What’s next for mathbabe?

September 12, 2014 11 comments

The Columbia J-School program that I have been directing, The Lede Program in Data Journalism, has wound down this past week and in four days my 6-month contract with Columbia will end. I’ve had a fantastic time and I am super proud of what we accomplished this past summer. The students from the program are awesome and many of them are now my friends. About half of them are still engaged in classes and will continue to work this semester with Jonathan Soma, who absolutely rocks, and of course my fabulous colleague Theresa Bradley, who will step in as Director now that I’m leaving.

So, what’s next? I am happy to say that as of today (or at least as of next Monday when my kids are really in school full-time) I’m writing my book Weapons of Math Destruction on a full-time basis. This comes as a huge relief, since the internal pressure I have to finish this book is reminiscent of how I felt when I needed to write my thesis: enormous, but maybe even worse than then since the timeliness of the book could not be overstated, and I want to get this book out before the moment passes.

In the meantime I have some cool talks I’m planning to go to (like this one I went to already!) and some I’m planning to give. So for example, I’m giving a keynote at The Yale Day of Data later this month, which is going to be fun and interesting.

My Yale talk is basically a meditation on what can be achieved by academic data science institutions, what presents cultural and technical obstacles to collaboration, and why we need to do it anyway. It’s no less than a plea for Yale to create a data science institute with a broad definition of data science – so including scholars from law and from journalism as well as the fields you think of already when you think of data science – and a broad mandate to have urgent conversations across disciplines about the “big data revolution.” That conversation has already begun at the Information Society Project at Yale Law School, which makes me optimistic.

I also plan to continue my weekly Slate Money podcasts with Felix Salmon and Jordan Weissmann. Today we’re discussing the economic implications of Scottish independence, Felix’s lifetime earnings calculator, and the Fed’s new liquidity rules and how they affect municipalities, which my friend Marc Joffe guest blogged about yesterday.

Guest post: New Federal Banking Regulations Undermine Obama Infrastructure Stance

September 11, 2014 11 comments

This is a guest post by Marc Joffe, a former Senior Director at Moody’s Analytics, who founded Public Sector Credit Solutions in 2011 to educate the public about the risk – or lack of risk – in government securities. Marc published an open source government bond rating tool in 2012 and launched a transparent credit scoring platform for California cities in 2013. Currently, Marc blogs for Bitvore, a company which sifts the internet to provide market intelligence to municipal bond investors.

Obama administration officials frequently talk about the need to improve the nation’s infrastructure. Yet new regulations published by the Federal Reserve, FDIC and OCC run counter to this policy by limiting the market for municipal bonds.

On Wednesday, bank regulators published a new rule requiring large banks to hold a minimum level of high quality liquid assets (HQLAs). This requirement is intended to protect banks during a financial crisis, and thus reduce the risk of a bank failure or government bailout. Just about everyone would agree that that’s a good thing.

The problem is that regulators allow banks to use foreign government securities, corporate bonds and even stocks as HQLAs, but not US municipal bonds. Unless this changes, banks will have to unload their municipal holdings and won’t be able to purchase new state and local government bonds when they’re issued. The new regulation will thereby reduce the demand for bonds needed to finance roads, bridges, airports, schools and other infrastructure projects. Less demand for these bonds will mean higher interest rates.

Municipal bond issuance is already depressed. According to data from SIFMA, total municipal bonds outstanding are lower now than in 2009 – and this is in nominal dollar terms. Scary headlines about Detroit and Puerto Rico, rating agency downgrades and negative pronouncements from market analysts have scared off many investors. Now with banks exiting the market, the premium that local governments have to pay relative to Treasury bonds will likely increase.

If the new rule had limited HQLA’s to just Treasuries, I could have understood it. But since the regulators are letting banks hold assets that are as risky as or even riskier than municipal bonds, I am missing the logic. Consider the following:

  • No state has defaulted on a general obligation bond since 1933. Defaults on bonds issued by cities are also extremely rare – affecting about one in one thousand bonds per year. Other classes of municipal bonds have higher default rates, but not radically different from those of corporate bonds.
  • Bonds issued by foreign governments can and do default. For example, private investors took a 70% haircut when Greek debt was restructured in 2012.
  • Regulators explained their decision to exclude municipal bonds because of thin trading volumes, but this is also the case with corporate bonds. On Tuesday, FINRA reported a total of only 6446 daily corporate bond trades across a universe of perhaps 300,000 issues. So, in other words, the average corporate bond trades less than once per day. Not very liquid.
  • Stocks are more liquid, but can lose value very rapidly during a crisis as we saw in 1929, 1987 and again in 2008-2009. Trading in individual stocks can also be halted.

Perhaps the most ironic result of the regulation involves municipal bond insurance. Under the new rules, a bank can purchase bonds or stock issued by Assured Guaranty or MBIA – two major municipal bond insurers – but they can’t buy state and local government bonds insured by those companies. Since these insurance companies would have to pay interest and principal on defaulted municipal securities before they pay interest and dividends to their own investors, their securities are clearly more risky than the insured municipal bonds.

Regulators have expressed a willingness to tweak the new HQLA regulations now that they are in place. I hope this is one area they will reconsider. Mandating that banks hold safe securities is a good thing; now we need a more data-driven definition of just what safe means. By including municipal securities in HQLA, bank regulators can also get on the same page as the rest of the Obama administration.

Categories: economics, finance, guest post

Wife beating education for sports fan and everyone else

Do you know what I am doing this morning? I’m glued to ESPN talk radio, which is 98.7FM in the NYC area, although it is a national station and can be streamed online as well.

Here’s a statement you might be surprised to hear from me. In the past decade, sports talk radio has become the best, rawest, and most honest source of information about how our culture condones and ignores violence against women, not to mention issues of race and homophobia. True fact. You are not going to hear this stuff from politicians or academics.

Right now I’m listening to the Mike & Mike program, which has guest Jemele Hill, who is killing it. I’m a huge fan of hers.

The specific trigger for the conversation today is the fact that NFL football player Ray Rice has been indefinitely suspended from playing now that a video has emerged of him beating his wife in the elevator. Previously we had only gotten to seen the video of her slumped body after he came out of the elevator with her. The police didn’t do much about it, and then the NFL responded with a paltry 2-game suspension, after which there was such a backlash (partly through sports radio!) that the commissioner promised to enact a stronger policy.

Questions being addressed right now as I type:

  1. Why didn’t the police give Rice a bigger penalty for beating his wife unconscious?
  2. Why didn’t the NFL ask for that video before now? Or did they, and now they’re lying?
  3. What does it say about the NFL that they had the wife, Janay Rice, apologize for her role in the incident?
  4. What did people think it would look like when a professional football player knocks out a woman?
  5. Did people really think she did something to deserve it, and now they are shocked to see that she didn’t?
Categories: news

Reverse-engineering the college admissions process

I just finished reading a fascinating article from Bloomberg BusinessWeek about a man who claims to have  reverse-engineered the admission processes at Ivy League colleges (hat tip Jan Zilinsky).

His name is Steven Ma, and as befits an ex-hedge funder, he has built an algorithm of sorts to work well with both the admission algorithms at the “top 50 colleges,” and the US News & World Report model which defines which colleges are in the “to 50.” It’s a huge modeling war that you can pay to engage in.

Ma is a salesman too: he guarantees that a given high-school kid will get into a top school, your money back. In other words he has no problem working with probabilities and taking risks that he think are likely to pay off and that make the parents willing to put down huge sums. Here’s an example of a complicated contract he developed with one family:

After signing an agreement in May 2012, the family wired Ma $700,000 over the next five months—before the boy had even applied to college. The contract set out incentives that would pay Ma as much as $1.1 million if the son got into the No. 1 school in U.S. News’ 2012 rankings. (Harvard and Princeton were tied at the time.) Ma would get nothing, however, if the boy achieved a 3.0 GPA and a 1600 SAT score and still wasn’t accepted at a top-100 college. For admission to a school ranked 81 to 100, Ma would get to keep $300,000; schools ranked 51 to 80 would let Ma hang on to $400,000; and for a top-50 admission, Ma’s payoff started at $600,000, climbing $10,000 for every rung up the ladder to No. 1.

He’s also interested in reverse-engineering the “winning essay” in conjunction with after-school activities:

With more capital—ThinkTank’s current valuation to potential investors is $60 million—Ma hopes to buy hundreds of completed college applications from the students who submitted them, along with the schools’ responses, and beef up his algorithm for the top 50 U.S. colleges. With enough data, Ma plans to build an “optimizer” that will help students, perhaps via an online subscription, choose which classes and activities they should take. It might tell an aspiring Stanford applicant with several AP classes in his junior year that it’s time to focus on becoming president of the chess or technology club, for example.

This whole college coaching industry reminds me a lot of financial regulation. We complicate the rules to the point where only very well-off insiders know exactly how to bypass the rules. To the extent that getting into one of these “top schools” actually does give young people access to power, influence, and success, it’s alarming how predictable the whole process has become.

Here’s a thought: maybe we should have disclosure laws about college coaching and prep? Or would those laws be gamed too?

Aunt Pythia gives it up for Polly

Dearest readers. Dearest, dearest readers. Aunt Pythia was just about to crack open her dog-eared google doc of questions when she happened across this Ask Polly column which blew her away (hat tip Julie Steele).

It’s entitled Ask Polly: Why Don’t the Men I Date Ever Truly Love Me? and it’s just about the best advice Aunt Pythia has ever seen for a whole lot of people, men and women. In fact she’s seriously considering stealing certain phrases out of this one column for future use, including the following:

  1. Is it time to stop being so good and start discovering what’s going to transform your life into something big and vibrant and shocking?
  2. Block the “other” from this picture. No more audience. You are the cherished and the cherisher.
  3. Fuck wondering if you’re lovable. Fuck asking someone else, “Am I there yet?” Fuck listening for the answer.

Bravo, Polly! And readers, please go read it.

Categories: Aunt Pythia

Friday morning reading

I’m very gratified to say that my Lede Program for data journalism at Columbia is over, or at least the summer program is (some students go on to take Computer Science classes in the Fall).

My adorable and brilliant students gave final presentations on Tuesday and then we had a celebration Tuesday night at my house, and my bluegrass band played (didn’t know I have a bluegrass band? I play the fiddle! You can follow us on twitter!). It was awesome! I’m hoping to get some of their projects online soon, and I’ll definitely link to it when that happens.

It’s been an exciting week, and needless to say I’m exhausted. So instead of a frothy rant I’ll just share some reading with y’all:

  1. Andrew Gelman has a guest post by Phil Price on the worst infographic ever, which sadly comes from Vox. My students all know better than this. Hat tip Lambert Strether.
  2. Private equity firms are buying stuff all over the country, including Ferguson. I’m actually not sure this is a bad thing, though, if nobody else is willing to do it. Please discuss.
  3. Bloomberg has an interesting story about online PayDay loans and the world of investing. I am still on the search for someone who knows exactly how those guys target their ads online. Hat tip Aryt Alasti.
  4. Felix Salmon, now at Fusion, has set up a nifty interactive to help you figure out your lifetime earnings.
  5. Felix also set up this cool online game where you can play as a debt collector or a debtor.
  6. Is it time to end letter grades? Hat tip Rebecca Murphy.
  7. There’s a reason fast food workers are striking nationwide. The ratio of average CEO pay to average full-time worker pay is around 1252.
  8. People lie to women in negotiations. I need to remember this.

Have a great weekend!

Categories: musing, news

Student evaluations: very noisy data

I’ve been sent this recent New York Times article by a few people (thanks!). It’s called Grading Teachers, With Data From Class, and it’s about how standardized tests are showing themselves to be inadequate to evaluate teachers, so a Silicon Valley-backed education startup called Panorama is stepping into the mix with a data collection process focused on student evaluations.

Putting aside for now how much this is a play for collecting information about the students themselves, I have a few words to say about the signal which one gets from student evaluations. It’s noisy.

So, for example, I was a calculus teacher at Barnard, teaching students from all over the Columbia University community (so, not just women). I taught the same class two semesters in a row: first in Fall, then in Spring.

Here’s something I noticed. The students in the Fall were young (mostly first semester frosh), eager, smart, and hard-working. They loved me and gave me high marks on all categories, except of course for the few students who just hated math, who would typically give themselves away by saying “I hate math and this class is no different.”

The students in the Spring were older, less eager, probably just as smart, but less hard-working. They didn’t like me or the class. In particular, they didn’t like how I expected them to work hard and challenge themselves. The evaluations came back consistently less excited, with many more people who hated math.

I figured out that many of the students had avoided this class and were taking it for a requirement, didn’t want to be there, and it showed. And the result was that, although my teaching didn’t change remarkably between the two semesters, my evaluations changed considerably.

Was there some way I could have gotten better evaluations from that second group? Absolutely. I could have made the class easier. That class wanted calculus to be cookie-cutter, and didn’t particularly care about the underlying concepts and didn’t want to challenge themselves. The first class, by contrast, had loved those things.

My conclusion is that, once we add “get good student evaluations” to the mix of requirements for our country’s teachers, we are asking for them to conform to their students’ wishes, which aren’t always good. Many of the students in this country don’t like doing homework (in fact most!). Only some of them like to be challenged to think outside their comfort zone. We think teachers should do those things, but by asking them to get good student evaluations we might be preventing them from doing those things. A bad feedback loop would result.

I’m not saying teachers shouldn’t look at student evaluations; far from it, I always did and I found them useful and illuminating, but the data was very noisy. I’d love to see teachers be allowed to see these evaluations without there being punitive consequences.

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