought-provoking. And by the same token people can get pretty threatened by what she has to say. I can well imagine what her experience has been. What if every day was a Hacker News day? What if a majority of comments contained ridiculous and personal attacks? Yuck.
Makes me even more grateful to have you guys.
There are various ways of deciding how valuable something is. People spend some amount of time talking about “the current value of future earnings til the end of time” as a rule-of-thumb measurement. That sometimes works (i.e. jives with what the selling price is), but it’s certainly not robust – in a given case, plenty of people think there’s a good reason a stock should be worth more than that, if their personal growth projections are rosy (you could argue that they are still valuing future earnings, but they’ve got a different projection than, say, the current dividends continued as is. Another possibility is that they’re simply valuing future values coming from other people). Similarly, some stocks are underpriced with respect to this baseline. Could it be that they’re cooking their books? If they don’t last til the end of time then they could hardly be making earnings til then (Groupon).
Of course when you go down that road, nothing lasts til the end of time. Never mind companies, the industry in which the company sits will be dead before too long unless it’s food or cosmetics.
Anyway, throw out the future earnings price for a moment, and replace it by something else entirely: there’s a certain amount of money invested in the (international) market at a given moment, and it has to go somewhere. I think of it as a big pot that sloshes around and achieves equilibrium depending on various things like relative interest rates in different countries, and to a lesser extent, regulation in different countries and access to markets. Like, the carry trade is kind of a big deal, and depends almost entirely on the Japanese interest rate being tiny.
Of course it’s not really that simple, since people can and do remove money from the market at certain times – it’s not a closed system. But not as much money is removed as you might think, because if you think about it, lots of people have set up their livelihoods to be investing large pots of money, so they need to appear busy.
Articles like this one from Bloomberg make me think about the “where should we put our money that we need to invest somewhere?” effect is particularly strong right now. We see people “chasing yield” in the junk bond market, buying junk bonds that have positive yields because their options are limited while the Fed keeps the rates really low (this is not a side-effect of the Fed’s keeping the rates low, it’s their goal. They want people to invest in financing businesses, which is what buying junk bonds is).
But they (the investors) all want the same stuff, so the prices are too
low high, which is another way of saying the yields are a lot lower than they’d otherwise be if there were other things to buy. This might be a good example of where the price of junk debt is not particularly good at exposing the actual risk of default. Well, it might be an ok indicator of the very short-term default rate, but that’s just because money is so cheap right now, businesses in trouble can just borrow more. It’s kind of a set-up for a bubble.
The article makes the point that once the Fed raises rates, people will flee this market, since they will actually be able to make money again with less risky bonds. The slower actors will be left with much-reduced-in-value junk debt. The big pot of money which is the market will have an entirely new equilibrium point, and there will be lots of death and destruction in the transition. It’s become even more crucial than usual to time the Fed’s moves, but keep in mind money managers are going to stay in there as long as they possibly can because they don’t want to miss yield while their bonuses depend on it (“opportunity costs”). It’s a game of chicken.
Staying with the meta-analysis, can someone do a back-of-the-envelope estimate of how much built-in interest rate risk we’ve taken on by the issuance of so much junk debt in the overall international portfolio? Is it sizeable?
A couple of nights I ago I attended this event at Columbia on the topic of ”Rent-Seeking, Instability and Fraud: Challenges for Financial Reform”.
The event was great, albeit depressing – I particularly loved Bill Black‘s concept of control fraud, which I’ll talk more about in a moment, as well as Lynn Turner‘s polite description of the devastation caused by the financial crisis.
To be honest, our conclusion wasn’t a surprise: there is a lack of political will in Congress or elsewhere to fix the problems, even the low-hanging obvious criminal frauds. There aren’t enough actual police to take on the job of dealing with the number of criminals that currently hide in the system (I believe the statistic was that there are about 1,000,000 people in law enforcement in this country, and 2,500 are devoted to white-collar crime), and the people at the top of the regulatory agencies have been carefully chosen to not actually do anything (or let their underlings do anything).
Even so, it was interesting to hear about this stuff through the eyes of a criminologist who has been around the block (Black was the guy who put away a bunch of fraudulent bankers after the S&L crisis) and knows a thing or two about prosecuting crimes. He talked about the concept of control fraud, and how pervasive control fraud is in the current financial system.
Control fraud, as I understood him to describe it, is the process by which a seemingly legitimate institution or process is corrupted by a fraudulent institution to maintain the patina of legitimacy.
Once you say it that way, you recognize it everywhere, and you realize how dirty it is, since outsiders to the system can’t tell what’s going on – hey, didn’t you have overseers? Didn’t they say everything was checking out ok? What the hell happened?
So for example, financial firms like Bank of America used control fraud in the heart of the housing bubble via their ridiculous accounting methods. As one of the speakers mentioned, the accounting firm in charge of vetting BofA’s books issued the same exact accounting description for many years in the row (literally copy and paste) even as BofA was accumulating massive quantities of risky mortgage-backed securities (update: I’ve been told it’s called an “Auditors Report” and it has required language. But surely not all the words are required? Otherwise how could it be called a report?). In other words, the accounting firm had been corrupted in order to aid and abet the fraud.
To get an idea of the repetitive nature and near-inevitability of control fraud, read this essay by Black, which is very much along the lines of his presentation on Tuesday. My favorite passage is this, when he addresses how our regulatory system “forgot about” control fraud during the deregulation boom of the 1990′s:
On January 17, 1996, OTS’ Notice of Proposed Rulemaking proposed to eliminate its rule requiring effective underwriting on the grounds that such rules were peripheral to bank safety.
“The OTS believes that regulations should be reserved for core safety and soundness requirements. Details on prudent operating practices should be relegated to guidance.
Otherwise, regulated entities can find themselves unable to respond to market innovations because they are trapped in a rigid regulatory framework developed in accordance with conditions prevailing at an earlier time.”
This passage is delusional. Underwriting is the core function of a mortgage lender. Not underwriting mortgage loans is not an “innovation” – it is a “marker” of accounting control fraud. The OTS press release dismissed the agency’s most important and useful rule as an archaic relic of a failed philosophy.
Here’s where I bring mathematics into the mix. My experience in finance, first as a quant at D.E. Shaw, and then as a quantitative risk modeler at Riskmetrics, convinced me that mathematics itself is a vehicle for control fraud, albeit in two totally different ways.
In the context of hedge funds and/or hard-core trading algorithms, here’s how it works. New-fangled complex derivatives, starting with credit default swaps and moving on to CDO’s, MBS’s, and CDO+’s, got fronted as “innovation” by a bunch of economists who didn’t really know how markets work but worked at fancy places and claimed to have mathematical models which proved their point. They pushed for deregulation based on the theory that the derivatives represented “a better way to spread risk.”
Then the Ph.D.’s who were clever enough to understand how to actually price these instruments swooped in and made asstons of money. Those are the hedge funds, which I see as kind of amoral scavengers on the financial system.
At the same time, wanting a piece of the action, academics invented associated useless but impressive mathematical theories which culminated in mathematics classes throughout the country that teach “theory of finance”. These classes, which seemed scientific, and the associated economists described above, formed the “legitimacy” of this particular control fraud: it’s math, you wouldn’t understand it. But don’t you trust math? You do? Then allow us to move on with rocking our particular corner of the financial world, thanks.
I also worked in quantitative risk, which as I see it is a major conduit of mathematical control fraud.
First, we have people putting forward “risk estimates” that have larger errorbars then the underlying values. In other words, if we were honest about how much we can actually anticipate price changes in mortgage backed securities in times of panic, then we’d say something like, “search me! I got nothing.” However, as we know, it’s hard to say “I don’t know” and it’s even harder to accept that answer when there’s money on the line. And I don’t apologize for caring about “times of panic” because, after all, that’s why we care about risk in the first place. It’s easy to predict risk in quiet times, I don’t give anyone credit for that.
Never mind errorbars, though- the truth is, I saw worse than ignorance in my time in risk. What I actually saw was a rubberstamping of “third part risk assessment” reports. I saw the risk industry for what it is, namely a poor beggar at the feet of their macho big-boys-of-finance clients. It wasn’t just my firm either. I’ve recently heard of clients bullying their third party risk companies into allowing them to replace whatever their risk numbers were by their own. And that’s even assuming that they care what the risk reports say.
Overall, I’m thinking this time is a bit different, but only in the details, not in the process. We’ve had control fraud for a long long time, but now we have an added tool in the arsenal in the form of mathematics (and complexity). And I realize it’s not a standard example, because I’m claiming that the institution that perpetuated this particular control fraud wasn’t a specific institution like Bank of America, but rather then entire financial system. So far it’s just an idea I’m playing with, what do you think?
If you having trouble falling asleep some time, but you’re too tired to actually read things that require anything more than amusement, amazement, and bafflement, then let me suggest you watch a bit of Sasuke, also known as the Japanese version of American Ninja Warrior (hat tip Johan de Jong).
I dare you to watch only five minutes of the following final round (here’s the competition from the beginning if you are hardcore) in which the last surviving American gets expelled almost immediately and it’s down to the last few Japanese competitors. It’s extra fun for it to be in Japanese because then you get to add in dubbing, kind of like Iron Chef used to be back before it became Americanized:
Hey I’ve just gotten my first shipment of mathbabe t-shirts and I love them so much I’ve made them available to anyone to order from Zazzle.
Here’s me wearing my t-shirt (my new logo is courtesy of my buddy Julie Steele):
And here’s the back:
But if that’s too strident for you, don’t despair! There’s an alternative back:
I know it’s a pretty good design because my fashion-focused 10-year-old wants one.
Here’s what you do if you want your very own mathbabe t-shirt:
- You will have to go to zazzle.com and start an account if you don’t already have one. I’m sorry about this but the alternative was to buy them all for you and then send them all to you separately, which I don’t have time for.
- Then go to this page on zazzle.com to buy the first version, or
- to this page on zazzle.com to get the more subdued second version.
- I’m also selling a mathbabe coffee mug.
- I’m also open to other products, tell me what you think.
Today’s post goes out to all the phenomenal women I am lucky to know and to love. It’s a gorgeous song based on this poem by Maya Angelou (h/t Becky Jaffe).
Apologies for the self-indulgent posts two days in a row, but I’m looking for ideas for a mathbabe logo. I have a coffee mug and a shirt already, because for whatever reason zazzle.com already had a mathbabe logo when I checked, and it looks like this:
The problem is that I’m not exactly a pink frilly person, although I’ve made do with a black T-shirt background.
And I need this why? Because I’m thinking of making some mathbabe t-shirts and paraphernalia to give to people and/or sell (partly because I’m jealous of the stack project t-shirts I see all over the neighborhood).
Anyway, if anyone has ideas for a new graphic, or a designer friend who needs money (not too much I hope), or better yet a sample graphic, please get in touch with me, thanks! My email is on the “About” page.
A few days ago I read a New York Times interview of Ray Kurzweil, who thinks he’s going to live forever and also claims he will cure cancer if and when he gets it (his excuse for not doing it in his spare time now: “Well, I mean, I do have to pick my priorities. Nobody can do everything.”). He also just got hired at Google.
As a joke I suggested that Google employees read the interview and then quit their job.
My reasoning went like this: if someone who is clearly narcissistic and delusional gets hired by your company, and given a position much higher than you (Kurzweil’s title is “Director of Engineering,” and although that doesn’t mean he is in charge of everyone in Engineering, it is nonetheless a high position), then you can give up all hope of ever being promoted based on your actual contributions. Companies have natural stages in their lives, and Google has evidently reached the stage of hiring “thought leaders” who nobody could actually work with but are somehow aligned with the agenda of the leadership.
Since then I’ve learned a bit more about Kurzweil, and about the Singularity Institute (based on the idea that computers will become self-aware and super-intelligent which will culminate in a very special moment for some parts of humanity), and the related ideologies of Futurism (fetishizing technology), Transhumanism (the idea we are going to be immortal), and “human rationality” as espoused by the blog lesswrong. Note I usually link to wikipedia articles but in the above cases, especially for the Singularity Institute, the associated wikipedia article is suspiciously sanitized of actual information.
A lot of my research is covered in this New York Times article from 2010 about the Singularity Institute’s opening. In particular it describes the close relationship between the Google royalty and the Singularity Institute. Suffice it to say there is a serious relationship between the founders of Google and this Institute.
But I’m not writing this to point out the number of ties between those institutions – this is well-documented in the above article and has only grown more obvious with the recent acquisition of Kurzweil.
And I’m also not writing to suggest that the Singularity Institute is a cult. I honestly think they make the case better than I could when the Executive Director, Luke Meuhlhauser, posts things entitled “So You Want to Save the World” wherein he states:
The best way for most people to help save the world is to donate to an organization working to solve these problems, an organization like the Singularity Institute or the Future of Humanity Institute.
Don’t underestimate the importance of donation. You can do more good as a philanthropic banker than as a charity worker or researcher.
It’s really that last sentence I want to focus on. It’s where the creepy elitism of this ideology comes out. Because make no mistake, this is a massive circle jerk for techie men (mostly men) to think of themselves as joining up with gods due to their superior intelligence and creativity.
Whatever, I’ve been around nerds all my life, and it’s nothing new to me that some of them want intelligence to count for more than just getting an edge in education and the job market. Somehow this ideology creates a hunger for much more than that: immortality, for one, and the feeling of being chosen.
You see, I believe in incentives. I want to prepare myself for what people will do next based on what I think their incentives are, and these Singularity Institute guys are on the one hand pretty hardcore with their beliefs, and on the other hand infiltrating Google, which is an incredibly powerful force in an essentially unregulated domain. So what are their plans?
Just to give you an idea, check out this line from Vernor Vinge’s now famous 1993 essay on the Singularity (emphasis mine):
Suppose we could tailor the Singularity. Suppose we could attain our most extravagant hopes. What then would we ask for: That humans themselves would become their own successors, that whatever injustice occurs would be tempered by our knowledge of our roots. For those who remained unaltered, the goal would be benign treatment (perhaps even giving the stay-behinds the appearance of being masters of godlike slaves). It could be a golden age that also involved progress (overleaping Stent’s barrier). Immortality (or at least a lifetime as long as we can make the universe survive  ) would be achievable.
A few comments:
- Vinge didn’t think the singularity was inevitable when he wrote that.
- Vinge recently spoke at the October 2012 Singularity Summit hosted by the Singularity Institute (along with Director of Research from Google, Peter Norvig). Here’s a video.
- The “stay-behinds” are the people who don’t get to transcend with the machines if and when the Singularity occurs.
Personally, I have fun thinking about the Singularity. I think it’s already happened, in fact, and my best argument for why machines are already smarter than us is this: when someone much smarter than you is saying something, maybe not to you, you don’t always know that that person is smarter – sometimes it just feels like they’re being confusing. But that’s exactly how we humans all feel about this mess we’ve made with the financial system: we are confused by it, we don’t understand it, and moreover we have no hope of dumbing it down to our level. That’s a sign it is superintelligent. Maybe not self-aware, but on the other hand how can you test that? In this light, the “stay-behinds” are Canadians.
Also, I totally believe everyone has the right to their own opinions, and for that matter they have a right to join a cult if they feel like it. In fact people who want to live forever, you could argue, are more likely to take care of the environment and their own children, because those are major investments for them.
On the other hand, what is their plan for the rest of us? Is it to, like Vinge says, give us the appearance of being masters of godlike slaves? Are those slaves our smart phones? Are we being intentionally shepherded into an artificial existence of play-power? Because I’ve suspected that very thing ever since I read the Filter Bubble. What else, especially in the context of the ongoing competition for resources?
The Singularity may never happen, or it may already have happened- that’s irrelevant to me. My thought experiment is this:
What are the consequences of a bunch of people who believe in something called the Singularity and who are also in control of a powerful company?
Got home from Nebraska last night, and I’ve learned an important lesson about how it feels to be a snob. Because, as it turns out, I’m unequivocally a snob in ways I didn’t even realize.
So, I couldn’t find good coffee in Lincoln. That is, in the hotel they had a coffee maker with a tiny pod, and I made myself two cups the first morning I got there, then I went downstairs and drank two more cups of the free coffee you get with the free breakfast and I swear it was hot water.
Then I looked around and wondered, where can I get something with caffeine in it?? After asking a few people this question, I suddenly realized: this is what it feels like to be a snob. Internally it feels weird that other people don’t have the same standards, but externally it looks like a smart-ass New Yorker complaining about the quality of free things.
Next: people would be walking around the hotel in what seemed like pajamas. Not the mathematicians, who came from everywhere, but the other guests in the hotel. They were young, maybe in college, and I swear they were wearing pajamas all the time. Sometimes they switched it up and wore clothes you might wear when watching a football game on the sofa.
Then I realized: people in New York spend way too much time getting all dolled up, and I used to know that, but nowadays I’m just used to it. So this is what is feels to be a snob.
Good to know, because:
- Next time someone who’s a huge snob talks to me I’ll have more empathy and explain the situation in clear sentences: you are looking like a snob because you have different standards, and the sooner you understand that the better for everyone.
- Next time I travel I plan to bring my own coffee and possibly even my own coffee maker, which I used to think is crazy snobby but now I get it – it actually saves time versus searching on foot in the winter for a good cup of coffee in a town you are unfamiliar with. I’m embracing my snobbery, people.
- Although then again maybe I’ll just bring a big ol’ vat of Nodoz.
Everyone should get a yarn whisperer. Here’s mine:
What does a yarn whisperer provide, you ask? Among other things:
- continuous advice on how to use the yarn you have,
- unadulterated enabling of buying more yarn that you don’t need, and
- companionship to annual “yarn events” (where #2 above takes place with wild abandon)
Yesterday me and my yarn whisperer went to Knitting Vogue Live (or VKL for those in the know), held at the Times Square Marriott. It was extra fancy, by knitting standards, which if you don’t know what that is, think Star Trek conventions for the knitterlati.
We had our very own knitting fashion show:
Just take another look at this packed crowd:
I was amazed to meet Alasdair Post-Quinn:
Alisdair is the author of the book “Extreme double knitting”:
And he does incredible double-knitting work. I told him he’s a mathematician, even if he wasn’t trained. Here are some examples:
And here’s the back of the trees one:
I got a huge kick out of staring at people’s backs yesterday:
I also enjoyed meeting this man with ENORMOUS KNITTING NEEDLES:
And the yarn sculptures were super:
Thank you, oh yarn whisperer!
In yesterday’s New York Times Science section, there was an article called “Life in the Red” (hat tip Becky Jaffe) about people’s behavior when they are in debt, summed up by this:
The usual explanations for reckless borrowing focus on people’s character, or social norms that promote free spending and instant gratification. But recent research has shown that scarcity by itself is enough to cause this kind of financial self-sabotage.
“When we put people in situations of scarcity in experiments, they get into poverty traps,” said Eldar Shafir, a professor of psychology and public affairs at Princeton. “They borrow at high interest rates that hurt them, in ways they knew to avoid when there was less scarcity.”
The psychological burden of debt not only saps intellectual resources, it also reinforces the reckless behavior, and quickly, Dr. Shafir and other experts said. Millions of Americans have been keeping the lights on through hard times with borrowed money, running a kind of shell game to keep bill collectors away.
So what we’ve got here is a feedback loop of poverty, which certainly jives with my observations of friends and acquaintances I’ve seen who are in debt.
I’m guessing the experiments described in the article are not as bad as real life, however.
I say that because I’ve been talking on this blog as well as in my recent math talks about a separate feedback loop involving models, namely the feedback loop whereby people who are judged poor by the model are offered increasingly bad terms on their loans. I call it the death spiral of modeling.
If you think about how these two effects work together – the array of offers gets worse as your vulnerability to bad deals increases – then you start to understand what half of our country is actually living through on a day-to-day basis.
As an aside, I have an enormous amount of empathy for people experiencing this poverty trap. I don’t think it’s a moral issue to be in debt: nobody wants to be poor, and nobody plans it that way.
This opinion article (hat tip Laura Strausfeld), also in yesterday’s New York Times, makes the important point that listening to a bunch of rich, judgmental people like David Bach, Dave Ramsey, and Suze Orman telling us it’s our fault we haven’t finished saving for retirement isn’t actually useful, and suggest we individually choose a money issue to take charge and sort out.
So my empathetic nerd take on poverty traps is this: how can we quantitatively measure this phenomenon, or more precisely these phenomena, since we’ve identified at least two feedback loops?
One reason it’s hard is that it’d be hard to perform natural tests where some people are submitted to the toxic environment but other people aren’t – it’s the “people who aren’t” category that’s the hard part, of course.
For the vulnerability to bad terms, the article describes the level of harassment that people receive from bill collectors as a factor in how they react, which doesn’t surprise anyone who’s ever dealt with a bill collector. Are there certain people who don’t get harassed for whatever reason, and do they fall prey to bad deals at a different rate? Are there local laws in some places prohibiting certain harassment? Can we go to another country where the bill collectors are reined in and see how people in debt behave there?
Also, in terms of availability of loans, it might be relatively easy to start out with people who live in states with payday loans versus people who don’t, and see how much faster the poverty spiral overtakes people with worse options. Of course, as crappy loans get more and more available online, this proximity study will become moot.
It’s also going to be tricky to tease out the two effects from each other. One is a question of supply and the other is a question of demand, and as we know those two are related.
I’m not answering these questions today, it’s a long-term project that I need your help on, so please comment below with ideas. Maybe if we have a few good ideas and if we find some data we can plan a data hackathon.
I didn’t know Aaron Swartz personally, but I’ve been reading about his life and death (hat tip Suresh Naidu) in the past day and he was clearly a remarkable thinker. His writing about procrastination in the context of computer programming (hat tip Matt Stoller) is particularly resonant. From the essay:
Yes it’s painful, but the trick is to make that mental shift. To realize that the pain isn’t something awful to be postponed and avoided, but a signal that you’re getting stronger — something to savor and enjoy. It’s what makes you better.
Pretty soon, when you start noticing something that causes you psychic pain, you’ll get excited about it, not afraid. Ooh, another chance to get stronger. You’ll seek out things you’re scared of and intentionally confront them, because it’s an easy way to get the great rewards of self-improvement. Dalio suggests thinking of each one as a puzzle, inside of which is embedded a beautiful gem. If you fight through the pain to solve the puzzle, you unlock it and get to keep the gem.
The trick is: when you start feeling that psychological pain coming on, don’t draw back from it and cower — lean into it. Lean into the pain.
You should really read the whole thing. Aaron explains something about good coding practices that elevates coding to a philosophical activity (which it deserves but rarely achieves) and, like any good philosophy, makes us reconsider how we spend our time and what we choose to do with it.
I know exactly what pain I’m leaning into this morning.
Yesterday I read this New York Times article which explains the so-called “end of history illusion,” a fancy way of saying that as we acknowledge having changed a lot in the past, we project more of the same into the future.
I guess this is supposed to mean we always see the present moment as the end of history. From the article:
“Middle-aged people — like me — often look back on our teenage selves with some mixture of amusement and chagrin,” said one of the authors, Daniel T. Gilbert, a psychologist at Harvard. “What we never seem to realize is that our future selves will look back and think the very same thing about us. At every age we think we’re having the last laugh, and at every age we’re wrong.”
For the record I thought my teenage self was pretty awesome, and it was the moment in my life where I actually lived as best I could avoiding hypocrisy. I never laugh at my teenage self, and I’m always baffled that other people do – think of everything we had to understand and deal with all at once! But back to the end of history.
Scientists explain the phenomenon by suggesting it’s good for our egos to think we are currently perfectly evolved and won’t need to modify anything in our beliefs. Another possibility they come up with: we are too lazy to do better than this, and it’s easier to remember the past than it is to think hard about the future.
Here’s another explanation that I came up with: we have no idea what the future holds, nor whether we will become more or less conservative, more or less healthy, or more or less irritable, etc., so in expectation we will be exactly the same as we are now. Note that’s not the same as saying we actually will be the same, it’s just that we don’t know which direction we’ll move.
In other words, we are doing something different when we look into the future than when we look into the past, and the honest best guess of our future selves may well be our current selves.
After all, we don’t know what random events will occur in the future (like getting hit by a car and breaking our leg, say) that will effect us, and the best we can go is our current plans for ourselves.
Even so, it’s interesting to think about how I’ve changed over my lifetime and continue the trend into the future. If I do that, I evoke something that is clearly not an extrapolation of my current self.
In particular, I can project that I will be very different in 10 years, more patient, more joyful, doing god knows what for a living (if I’m not totally broke), even more opinionated than I am now, and much much wiser about how to raise teenage sons. Come to think of it, I can’t wait!
I was thinking the other day how much I’ve gotten out of writing this blog. I’m incredibly grateful for it, and I want you to consider starting a blog too. Let’s go through the pros and cons:
- A blog forces you to articulate your thoughts rather than having vague feelings about issues.
- This means you get past things that are bothering you.
- You also get much more comfortable with writing, because you’re doing it rather than thinking about doing it.
- If your friends read your blog you get to hear what they think.
- If other people read your blog you get to hear what they think too. You learn a lot that way.
- Your previously vague feelings and half-baked ideas are not only formulated, but much better thought out than before, what with all the feedback. You’ll find yourself changing your mind or at least updating and modifying lots of opinions.
- You also get to make new friends through people who read your blog (this is my favorite part).
- Over time, instead of having random vague thoughts about things that bug you, you almost feel like you have a theory about the things that bug you (this could be a “con” if you start feeling all bent out of shape because the world is going to hell).
- People often think what you’re saying is dumb and they don’t resist telling you (you could think of this as a “pro” if you enjoy growing a thicker skin, which I do).
- Once you say something dumb, it’s there for all time, in your handwriting, and you’ve gone on record saying dumb things (that’s okay too if you don’t mind being dumb).
- It takes a pretty serious commitment to write a blog, since you have to think of things to say that might interest people (thing you should never say on a blog: “Sorry it’s been so long since I wrote a post!”).
- Even when you’re right, and you’ve articulated something well, people can always dismiss what you’ve said by claiming it can’t be important since it’s just a blog.
Advice if you’ve decided to go ahead and start a blog
- Set aside time for your blog every day. My time is usually 6-7am, before the kids wake up.
- Keep notes for yourself on bloggy subjects. I write a one-line gmail to myself with the subject “blog ideas” and in the morning I search for that phrase and I’m presented with a bunch of cool ideas.
- For example I might write something like, “Can I pay people to not wear moustaches?” and I leave a link if appropriate.
- I try to switch up the subject of the blog so I don’t get bored. This may keep my readers from getting bored but don’t get too worried about them because it’s distracting.
- My imagined audience is almost always a friend who would forgive me if I messed something up. It’s a friendly conversation.
- Often I write about something I’ve found myself explaining or complaining about a bunch of times in the past few days.
- Anonymous negative comments happen, and are often written by jerks. Try to not take them personally.
- Try to accept criticism if it’s helpful and ignore it if it’s hurtful. And don’t hesitate to delete hurtful comments. If that jerk wants a platform, he or she can start his or her own goddamn blog.
- Never feel guilty towards your blog. It’s inanimate. If you start feeling guilty then think about how to make it more playful. Take a few days off and wait until you start missing your blog, which will happen, if you’re anything like me.
I’m up in Western Massachusetts with the family, hidden off in a hotel with a pool and a nearby yarn superstore. My blogging may be spotty for the next few days but rest assured I haven’t forgotten about mathbabe (or Aunt Pythia).
I have just enough time this morning to pose a thought experiment. It’s in three steps. First, read this Reuters article which ends with:
Imagine if Starbucks knew my order as I was pulling into the parking lot, and it was ready the second I walked in. Or better yet, if a barista could automatically run it out to my car the exact second I pulled up. I may not pay more for that everyday, but I sure as hell would if I were late to a meeting with a screaming baby in the car. A lot more. Imagine if my neighborhood restaurants knew my local, big-tipping self was the one who wanted a reservation at 8 pm, not just an anonymous user on OpenTable. They might find some room. And odds are, I’d tip much bigger to make sure I got the preferential treatment the next time. This is why Uber’s surge pricing is genius when it’s not gouging victims of a natural disaster. There are select times when I’ll pay double for a cab. Simply allowing me to do so makes everyone happy.
In a world where the computer knows where we are and who we are and can seamlessly charge us, the world might get more expensive. But it could also get a whole lot less annoying. ”This is what big data means to me,” Rosensweig says.
Second, think about just how not “everyone” is happy. It’s a pet peeve of mine that people who like their personal business plan consistently insist that everybody wins, when clearly there are often people (usually invisible) who are definitely losing. In this case the losers are people whose online personas don’t correlate (in a given model) with big tips. Should those people not be able to reserve a table at a restaurant now? How is that model going to work?
And now I’ve gotten into the third step. It used to be true that if you went to a restaurant enough, the chef and the waitstaff would get to know you and might even keep a table open for you. It was old-school personalization.
What if that really did start to happen at every restaurant and store automatically, based on your online persona? On the one hand, how weird would that be, and on the other hand how quickly would we all get used to it? And what would that mean for understanding each other’s perspectives?
I’ve really enjoyed the discussion on my post from yesterday about MOOCs and how I predict they are going to affect the education world. I could be wrong, of course, but I think this stuff is super interesting to think about.
One thing I thought about since writing the post yesterday, in terms of math departments, is that I used to urge people involved in math departments to be attentive to their calculus teaching.
The threat, as I saw it then, was this: if math departments are passive and boring and non-reactive about how they teach calculus, then other departments which need calculus for their majors would pick up the slack and we’d see calculus taught in economics, physics, and engineering departments.
The reason math departments should care about this is that calculus is the bread and butter of math departments – math departments in other countries who have lost calculus to other departments are very small. If you only need to teach math majors, it doesn’t require that many people to do that.
But now I don’t even bother saying this, because the threat from MOOCs is much bigger and is going to have a more profound effect, and moreover there’s nothing math departments can do to stop it. Well, they can bury their head in the sand but I don’t recommend it.
Once there’s a really good calculus sequence out there, why would departments continue to teach the old fashioned way? Once there’s a fantastic calculus-for-physics MOOC, or calculus-for-economics MOOC available, one would hope that math departments would admit they can’t do better.
Instead of the old-fashioned calculus approach they’d figure out a way to incorporate the MOOC and supplement it by forming study groups and leading sections on the material. This would require a totally different set-up, and probably fewer mathematicians.
Another thing. I think I’ve identified a few separate issues in the discussion that it makes sense to highlight. There are four things (at least) that are all rolled together in our current college and university experience:
- learning itself,
- research, and
So, MOOCs directly address learning but clearly want to control something about credentialing too, which I think won’t necessarily work. They also affect research because the role of professor as learning instructor will change. They give us nothing in terms of socializing.
But as commenters have pointed out, socializing students is a huge part of the college experience, and may be even more important than credentialing. Or another way of saying that is people look at your resume not so much to know what you know but to know how you’ve been socialized.
It makes me wonder how we will address the “socializing” part of education in the future. And it also makes me wonder where research will be in 100 years.
I find myself every other day in a conversation with people about the massive online open course (MOOC) movement.
People often want to complain about the quality of this education substitute. They say that students won’t get the one-on-one interaction between the professor and student that is required to really learn. They complain that we won’t know if someone really knows something if they only took a MOOC or two.
First of all, this isn’t going away, nor should it: it’s many people’s only opportunity to learn this stuff. It’s not like MIT has plans to open 4,000 campuses across the world. It’s really awesome that rural villagers (with internet access) all over the world can now take MIT classes anyway through edX.
Second, if we’re going to put this new kind of education under the microscope, let’s put the current system under the microscope too. Many of the people fretting about the quality of MOOC education are themselves products of super elite universities, and probably don’t know what the average student’s experience actually is. Turns out not everyone gets a whole lot of attention from their professors.
Even at elite institutions, there are plenty of masters programs which are treated as money machines for the university and where the quality and attention of the teaching is a secondary concern. If certain students decide to forgo the thousands of dollars and learn the stuff just as well online, then that would be a good thing (for them at least).
Some things I think are inevitable:
- Educational institutions will increasingly need to show they add value beyond free MOOC experiences. This will be an enormous market force for all but the most elite universities.
- Instead of seeing where you went to school, potential employers will directly test knowledge of candidates. This will mean weird things like you never actually have to learn a foreign language or study Shakespeare to get a job, but it will be good for the democratization of education in general.
- Professors will become increasingly scarce as the role of the professor is decreased.
- One-on-one time with masters of a subject will become increasingly rare and expensive. Only truly elite students will have the mythological education experience.
Yesterday I was in a bit of a funk.
I decided to try to get out and do something new, and since my neighbors were going to Costco, which I’d never been to (or maybe I had once but I couldn’t remember and it would have been at least 13 years ago), I invited myself to go with them. The change would do me good, I thought.
Here’s the thing about Costco which you probably already know if you shop there: it’s a rush, like taking a narcotic. I am sure that their data scientists have spent many computing hours munging through many terabytes of shopping behavior to perfect this effect [Update: an article has just appeared in the New York Times explaining this very thing].
For example, I’m on a budget, and I was planning to go for the sociological experience of it, not to buy anything. After all, I’ve already gotten my groceries for the week, and bought reasonable presents for the kids for Christmas. Nothing outrageous. So I was feeling pretty safe.
But then I got there, and I immediately came across things I didn’t know I needed until I saw them. The most ridiculous and startling version of this was my tupperware experience.
Tupperware is an essential tool in a house with three kids, because if you do the math you’ve got 15 school lunches to make per week. That’s not something you can scrounge up carelessly. So what you do is save plastic Chinese takeout containers and fill them up after dinners with things like pasta and chicken bits. Ready to go in the morning.
But when I came across the gorgeous 30-, no 42-, no 75-piece rainbow-colored tupperware kits that actually stack together beautifully, I instantaneously realized my hitherto scheme was laughably ridiculous and that I must own gorgeous tupperware right now.
This happened to me with a rainbow-colored knife set too, but I managed to hold myself back because, I argued, I already owned knives. I am not sure why that reasoning failed with the tupperware.
In fact I immediately filled up a cart with various (rainbow-colored) things I had no idea I needed until I got there ($50 for a cashmere sweater!?), and then I started wandering around the food area.
This is when my narcotic experience started to wear off. I think it was around the 6-pound block of mozzarella that I started to say to myself, wait, do I really want 6 pounds of mozzarella? I mean, it’s a great price, but won’t that take up half my fridge?
Then I started putting stuff back. It was amazingly easy to part with that stuff once the narcotic wore off. I was in deep withdrawal by the time we left the store. Paying in cash for the few items I did buy also helped.
- I totally get why people own lots of stuff they don’t need.
- I’m sure people can get addicted to that narcotic shopping rush.
- We should consider treating Costco as a dealer in controlled substances.
- I have ugly tupperware and that’s okay.
I was really impressed with yesterday’s Tedx Women at Barnard event yesterday, organized by Nathalie Molina, who organizes the Athena Mastermind group I’m in at Barnard. I went to the morning talks to see my friend and co-author Rachel Schutt‘s presentation and then came home to spend the rest of the day with my kids, but they other three I saw were also interesting and food for thought.
Unfortunately the videos won’t be available for a month or so, and I plan to blog again when they are for content, but I wanted to discuss an issue that came up during the Q&A session, namely:
what we choose to quantify and why that matters, especially to women.
This may sound abstract but it isn’t. Here’s what I mean. The talks were centered around the following 10 themes:
- Inspiration: Motivate, and nurture talented people and build collaborative teams
- Advocacy: Speak up for yourself and on behalf of others
- Communication: Listen actively; speak persuasively and with authority
- Vision: Develop strategies, make decisions and act with purpose
- Leverage: Optimize your networks, technology, and financing to meet strategic goals; engage mentors and sponsors
- Entrepreneurial Spirit: Be innovative, imaginative, persistent, and open to change
- Ambition: Own your power, expertise and value
- Courage: Experiment and take bold, strategic risks
- Negotiation: Bridge differences and find solutions that work effectively for all parties
- Resilience: Bounce back and learn from adversity and failure
The speakers were extraordinary and embodied their themes brilliantly. So Rachel spoke about advocating for humanity through working with data, and this amazing woman named Christa Bell spoke about inspiration, and so on. Again, the actual content is for another time, but you get the point.
A high school teacher was there with five of her female students. She spoke eloquently of how important and inspiring it was that these girls saw these talk. She explained that, at their small-town school, there’s intense pressure to do well on standardized tests and other quantifiable measures of success, but that there’s essentially no time in their normal day to focus on developing the above attributes.
Ironic, considering that you don’t get to be a “success” without ambition and courage, communication and vision, or really any of the themes.
In other words, we have these latent properties that we really care about and are essential to someone’s success, but we don’t know how to measure them so we instead measure stuff that’s easy to measure, and reward people based on those scores.
By the way, I’m not saying we don’t also need to be good at content, and tasks, which are easier to measure. I’m just saying that, by focusing on content and tasks, and rewarding people good at that, we’re not developing people to be more courageous, or more resilient, or especially be better advocates of others.
And that’s where the women part comes in. Women, especially young women, are sensitive to the expectations of the culture. If they are getting scored on X, they tend to focus on getting good at X. That’s not a bad thing, because they usually get really good at X, but we have to understand the consequences of it. We have to choose our X’s well.
I’d love to see a system evolve wherein young women (and men) are trained to be resilient and are rewarded for that just as they’re trained to do well on the SAT’s and rewarded for that. How do you train people to be courageous? I’m sure it can be done. How crazy would it be to see a world where advocating for others is directly encouraged?
Let’s try to do this, and hell let’s quantify it too, since that desire, to quantify everything, is not going away. Instead of giving up because important things are hard to quantify, let’s just figure out a way to quantify them. After all, people didn’t think their musical tastes could be quantified 15 years ago but now there’s Pandora.
Update: Ok to quantify this, but the resulting data should not be sold or publicly available. I don’t want our sons’ and daughters’ “resilience scores” to be part of their online personas for everyone to see.