I don’t know if you guys read this recent New York Times editorial entitled Even Gifted Students Can’t Keep Up: In Math and Science, the Best Fend for Themselves.
In it, they claim there’s some kind of crisis going on in this country for smart kids (defined as good test-takers). Mostly their evidence for this is that, among other countries, our super good test takers aren’t as prevalent as in other countries. Turns out we’re in the middle of the pack in terms of super scorers. From the article:
On the 2012 Program for International Student Assessment test, the most recent, 34 of 65 countries and school systems had a higher percentage of 15-year-olds scoring at the advanced levels in mathematics than the United States did.
Why is this a problem? As far as I can see they’ve come up with two reasons.
First, it’s “bad for American competitiveness,” whatever that means. Last time I checked we were still pretty dominant in various ways in terms of technology and science, and there are still plenty of very well-educated young people trying desperately to get visas to enter or stay in this country.
As an aside: it’s a super interesting question to think about how we, as a country, are increasingly ignorant about how our technology works, because so much technical knowledge has been off-shored. But that’s not the crisis these guys are addressing.
Second, it’s bad for the smart kids in this country, because “when the brightest students are not challenged academically, they lose steam and check out.”
I’ll pause in my summary of their article to make the following point. If that’s true, if bright kids who aren’t academically challenged at school start checking out more and more, then it makes just as much sense to me to see if there’s something they can check out towards.
In other words, what else is there for bright teenagers to do besides school? I’ll speak as a former bright teenager. When I lost interest in school, I got a lot of odd jobs in town cleaning houses and raking lawns, and then I used the money to buy lots of softcover books from a local bookstore. I don’t know why I didn’t just take them out of the library, where I also worked. It just didn’t seem as cool as owning my very own Brother Karamazov.
I learned a lot with my odd jobs in high school, which included being a part-time secretary, a barista, a math tutor, and working on a truck at the New England Produce Center. In fact I learned way more about how the world worked than I would have if I’d followed the advice of this editorial, which was to take lots more AP classes and then enter college when I was 14.
My theory is that, instead of obsessing over math scores in standardized tests, we concentrate on allowing our children to enrich their lives with adventures and experiences that they come up with and that are reasonably safe. So let’s start by encouraging widespread internships for younger kids, and not just minimum wage jobs at fast food joints. And not just for super test-takers either. Enrichment happens when kids learn about stuff that’s outside their usual rhythm and when there are no adults scripting their activities and telling them what to do or how many laps to swim.
Notice my emphasis on letting kids choose stuff. What drives me nuts just as much as the idea of further separating and isolating and venerating great test-takers, which as far as I’m concerned is the opposite way you should treat future successful people, is the idea that there should be such a well-defined funnel for children at all.
Yes, kids should all go to school and learn basic things. But the idea that, just because someone’s good at tests they should be treated as if they’re already running the Fed only increases the weird worshippy aspect of how our culture treats math nerds.
Plus, it’s a bizarre time to come up with this idea, considering how many online and live resources there are for nerd kids now compared to when I was a kid. If I’m a nerd teenager now, I can find plenty of ways to share nerdy questions and learn nerdy things online if I decide not to work in a coffee shop.
Finally, let me just take one last swipe at this idea from the perspective of “it’s meritocratic therefore it’s ok”. It’s just plain untrue that test-taking actually exposes talent. It’s well established that you can get better at these tests through practice, and that richer kids practice more. So the idea that we’re going to establish a level playing field and find minority kids to elevate this way is rubbish. If we do end up focusing more on the high end of test-takers, it will be completely dominated by the usual suspects.
In other words, this is a plan to make elite youth even more elite. And I don’t know about you, but my feeling is that’s not going to help our country overall.
The New York Times just put out an amazing and outrageous story, entitled Tobacco Industry Tactics Limit Poorer Nations’ Smoking Laws and written by Sabrina Tavernise.
In it she describes the bullying tactics of tobacco companies to small countries over their internal health regulations aiming to protect their citizenry from cancer. From the article:
In Africa, at least four countries — Namibia, Gabon, Togo and Uganda — have received warnings from the tobacco industry that their laws run afoul of international treaties, said Patricia Lambert, director of the international legal consortium at the Campaign for Tobacco Free Kids.
“They’re trying to intimidate everybody,” said Jonathan Liberman, director of the McCabe Center for Law and Cancer in Australia, which gives legal support to countries that have been challenged by tobacco companies. In Namibia, the tobacco industry has said that requiring large warning labels on cigarette packages violates its intellectual property rights and could fuel counterfeiting.
A few comments about this outrage, only tangentially mathematical:
- This happens because, in order to protect companies from being taken over by foreign nations, and in the name of free trade, it’s now possible for companies to sue countries directly. That’s what the tobacco industry is doing to small countries without the means to fight back.
- This is exactly the kind of thing that some people like Yves Smith have warned the TPP is going to do with financial regulation and other stuff. So imagine large companies or industries suing the United States or other nations for regulation that would “harm trade” or “violate their intellectual property rights.”
- In fact, it’s not going too far to say that the proliferation of these kinds of treaties are a serious threat to national sovereignty. Yves makes this case here.
- Think about it this way. It’s kind of a supernational Citizen’s United, in that only companies and industries that have enough lawyer power can get their way. And many companies easily have more resources than many countries. Think about Facebook and Google and their lobbying efforts on behalf of data privacy laws in Europe already. Now think how that battle might look when it’s against Namibia.
- Already, from the article, we saw that Uruguay was only able to fight back against Philip Morris because Bloomberg’s foundation helped them with the legal battle. And I’m glad Bloomberg helped, but if you count up all the money that will go to bullying and compare that to all the money available to help out the bullied, you quickly come to a sad conclusion.
- Once again, we have to remember that the TPP is being negotiated in secret, among a bunch of nations many of whom claim to be democratic.
Today I’d like to discuss recent article from the Atlantic entitled “They’re watching you at work” (hat tip Deb Gieringer).
In the article they describe what they call “people analytics,” which refers to the new suite of managerial tools meant to help find and evaluate employees of firms. The first generation of this stuff happened in the 1950’s, and relied on stuff like personality tests. It didn’t seem to work very well and people stopped using it.
But maybe this new generation of big data models can be super useful? Maybe they will give us an awesome way of throwing away people who won’t work out more efficiently and keeping those who will?
Here’s an example from the article. Royal Dutch Shell sources ideas for “business disruption” and wants to know which ideas to look into. There’s an app for that, apparently, written by a Silicon Valley start-up called Knack.
Specifically, Knack had a bunch of the ideamakers play a video game, and they presumably also were given training data on which ideas historically worked out. Knack developed a model and was able to give Royal Dutch Shell a template for which ideas to pursue in the future based on the personality of the ideamakers.
From the perspective of Royal Dutch Shell, this represents huge timesaving. But from my perspective it means that whatever process the dudes at Royal Dutch Shell developed for vetting their ideas has now been effectively set in stone, at least for as long as the algorithm is being used.
I’m not saying they won’t save time, they very well might. I’m saying that, whatever their process used to be, it’s now embedded in an algorithm. So if they gave preference to a certain kind of arrogance, maybe because the people in charge of vetting identified with that, then the algorithm has encoded it.
One consequence is that they might very well pass on really excellent ideas that happened to have come from a modest person – no discussion necessary on what kind of people are being invisible ignored in such a set-up. Another consequence is that they will believe their process is now objective because it’s living inside a mathematical model.
The article compares this to the “blind auditions” for orchestras example, where people are kept behind a curtain so that the listeners don’t give extra consideration to their friends. Famously, the consequence of blind auditions has been way more women in orchestras. But that’s an extremely misleading comparison to the above algorithmic hiring software, and here’s why.
In the blind auditions case, the people measuring the musician’s ability have committed themselves to exactly one clean definition of readiness for being a member of the orchestra, namely the sound of the person playing the instrument. And they accept or deny someone, sight unseen, based solely on that evaluation metric.
Whereas with the idea-vetting process above, the training data consisted of “previous winners” which presumable had to go through a series of meetings and convince everyone in the meeting that their idea had merit, and that they could manage the team to try it out, and all sorts of other things. Their success relied, in other words, on a community’s support of their idea and their ability to command that support.
In other words, imagine that, instead of listening to someone playing trombone behind a curtain, their evaluation metric was to compare a given musician to other musicians that had already played in a similar orchestra and, just to make it super success-based, had made first seat.
That you’d have a very different selection criterion, and a very different algorithm. It would be based on all sorts of personality issues, and community bias and buy-in issues. In particular you’d still have way more men.
The fundamental difference here is one of transparency. In the blind auditions case, everyone agrees beforehand to judge on a single transparent and appealing dimension. In the black box algorithms case, you’re not sure what you’re judging things on, but you can see when a candidate comes along that is somehow “like previous winners.”
One of the most frustrating things about this industry of hiring algorithms is how unlikely it is to actively fail. It will save time for its users, since after all computers can efficiently throw away “people who aren’t like people who have succeeded in your culture or process” once they’ve been told what that means.
The most obvious consequence of using this model, for the companies that use it, is that they’ll get more and more people just like the people they already have. And that’s surprisingly unnoticeable for people in such companies.
My conclusion is that these algorithms don’t make things objective, they makes things opaque. And they embeds our old cultural problems in new mathematical models, giving us a false badge of objectivity.
This might surprise some of you – or not, I’m not sure. But one of the most satisfying things about leaving academia and the tenure system and going into industry is how, at least in the ideal situation, you can get fired for not doing your job.
In fact, one of the reasons I decided to leave academia is that I really thought some of my colleagues weren’t doing right by the undergraduates, and the frustrating thing was that there was essentially no way to force them to start. Tenure has great aspects and not-so-great aspects, and a total lack of leverage is not a great one. I feel for deans sometimes.
Here’s the dirty little secret of lots of industry jobs, though: lots of time people also don’t get fired when they should. And sometimes it’s super awful bullies who yell and scream and act inappropriately but also pull in amazing sales numbers. There are things like that, of course. That’s the example of how they don’t abide by the alleged social contract but they perform on the bottomline. Social contracts are hard to quantify and somewhat squishy. You see people getting away with stuff because they’re rainmakers or higher ups.
But there are also plenty of examples of people just not doing their job, and having super awful attitudes, or even just completely apathetic attitudes, and for whatever reason they don’t get fired. This demoralizes and irritates and distracts everyone around them, because they all resent the free-rider.
Plus, retaining people who should by all accounts get fired makes the veneer of the kool-aid drinking camaraderie even more flimsy and scrutinizable – what’s so great about working here if people can just slack off and not care? Why do I give two shits about this project anyway? How does this project in the larger scheme of things? Maybe that scrutiny is a good thing – I engage in it myself – but you don’t want everyone thinking that all the time.
Here’s the thing, before you think I’m super vicious and mean to want people to get fired. These people I’m talking about are generally high skilled and temporarily depressed. They’re in the wrong job. And once fired, they will find another job, which will hopefully be a better one for them. I’m not saying that nobody will ever end up jobless and homeless, but very few, and moreover there are plenty of jobless and homeless people who would be psyched to do that job really well (putting aside how difficult it is for homeless people to get seriously considered for a job).
And I’m not saying you fire people out of the blue. You definitely need to tell people they’re not performing well (or that they are) and keep them in the feedback loop on whether things are working out. But in my experience people who deserve to get fired totally know it and can’t believe their luck that they’ve not been fired yet.
To conclude, I’m going on record saying I kind of agree with Jack Welch on this issue in a way I never thought I would.
I seem to be in a mood this week for provocative posts about body image and appearance (maybe this is what happens when I skip an Aunt Pythia column). Apologies to people who came for math talk.
I just wanted to mention something positive about the experience of being fat all my life, but especially as a school kid. Because just to be clear, this isn’t a phase. I’ve been pudgy since I was 2 weeks old. And overall it kind of works for me, and I’ll say why.
Namely, being a fat school kid meant that I was so uncool, so outside of normal social activity with boys and the like, that I was freed up to be as smart and as nerdy as I wanted, with very little stress about how that would “look”. You’re already fat, so why not be smart too? You’re not doing anything else, nobody’s paying attention to you, and there’s nothing to gossip about, so might as well join the math team.
It’s really a testament to both the pressure to be thin and the pressure to conform intellectually, i.e. not be a nerd, when you’re a young girl: they are both intense and super unpleasant. The happy truth is, one can be cover for the other. More than that, really: being fat (or “overweight” for people who are squeamish about the word “fat”) has opened up many doors that I honestly think would have, or at least could have, remained shut had I been more socially acceptable.
Going back to dress code at work for a moment: while people claim that corporate dress codes are meant to keep our minds off of sex, that is clearly a huge lie when it comes to many categories of women’s work clothes. Who are we kidding? The mere fact that many women wear high heels to work kind of says it all. And that’s fine, but let’s freaking acknowledge it.
On the other hand, it’s pretty hard to look sexy in a plus-sized suit (although not impossible), and the idea of high heels at work is just nuts. This ends up being a weirdly good thing for me, though: people take me more seriously because I have taken myself out of the sex game altogether – or at least the traditional sex game.
By the way, I’m not saying all fat women have the same perspective on it. I’m lucky enough to have figured out pretty early on how to separate other people’s projected feelings about my body from my own feelings. I am an observer of fat hatred, in other words. That doesn’t make me entirely insulated but it does give me one critical advantage: I have a lot of time on my hands to do stuff that I might otherwise spend fretting about my body.
It also might help partly explain why some girls get on the math team and others don’t. Being fat is something you don’t have control over (the continuing and damaging myth that each person does have control over it notwithstanding) but joining the math team is something you do have control over. And if you aren’t already excluded for some other reason (being fat is one but by no means the only way this could happen of course), you might not want to start that whole thing intentionally. Just a theory.
Am I the only person offended by the recent wave of articles wherein “senior women” at corporate offices are going around telling “younger women” about the appropriate dress code?
For example, here’s the beginning of a WSJ piece on just that subject:
Clothes may make the man. Can they undo the woman?
When female employees at Frontier Communications Corp. show up at its headquarters in very short skirts, sweatpants or sneakers, Chief Executive Maggie Wilderotter sometimes pulls them aside for a quick, private chat on dressing for success.
“I want women to be paid attention to for what they say–and not how they look,” explains Ms. Wilderotter.
Later in the article the explain why this is ok:
Women face more pitfalls because they have more clothing choices than men. And because male bosses fear being accused of sexual harassment, it usually falls to female supervisors to confront an associate about her attire.
This is one reason I hate corporate jobs. And yes, it’s because I come from academia and because I’m essentially a hippie, but seriously, why do we need so much policing? Why can’t people just leave each other alone to express themselves? It’s also a double standard:
Rosalind Hudnell, human resources vice president of Intel Corp., occasionally intervenes when she sees young female staffers clad unprofessionally, even though Intel staffers often wear shorts and jeans.
It’s just another in a long list of things you are scrutinized on if you’re a woman. In addition to whether you are a good mother, a feminine-enough-without-being-too-feminine employee, and, as a tertiary issue, if that, whether you actually do your job well. Fuck this.
Question for you readers: what does it really mean that these “senior women” are taking it upon themselves to scrutinize and criticize young women? Am I wrong, is it actually generous? Or is it some kind of hazing thing? Or is it a media invention that doesn’t actually happen?
Yesterday I read Alan Greenspan’s recent article in Foreign Affairs magazine (hat tip Rhoda Schermer). It is entitled “Never Saw It Coming: Why the Financial Crisis Took Economists By Surprise,” and for those of you who want to save some time, it basically goes like this:
I’ll admit it, the macroeconomic models that we used before the crisis failed, because we assumed
people financial firms behaved rationally. But now there are new models that assume predictable irrational behavior, and once we add those bells and whistles onto our existing models, we’ll be all good. Y’all can start trusting economists again.
Here’s the thing that drives me nuts about Greenspan. He is still talking about financial firms as if they are single people. He just didn’t really read Adam Smith’s Wealth of Nations, or at least didn’t understand it, because if he had, he’d have seen that Adam Smith argued against large firms in which the agendas of the individuals ran counter to the agenda of the company they worked for.
If you think about individuals inside the banks, in other words, then their individual incentives explain their behavior pretty damn well. But Greenspan ignores that and still insists on looking at the bank as a whole. Here’s a quote from the piece:
Financial firms accepted the risk that they would be unable to anticipate the onset of a crisis in time to retrench. However, they thought the risk was limited, believing that even if a crisis developed, the seemingly insatiable demand for exotic financial products would dissipate only slowly, allowing them to sell almost all their portfolios without loss. They were mistaken.
Let’s be clear. Financial firms were not “mistaken”, because legal contracts can’t think. As for the individuals working inside those firms, there was no such assumption about a slow exhale. Everyone was furiously getting their bonuses pumped up while the getting was good. People on the inside knew the market for exotic financial products would blow at some point, and that their personal risks were limited, so why not make systemic risk worse until then.
As a mathematical modeler myself, it bugs me to try to put a mathematical band-aid on an inherently failed model. We should instead build a totally new model, or even better remove the individual perverted incentives of the market using new rules (I’m using the word “rules” instead of “regulations” because people don’t hate rules as much as they hate regulations).
Wouldn’t it be nice if the agendas of the individuals inside a financial firm were more closely aligned with the financial firm? And if it was over a long period of time instead of just until the bonus day? Not impossible.
And, since I’m an occupier, I get to ask even more. Namely, wouldn’t it be even nicer if that agenda was also shared by the general public? Doable!
Mr. Greenspan, there are ways to address the mistake you economists made and continue to make, but they don’t involve fancier math models from behavioral economics. They involve really simple rule changes and, generally speaking, making finance much more boring and much less profitable.
I had a great time at Harvard Wednesday giving my talk (prezi here) about modeling challenges. The audience was fantastic and truly interdisciplinary, and they pushed back and challenged me in a great way. I’m glad I went and I’m glad Tess Wise invited me.
One issue that came up is something I want to talk about today, because I hear it all the time and it’s really starting to bug me.
Namely, the fallacy that people, especially young people, are “happy to give away their private data in order to get the services they love on the internet”. The actual quote came from the IBM guy on the congressional subcommittee panel on big data, which I blogged about here (point #7), but I’ve started to hear that reasoning more and more often from people who insist on side-stepping the issue of data privacy regulation.
Here’s the thing. It’s not that people don’t click “yes” on those privacy forms. They do click yes, and I acknowledge that. The real problem is that people generally have no clue what it is they’re trading.
In other words, this idea of a omniscient market participant with perfect information making a well-informed trade, which we’ve already seen is not the case in the actual market, is doubly or triply not the case when you think about young people giving away private data for the sake of a phone app.
Just to be clear about what these market participants don’t know, I’ll make a short list:
- They probably don’t know that their data is aggregated, bought, and sold by Acxiom, which they’ve probably never heard of.
- They probably don’t know that Facebook and other social media companies sell stuff about them even if their friends don’t see it and even though it’s often “de-identified”. Think about this next time you sign up for a service like “Bang With Friends,” which works through Facebook.
- They probably don’t know how good algorithms are getting at identifying de-identified information.
- They probably don’t know how this kind of information is used by companies to profile users who ask for credit or try to get a job.
Conclusion: people are ignorant of what they’re giving away to play Candy Crush Saga. And whatever it is they’re giving away, it’s something way far in the future that they’re not worried about right now. In any case it’s not a fair trade by any means, and we should stop referring to it as such.
What is it instead? I’d say it’s a trick. A trick which plays on our own impulses and short-sightedness and possibly even a kind of addiction to shiny toys in the form of candy. If you give me your future, I’ll give you a shiny toy to play with right now. People who click “yes” are not signaling that they’ve thought deeply about the consequences of giving their data away, and they are certainly not making the definitive political statement that we don’t need privacy regulation.
1. I actually don’t know the data privacy rules for Candy Crush and can’t seem to find them, for example here. Please tell me if you know what they are.
A few of you may have read this recent New York TImes op-ed (hat tip Suresh Naidu) by economist Raj Chetty entitled “Yes, Economics is a Science.” In it he defends the scienciness of economics by comparing it to the field of epidemiology. Let’s focus on these three sentences in his essay, which for me are his key points:
I’m troubled by the sense among skeptics that disagreements about the answers to certain questions suggest that economics is a confused discipline, a fake science whose findings cannot be a useful basis for making policy decisions.
That view is unfair and uninformed. It makes demands on economics that are not made of other empirical disciplines, like medicine, and it ignores an emerging body of work, building on the scientific approach of last week’s winners, that is transforming economics into a field firmly grounded in fact.
Chetty is conflating two issues in his first sentence. The first is whether economics can be approached as a science, and the second is whether, if you are an honest scientist, you push as hard as you can to implement your “results” as public policy. Because that second issue is politics, not science, and that’s where people like myself get really pissed at economists, when they treat their estimates as facts with no uncertainty.
In other words, I’d have no problem with economists if they behaved like the people in the following completely made-up story based on the infamous Reinhart-Rogoff paper with the infamous excel mistake.
Two guys tried to figure what public policy causes GDP growth by using historical data. They collected their data and did some analysis, and they later released both the spreadsheet and the data by posting them on their Harvard webpages. They also ran the numbers a few times with slightly different countries and slightly different weighting schemes and explained in their write-up that got different answers depending on the initial conditions, so therefore they couldn’t conclude much at all, because the error bars are just so big. Oh well.
You see how that works? It’s called science, and it’s not what economists are known to do. It’s what we all wish they’d do though. Instead we have economists who basically get paid to write papers pushing for certain policies.
Next, let’s talk about Chetty’s comparison of economics with medicine. It’s kind of amazing that he’d do this considering how discredited epidemiology is at this point, and how truly unscientific it’s been found to be, for essentially exactly the same reasons as above – initial conditions, even just changing which standard database you use for your tests, switch the sign of most of the results in medicine. I wrote this up here based on a lecture by David Madigan, but there’s also a chapter in my new book with Rachel Schutt based on this issue.
To briefly summarize, Madigan and his colleagues reproduce a bunch of epidemiological studies and come out with incredible depressing “sensitivity” results. Namely, that the majority of “statistically significant findings” change sign depending on seemingly trivial initial condition changes that the authors of the original studies often didn’t even explain.
So in other words, Chetty defends economics as “just as much science” as epidemiology, which I would claim is in the category “not at all a science.” In the end I guess I’d have to agree with him, but not in a good way.
Finally, let’s be clear: it’s a good thing that economists are striving to be scientists, when they are. And it’s of course a lot easier to do science in microeconomic settings where the data is plentiful than it is to answer big, macro-economic questions where we only have a few examples.
Even so, it’s still a good thing that economists are asking the hard questions, even when they can’t answer them, like what causes recessions and what determines growth. It’s just crucial to remember that actual scientists are skeptical, even of their own work, and don’t pretend to have error bars small enough to make high-impact policy decisions based on their fragile results.
Did you think public radio doesn’t have advertising? Think again.
Last week Here and Now’s host Jeremy Hobson set up College Board’s James Montoya for a perfect advertisement regarding a story on SAT scores going down. The transcript and recording are here (hat tip Becky Jaffe).
To set it up, they talk about how GPA’s are going up on average over the country but how, at the same time, the average SAT score went down last year.
Somehow the interpretation of this is that there’s grade inflation and that kids must be in need of more test prep because they’re dumber.
What is the College Board?
You might think, especially if you listen to this interview, that the college board is a thoughtful non-profit dedicated to getting kids prepared for college.
Make no mistake about it: the College Board is a big business, and much of their money comes from selling test prep stuff on top of administering tests. Here are a couple of things you might want to know about College Board through its wikipedia page:
Consumer rights organization Americans for Educational Testing Reform (AETR) has criticized College Board for violating its non-profit status through excessive profits and exorbitant executive compensation; nineteen of its executives make more than $300,000 per year, with CEO Gaston Caperton earning $1.3 million in 2009 (including deferred compensation). AETR also claims that College Board is acting unethically by selling test preparation materials, directly lobbying legislators and government officials, and refusing to acknowledge test-taker rights.
Anyhoo, let’s just say it this way: College Board has the ability to create an “emergency” about SAT scores, by say changing the test or making it harder, and then the only “reasonable response” is to pay for yet more test prep. And somehow Here and Now’s host Jeremy Hobson didn’t see this coming at all.
Here’s an excerpt:
HOBSON: It also suggests, when you look at the year-over-year scores, the averages, that things are getting worse, not better, because if I look at, for example, in critical reading in 2006, the average being 503, and now it’s 496. Same deal in math and writing. They’ve gone down.
MONTOYA: Well, at the same time that we have seen the scores go down, what’s very interesting is that we have seen the average GPAs reported going up. So, for example, when we look at SAT test takers this year, 48 percent reported having a GPA in the A range compared to 45 percent last year, compared to 44 percent in 2011, I think, suggesting that there simply have to be more rigor in core courses.
HOBSON: Well, and maybe that there’s grade inflation going on.
MONTOYA: Well, clearly, that there is grade inflation. There is no question about that. And it’s one of the reasons why standardized test scores are so important in the admission office. I know that, as a former dean of admission, test scores help gauge the meaning of a GPA, particularly given the fact that nearly half of all SAT takers are reporting a GPA in the A range.
Just to be super clear about the shilling, here’s Hobson a bit later in the interview:
HOBSON: Well – and we should say that your report noted – since you mentioned practice – that as is the case with the ACT, the students who take the rigorous prep courses do better on the SAT.
What does it really mean when SAT scores go down?
Here’s the thing. SAT scores are fucked with ALL THE TIME. Traditionally, they had to make SAT’s harder since people were getting better at them. As test-makers, they want a good bell curve, so they need to adjust the test as the population changes and as their habits of test prep change.
The result is that SAT tests are different every year, so just saying that the scores went down from year to year is meaningless. Even if the same group of kids took those two different tests in the same year, they’d have different scores.
Also, according to my friend Becky who works with kids preparing for the SAT, they really did make substantial changes recently in the math section, changing the function notation, which makes it much harder for kids to parse the questions. In other words, they switched something around to give kids reason to pay for more test prep.
Important: this has nothing to do with their knowledge, it has to do with their training for this specific test.
If you want to understand the issues outside of math, take for example the essay. According to this critique, the number one criterion for essay grade is length. Length trumps clarity of expression, relevance of the supporting arguments to the thesis, mechanics, and all other elements of quality writing. As my friend Becky says:
I have coached high school students on the SAT for years and have found time and again, much to my chagrin, that students receive top scores for long essays even if they are desultory, tangent-filled and riddled with sentence fragments, run-ons, and spelling errors.
Similarly, I have consistently seen students receive low scores for shorter essays that are thoughtful and sophisticated, logical and coherent, stylish and articulate.
As long as the number one criterion for receiving a high score on the SAT essay is length, students will be confused as to what constitutes successful college writing and scoring well on the written portion of the exam will remain essentially meaningless. High-scoring students will have to unlearn the strategies that led to success on the SAT essay and relearn the fundamentals of written expression in a college writing class.
If the College Board (the makers of the SAT) is so concerned about the dumbing down of American children, they should examine their own role in lowering and distorting the standards for written expression.
Two things. First, shame on College Board and James Montoya for acting like SAT scores are somehow beacons of truth without acknowledging the fiddling that goes on time and time again by his company. And second, shame on Here and Now and Jemery Hobson for being utterly naive and buying in entirely to this scare tactic.
Google has formally thrown their hat into the “rich people should never die” arena, with an official announcement of their new project called Calico, “a new company that will focus on health and well-being, in particular the challenge of aging and associated diseases”. Their plan is to use big data and genetic research to avoid aging.
I saw this coming when they hired Ray Kurzweil. Here’s an excerpt from my post:
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.
Here’s the thing. We need people to die. Our planet cannot sustain all the people currently alive as well as all the people who are going to someday be born. Just not gonna happen. Plus, it would be a ridiculously boring place to live. Think about how boring it is already for young people to be around old people. I bore myself around my kids, and I’m only 30 years older than they are.
And yes, it’s tragic when someone we love actually becomes one of those people whose time has come, especially if they’re young and especially if it seemed preventable. For that matter, I’m all for figuring out how to improve the quality of life for people.
But the idea that we’re going to figure out how to keep alive a bunch of super rich advertising executives just doesn’t seem right – because, let’s face it, there will have to be a way to choose who lives and who dies, and I know who is at the top of that list – and I for one am not on board with the plan. Larry Page, Tim Cook, and Ray Kurzweil: I’d really like it if you eventually died.
On the other hand, I’m not super worried about this plan coming through either. Big data can do a lot but it’s not going to make people live forever. Or let’s say it another way: if they can use big data to make people live forever, they can also use big data to convince me that super special rich white men living in Silicon Valley should take up resources and airtime for the rest of eternity.
Yet another aspect of Gary Shteyngart’s dystopian fiction novel Super Sad True Love Story is coming true for reals this week.
Besides anticipating Occupy Wall Street, as well as Bloomberg’s sweep of Zuccotti Park (although getting it wrong on how utterly successful such sweeping would be), Shteyngart proposed the idea of instant, real-time and broadcast credit ratings.
Anyone walking around the streets of New York, as they’d pass a certain type of telephone pole – the kind that identifies you via your cell phone and communicates with data warehousing services and databases – would have their credit rating flashed onto a screen. If you went to a party, depending on how you impressed the other party go-ers, your score could plummet or rise in real time, and everyone would be able to keep track and treat you accordingly.
I mean, there were other things about the novel too, but as a data person these details certainly stuck with me since they are both extremely gross and utterly plausible.
And why do I say they are coming true now? I base my claim on two news stories I’ve been sent by my various blog readers recently.
[Aside: if you read my blog and find an awesome article that you want to send me, by all means do! My email address is available on my "About" page.]
First, coming via Suresh and Marcos, we learn that data broker Acxiom is letting people see their warehoused data. A few caveats, bien sûr:
- You get to see your own profile, here, starting in 2 days, but only your own.
- And actually, you only get to see some of your data. So they won’t tell you if you’re a suspected gambling addict, for example. It’s a curated view, and they want your help curating it more. You know, for your own good.
- And they’re doing it so that people have clarity on their business.
- Haha! Just kidding. They’re doing it because they’re trying to avoid regulations and they feel like this gesture of transparency might make people less suspicious of them.
- And they’re counting on people’s laziness. They’re allowing people to opt out, but of course the people who should opt out would likely never even know about that possibility.
- Just keep in mind that, as an individual, you won’t know what they really think they know about you, but as a corporation you can buy complete information about anyone who hasn’t opted out.
In any case those credit scores that Shteyngart talks about are already happening. The only issue is who gets flashed those numbers and when. Instead of the answers being “anyone walking down the street” and “when you walk by a pole” it’s “any corporation on the interweb” and “whenever you browse”.
After all, why would they give something away for free? Where’s the profit in showing the credit scores of anyone to everyone? Hmmmm….
That brings me to my second news story of the morning coming to me via Constantine, namely this TechCrunch story which explains how a startup called Fantex is planning to allow individuals to invest in celebrity athletes’ stocks. Yes, you too can own a tiny little piece of someone famous, for a price. From the article:
People can then buy shares of that player’s brand, like a stock, in the Fantex-consumer market. Presumably, if San Francisco 49ers tight end Vernon Davis has a monster year and looks like he’s going to get a bigger endorsement deal or a larger contract in a few years, his stock would rise and a fan could sell their Davis stock and cash out with a real, monetary profit. People would own tracking or targeted stocks in Fantex that would depend on the specific brand that they choose; these stocks would then rise and fall based on their own performance, not on the overall performance of Fantex.
Let’s put these two things together. I think it’s not too much of a stretch to acknowledge a reason for everyone to know everyone else’s credit score! Namely, we can can bet on each other’s futures!
I can’t think of any set-up more exhilarating to the community of hedge fund assholes than a huge, new open market – containing profit potentials for every single citizen of earth – where you get to make money when someone goes to the wrong college, or when someone enters into an unfortunate marriage and needs a divorce, or when someone gets predictably sick. An orgy in the exact center of tech and finance.
Are you with me peoples?!
I don’t know what your Labor Day plans are, but I’m getting ready my list of people to short in this spanking new market.
Last week Obama began to making threats regarding a new college ranking system and its connection to federal funding. Here’s an excerpt of what he was talking about, from this WSJ article:
The president called for rating colleges before the 2015 school year on measures such as affordability and graduation rates—”metrics like how much debt does the average student leave with, how easy is it to pay off, how many students graduate on time, how well do those graduates do in the workforce,” Mr. Obama told a crowd at the University at Buffalo, the first stop on a two-day bus tour.
Interesting! This means that Obama is wading directly into the field of modeling. He’s probably sick of the standard college ranking system, put out by US News & World Reports. I kind of don’t blame him, since that model is flawed and largely gamed. In fact, I made a case for open sourcing that model recently just so that people would look into it and lose faith in its magical properties.
So I’m with Obama, that model sucks, and it’s high time there are other competing models so that people have more than one thing to think about.
On the other hand, what Obama is focusing on seems narrow. Here’s what he supposedly wants to do with that model (again from the WSJ article):
Once a rating system is in place, Mr. Obama will ask Congress to allocate federal financial aid based on the scores by 2018. Students at top-performing colleges could receive larger federal grants and more affordable student loans. “It is time to stop subsidizing schools that are not producing good results,” he said.
His main goal seems to be “to make college more affordable”.
I’d like to make a few comments on this overall plan. The short version is that he’s suggesting something that will have strong, mostly negative effects, and that won’t solve his problem of college affordability.
Why strong negative effects?
What Obama seems to realize about the existing model is that it’s had side effects because of the way college administrators have gamed the model. Presumably, given that this new proposed model will be directly tied to federal funding, it will be high-impact and will thus be thoroughly gamed by administrators as well.
The first complaint, then, is that Obama didn’t address this inevitably gaming directly – and that doesn’t bode well about his ability to put into place a reasonable model.
But let’s not follow his lead. Let’s think about what kind of gaming will occur once such a model is in place. It’s not pretty.
Here are the attributes he’s planning to use for colleges. I’ve substituted reasonably numerical proxies for his descriptions above:
- Cost (less is better)
- Percentage of people able to pay off their loans within 10 years (more is better)
- Graduation rate (more is better)
- Percentage of people graduating within 4 years (more is better)
- Percentage of people who get high-paying jobs after graduating (more is better)
Nobody is going to argue against optimizing for lower cost. Unfortunately, what with the cultural assumption of the need for a college education, combined with the ignorance and naive optimism of young people, not to mention start-ups like Upstart that allow young people to enter indentured servitude, the pressure is upwards, not downwards.
The supply of money for college is large and growing, and the answer to rising tuition costs is not to supply more money. Colleges have already responded to the existence of federal loans, for example, by raising tuition in the amount of the loan. Ironically, much of the rise in tuition cost has gone to administrators, whose job it is to game the system for more money.
Which is to say, you can penalize certain colleges for being at the front of the pack in terms of price, but if the overall cost is rising constantly, you’re not doing much.
If you really wanted to make costs low, then fund state universities and make them really good, and make them basically free. That would actually make private colleges try to compete on cost.
Paying off loans quickly
Here’s where we get to the heart of the problem with Obama’s plan.
What are you going to do, as an administrator tasked with making sure you never lose federal funding under the new regime?
Are you going to give all the students fairer terms on their debt? Or are you going to select for students that are more likely to get finance jobs? I’m guessing the latter.
So much for liberal arts educations. So much for learning about art, philosophy, or for that matter anything that isn’t an easy entrance into the tech or finance sector. Only colleges that don’t care a whit about federal money will even have an art history department.
Gaming the graduation rate is easy. Just lower your standards for degrees, duh.
How quickly people graduate
Again, a general lowering of standards is quick and easy.
How well graduates do in the workforce
Putting this into your model is toxic, and measures a given field directly in terms of market forces. Economics, Computer Science, and Business majors will be the kings of the hill. We might as well never produce writers, thinkers, or anything else creative again.
Note this pressure already exists today: many of our college presidents are becoming more and more corporate minded and less interested in education itself, mostly as a means to feed their endowments. As an example, I don’t need to look further than across my street to Barnard, where president Debora Spar somehow decided to celebrate Ina Drew as an example of success in front of a bunch of young Barnard students. I can’t help but think that was related to a hoped-for gift.
Obama needs to think this one through. Do we really want to build the college system in this country in the image of Wall Street and Silicon Valley? Do we want to intentionally skew the balance towards those industries even further?
Building a better college ranking model
The problem is that it’s actually really hard to model quality of education. The mathematical models that already exist and are being proposed are just pathetically bad at it, partly because college, ultimately, isn’t only about the facts you learn, or the job you get, or how quickly you get it. It’s actually a life experience which, in the best of cases, enlarges your world view, and gets you to strive for something you might not have known existed before going.
I’d suggest that, instead of building a new ranking system, we on the one hand identify truly fraudulent colleges (which really do exist) and on the other, invest heavily in state schools, giving them enough security so they can do without their army of expensive administrators.
You’ve probably heard rumors about this here and there, but the Wall Street Journal convincingly reported yesterday that websites charge certain people more for the exact thing.
Specifically, poor people were more likely to pay more for, say, a stapler from Staples.com than richer people. Home Depot and Lowes does the same for their online customers, and Discover and Capitol One make different credit card offers to people depending on where they live (“hey, do you live in a PayDay lender neighborhood? We got the card for you!”).
They got pretty quantitative for Staples.com, and did tests to determine the cost. From the article:
It is possible that Staples’ online-pricing formula uses other factors that the Journal didn’t identify. The Journal tested to see whether price was tied to different characteristics including population, local income, proximity to a Staples store, race and other demographic factors. Statistically speaking, by far the strongest correlation involved the distance to a rival’s store from the center of a ZIP Code. That single factor appeared to explain upward of 90% of the pricing pattern.
If anyone’s ever seen a census map, race is highly segregated by ZIP code, and my guess is we’d see pretty high correlations along racial lines as well, although they didn’t mention it in the article except to say that explicit race-related pricing is illegal. The article does mentions that things get more expensive in rural areas, which are also poorer, so there’s that acknowledged correlation.
But wait, how much of a price difference are we talking about? From the article:
Prices varied for about a third of the more than 1,000 randomly selected Staples.com products tested. The discounted and higher prices differed by about 8% on average.
In other words, a really non-trivial amount.
The messed up thing about this, or at least one of them, is that we could actually have way more control over our online personas than we think. It’s invisible to us, typically, so we don’t think about our cookies and our displayed IP addresses. But we could totally manipulate these signatures to our advantage if we set our minds to it.
Hackers, get thyselves to work making this technology easily available.
For that matter, given the 8% difference, there’s money on the line so some straight-up capitalist somewhere should be meeting that need. I for one would be willing to give someone a sliver of the amount saved every time they manipulated my online persona to save me money. You save me $1.00, I’ll give you a dime.
Here’s my favorite part of this plan: it would be easy for Staples to keep track of how much people are manipulating their ZIP codes. So if Staples.com infers a certain ZIP code for me to display a certain price, but then in check-out I ask them to send the package to a different ZIP code, Staples will know after-the-fact that I fooled them. But whatever, last time I looked it didn’t cost more or less to send mail to California or wherever than to Manhattan [Update: they do charge differently for packages, though. That's the only differential in cost I think is reasonable to pay].
I’d love to see them make a case for how this isn’t fair to them.
My friend Frank Pasquale sent me this article over twitter, about New York State attorney general Eric T. Schneiderman’s investigation into possibly unfair practices by big banks using opaque and sometimes erroneous databases to disqualify people from opening accounts.
Not much hard information is given in the article but we know that negative reports stemming from the databases have effectively banished more than a million lower-income Americans from the financial system, and we know that the number of “underbanked” people in this country has grown by 10% since 2009. Underbanked people are people who are shut out of the normal banking system and have to rely on the underbelly system including check cashing stores and payday lenders.
I can already hear the argument of my libertarian friends: if I’m a bank, and I have reason to suspect you have messed up with your finances in the past, I don’t offer you services. Done and done. Oh, and if I’m a smart bank that figures out some of these so-called “past mistakes” are actually erroneously reported, then I make extra money by serving those customers that are actually good when they look bad. And the free market works.
Two responses to this. First, at this point big banks are really not private companies, being on the taxpayer dole. In response they should reasonably be expected to provide banking services to all of not most people as part of a service. Of course this is a temporary argument, since nobody actually likes the fact that the banks aren’t truly private companies.
The second, more interesting point – at least to me – is this. We care about and defend ourselves from our constitutional rights being taken away but we have much less energy to defend ourselves against good things not happening to us.
In other words, it’s not written into the constitution that we all deserve a good checking account, nor a good college education, nor good terms on a mortgage, and so on. Even so, in a large society such as ours, such things are basic ingredients for a comfortable existence. Yet these services are rare if not nonexistent for a huge and swelling part of our society, resulting in a degradation of opportunity for the poor.
The overall effect is heinous, and at some point does seem to rise to the level of a constitutional right to opportunity, but I’m no lawyer.
In other words, instead of only worrying about the truly bad things that might happen to our vulnerable citizens, I personally spend just as much time worrying about the good things that might not happen to our vulnerable citizens, because from my perspective lots of good things not happening add up to bad things happening: they all narrow future options.
I’ve blogged before about how I find it outrageous that the credit scoring models are proprietary, considering the impact they have on so many lives.
The argument given for keeping them secret is that otherwise people would game the models, but that really doesn’t make sense.
After all, the models that the big banks have to deal with through regulation aren’t secret, and they game those models all the time. It’s one of the main functions of the banks, in fact, to figure out how to game the models. So either we don’t mind gaming or we don’t hold up our banks to the same standards as our citizens.
Plus, let’s say the models were open and people started gaming the credit score models – what would that look like? A bunch of people paying their electricity bill on time?
Let’s face it: the real reason the models are secret is that the companies who set them up make more money that way, pretending to have some kind of secret sauce. What they really have, of course, is a pretty simple model and access to an amazing network of up-to-date personal financial data, as well as lots of clients.
Their fear is that, if their model gets out, anyone could start a credit scoring agency, but actually it wouldn’t be so easy – if I wanted to do it, I’d have to get all that personal data on everyone. In fact, if I could get all that personal data on everyone, including the historical data, I could easily build a credit scoring model.
So anyhoo, it’s all about money, that and the fact that we’re living under the assumption that it’s appropriate for credit scoring companies to wield all this power over people’s lives, including their love lives.
It’s like we have a secondary system of secret laws where we don’t actually get to see the rules, nor do we get to point out mistakes or reasonably refute them. And if you’re thinking “free credit report,” let’s be clear that that only tells you what data goes in to the model, it doesn’t tell you how it’s used.
As it turns out, though, it’s now more than like a secondary system of laws – it’s become embedded in our actual laws. Somehow the proprietary credit scoring company Equifax is now explicitly part of our healthcare laws. From this New York Times article (hat tip Matt Stoller):
Federal officials said they would rely on Equifax — a company widely used by mortgage lenders, social service agencies and others — to verify income and employment and could extend the initial 12-month contract, bringing its potential value to $329.4 million over five years.
Contract documents show that Equifax must provide income information “in real time,” usually within a second of receiving a query from the federal government. Equifax says much of its information comes from data that is provided by employers and updated each payroll period.
Under the contract, Equifax can use sources like credit card applications but must develop a plan to indicate the accuracy of data and to reduce the risk of fraud.
Thanks Equifax, I guess we’ll just trust you on all of this.
I wrote a post yesterday to discuss the fact that, as we’ve seen in Detroit and as we’ll soon see across the country, the math isn’t working out on pensions. One of my commenters responded, saying I was falling for a “very right wing attack on defined benefit pensions.”
I think it’s a mistake to think like that. If people on the left refuse to discuss reality, then who owns reality? And moreover, who will act and towards what end?
Here’s what I anticipate: just as “bankruptcy” in the realm of airlines has come to mean “a short period wherein we toss our promises to retired workers and then come back to life as a company”, I’m afraid that Detroit may signal the emergence of a new legal device for cities to do the same thing, especially the tossing out of promises to retired workers part. A kind of coordinated bankruptcy if you will.
It comes down to the following questions. For whom do laws work? Who can trust that, when they enter a legal obligation, it will be honored?
From Trayvon Martin to the people who have been illegally foreclosed on, we’ve seen the answer to that.
And then we might ask, for whom are laws written or exceptions made? And the answer to that might well be for banks, in times of crisis of their own doing, and so they can get their bonuses.
I’m not a huge fan of the original bailouts, because it ignored the social and legal contracts in the opposite way, that failures should fail and people who are criminals should go to jail. It didn’t seem fair then, and it still doesn’t now, as JP Morgan posts record $6.4 billion profits in the same quarter that it’s trying to settle a $500 million market manipulation charge.
It’s all very well to rest our arguments on the sanctity of the contract, but if you look around the edges you’ll see whose contracts get ripped up because of fraudulent accounting, and whose bonuses get bigger.
And it brings up the following question: if we bailed out the banks, why not the people of Detroit?
I’m finishing up an essay called “On Being a Data Skeptic” in which I catalog different standard mistakes people make with data – sometimes unintentionally, sometimes intentionally.
It occurred to me, as I wrote it, and as I read the various press conferences with departing mayor Bloomberg and Police Commissioner Raymond Kelly when they addressed the Stop and Frisk policy, that they are guilty of making one of these standard mistakes. Namely, they use a sleight of hand with respect to the evaluation metric of the policy.
Recall that an evaluation metric for a model is the way you decide whether the model works. So if you’re predicting whether someone would like a movie, you should go back and check whether your recommendations were good, and revise your model if not. It’s a crucial part of the model, and a poor choice for it can have dire consequences – you could end up optimizing to the wrong thing.
[Aside: as I've complained about before, the Value Added Model for teachers doesn't have an evaluation method of record, which is a very bad sign indeed about the model. And that's a Bloomberg brainchild as well.]
So what am I talking about?
Here’s the model: stopping and frisking suspicious-looking people in high-crime areas will improve the safety and well-being of the city as a whole.
Here’s Bloomberg/Kelly’s evaluation method: the death rate by murder has gone down in New York during the policy. However, that rate is highly variable and depends just as much on whether there’s a crack epidemic going on as anything else. Or maybe it’s improved medical care. Truth is people don’t really know. In any case ascribing credit for the plunging death rate to Stop and Frisk is a tenuous causal argument. Plus since Stop and Frisk events have decreased drastically recently, we haven’t seen the murder rate shoot up.
Here’s another possible evaluation method: trust in the police. And considering that 400,000 innocent black and Latino New Yorkers were stopped last year under this policy (here are more stats), versus less than 50,000 whites, and most of them were young men, it stands to reason that the average young minority male feels less trust towards police than the average young white male. In fact, this is an amazing statistic put together by the NYCLU from 2011:
The number of stops of young black men exceeded the entire city population of young black men (168,126 as compared to 158,406).
If I’m a black guy I have an expectation of getting stopped and frisked at least once per year. How does that make me trust cops?
Let’s choose an evaluation method closer to what we can actually control, and let’s optimize to it.
Update: a guest columnist fills in for David Brooks, hopefully not for the last time, and gives us his take on Kelly, Obama, and racial profiling.
Usually I like to think through abstract ideas – thought experiments, if you will – and not get too personal. I take exceptions for certain macroeconomists who are already public figures but most of the time that’s it.
Here’s a new category of people I’ll call out by name: CEO’s who defend creepy models using the phrase “People will trade their private information for economic value.”
That’s a quote of Douglas Merrill, CEO of Zest Finance, taken from this video taken at a recent data conference in Berkeley (hat tip Rachel Schutt). It was a panel discussion, the putative topic of which was something like “Attacking the structure of everything”, whatever that’s supposed to mean (I’m guessing it has something to do with being proud of “disrupting shit”).
Do you know the feeling you get when you’re with someone who’s smart, articulate, who probably buys organic eggs from a nice farmer’s market, but who doesn’t expose an ounce of sympathy for people who aren’t successful entrepreneurs? When you’re with someone who has benefitted so entirely and so consistently from the system that they have an almost religious belief that the system is perfect and they’ve succeeded through merit alone?
It’s something in between the feeling that, maybe you’re just naive because you’ve led such a blessed life, or maybe you’re actually incapable of human empathy, I don’t know which because it’s never been tested.
That’s the creepy feeling I get when I hear Douglas Merrill speak, but it actually started earlier, when I got the following email almost exactly one year ago via LinkedIn:
Your profile looked interesting to me.
I’m seeking stellar, creative thinkers like you, for our team in Hollywood, CA. If you would consider relocating for the right opportunity, please read on.
You will use your math wizardry to develop radically new methods for data access, manipulation, and modeling. The outcome of your work will result in game-changing software and tools that will disrupt the credit industry and better serve millions of Americans.
You would be working alongside people like Douglas Merrill – the former CIO of Google – along with a handful of other ex-Googlers and Capital One folks. More info can be found on our LinkedIn company profile or at www.ZestFinance.com.
At ZestFinance we’re bringing social responsibility to the consumer loan industry.
Do you have a few moments to talk about this? If you are not interested, but know someone else who might be a fit, please send them my way!
I hope to hear from you soon. Thank you for your time.
Wow, let’s “better serve millions of Americans” through manipulation of their private data, and then let’s call it being socially responsible! And let’s work with Capital One which is known to be practically a charity.
Message to ZestFinance: “getting rich with predatory lending” doesn’t mean “being socially responsible” unless you have a really weird definition of that term.
Going back to the video, I have a few more tasty quotes from Merrill:
- First when he’s describing how he uses personal individual information scraped from the web: “All data is credit data.”
- Second, when he’s comparing ZestFinance to FICO credit scoring: “Context is developed by knowing thousands of things about you. I know you as a person, not just you via five or six variables.”
I’d like to remind people that, in spite of the creepiness here, and the fact that his business plan is a death spiral of modeling, everything this guy is talking about is totally legal. And as I said in this post, I’d like to see some pushback to guys like Merrill as well as to the NSA.
I’ve been keeping tabs on hard it is to do my bills. I did my bills last night, and man, I’m telling you, I used all of my organizational abilities, all of my customer service experience, and quite a bit of my alpha femaleness just to get it done. Not to mention I needed more than 2 hours of time which I squeezed out by starting the bills while waiting for take-out.
By the way, I am not one of those sticklers for doing everything myself – I have an accountant, and I don’t read those forms, I just sign them and pray. But even so, removing tax issues from the conversation, the kind of expertise required to do my monthly bills is ridiculous and getting worse.
Take medical bills. I have three kids, so there’s always a few appointments pending, but it’s absolutely amazing to me how often I’m getting charged for appointments unfairly. I recently got charged for a physical for my 10-year-old son, even though I know that physicals are free thanks to ObamaCare.
So I call up my insurance company and complain, spend 15 minutes on the phone waiting, then it turns out he isn’t allowed to have more than one physical in a 12-month period which is why it was charged to me. But wait, he had one last April and one this April, what gives? Turns out last April it was on the 14th and this April it was on the 8th. So less than one year.
But surely, I object, you can’t ask for people to always be exactly 12 months apart or more! It turns out that, yes, they have a 30-day grace period for this exact reason, but for some reason it’s not automatic – it requires a person to call and complain to the insurance company to get their son’s physical covered.
Do you see what I mean? This is not actually a coincidence – insurance companies make big money from having non-automatic grace periods, because many people don’t have the time, the patience, and the pushiness to make them do it right, and that’s free money for insurance companies.
There are the (abstract) “rules” and then there’s what actually happens, and it’s a constant battle between what you know you’re paying for which you shouldn’t be and how much your time is worth. For example, if it’s less than $50 I just pay it even if it’s not reasonable. I’m sure other people have different limits.
I see this as a systemic problem. So this isn’t a diatribe against just insurance companies, because I have to jump through about 15 hoops a month like this just to get my paperwork sorted out, and they are mostly not medical issues. This is really a diatribe against complexity, and the regressive tax that complexity projects onto our society.
Rich people have people to work out their paperwork for them. People like me, we don’t have people to do this, but we have the time, skills, and patience to do it ourselves (and the money to buy takeout while we do it). There are plenty of people with no time, or who aren’t organized to have all the information they need at their fingertips when they make these calls, or are too intimidated by customer service phone lines to work it out.
And, as in the example above, there’s usually a perverse incentive for complexity to exist – people give up and pay extra because it’s not worth doing the paperwork. That means it’s always getting worse.
Bottomline: you shouldn’t need to have a college degree and customer service experience to do your bills. I’d love to see an estimate of how much more in unnecessary fees and accounting errors are paid by the poor in this country.