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Quants for the rest of us

March 8, 2012

A few days ago I wrote about the idea of having a quant group working for consumers rather than against them. Today I wanted to spell out a few things I think that group could do.

The way I see it, there’s this whole revolution of data and technology and modeling going on right now, but only people with enough dough to pay for the quants are actually actively benefiting from the revolution. So people in finance, obviously, but also internet advertising companies.

The problem with this, besides the lopsidedness of it all, is that the actual models being used are for the most part predatory rather than helpful to the average person.

In other words, most models are answering question of the form:

  1. how can we get you to spend money you don’t necessarily want to spend? or
  2. how good a credit risk are you? or
  3. how likely are you to come back and spend more money? or
  4. how can we anticipate the market responding to end-of-month accounting shenanigans? I just threw this one in to give people a sense of how finance models work.

It all makes sense: these are businesses that are essentially bloodthirsty, making their money off your clicks and purchases. They are not going away.

Then there are some models that are already out there trying to make the user experience more enjoyable. They answer questions of the form:

  1. If you like that, what else may you like? (Pandora, Netflix, Google)
  2. If you bought that last week, maybe you’d like to buy it again this week?
  3. If you bought that, maybe you’d like to buy this now?

The problem, as you can see, is that these second, helpfulish kinds of things quickly devolve into the first, predatory kinds of things. In other words, you’re being bombarded by ads and suggestions for spending more money than you actually want to spend.

What about stuff that you actually don’t want to do but that is probably not directly profitable to anyone? I’d love to see technology used to tackle some of these chores:

  1. Figuring out what the best deal is on loans (credit card, student loans or mortgages), without becoming a lawyer. Here I’m not just saying they should all be clear about their terms- that’s a job for the CFPB. I mean there should be a website that asks me a few questions about what I need a loan for and points me to the best deal available.
  2. Finding the best price for something. I discussed this briefly here.
  3. Warnings about weird conditions and agreements, like mandatory arbitration.
  4. Help finding a good doctor or a good plumber etc.
  5. Help knowing when to go to the DMV or other public services building so the lines are bearable, or even better a way to do stuff on your computer or phone and avoid the trip altogether.
  6. Getting your kids’ medical records to their schools and camps safely and efficiently.
I’m sure I’ve missed a bunch of things (please tell me what I’ve missed!). In general, the consumer is constantly being asked to make decisions in situations where there’s unnecessary information asymmetry. A quant model for consumers should try to rebalance that asymmetry.

Some of these things already exist (like the doctor thing) but aren’t well-known or well-publicized, so wouldn’t it be cool if this quant group also provided an app that would aggregate all these services into one place?

And for the things like #4, where you want to be warned before you buy, it’s too much work to go back to a webpage to check everything before buying. Instead, the app could follow you around the web when you’re shopping and overlay a “bullshit warning” icon on the potential purchase in situations where people have complained about unreasonable terms and conditions.

Let’s use technology in our favor. Instead of the companies collecting information about us, let’s collect information about them. Come to think of it, the CFPB should start this quant group today.

Categories: data science
  1. Joe
    March 8, 2012 at 9:14 am

    You bring up a lot of good points. I work for an internet advertising company and would love to see the technology we use for targeting purposes used for something other than selling products. I would love to see the same tech and predictive techniques put to use for public health issues or as a suicide prevention/outreach.


    • March 13, 2012 at 5:00 pm

      Are you sure?


      • Joe
        March 14, 2012 at 3:27 pm

        Am I sure that a lot of good points were brought up?
        Am I sure that I work for an internet advertising company?

        Can you be more specific?


  2. K.J.
    March 8, 2012 at 10:01 am

    For number 4, I’ve heard advertising for Angie’s List (spelling??) on NPR, and have a friend that used it for finding a good contractor when he was having major plumbing work done.


  3. March 8, 2012 at 11:42 am

    It sounds as though you’re advocating some sort of crazy alternate universe.
    How do I join up?


  4. March 8, 2012 at 12:29 pm

    Great ideas! Here are two more:

    As consumers: as a way of applying global pressure on corporations. For example, working with labor rights activists, getting workers around the globe to report terrible working conditions – by tweeting? something simple – and then consolidating the data in a way that would let consumers around the globe know what Apple, etc were up to. In turn, this work could be used to help launch coordinated campaigns, such as going after all computer manufacturers at the same time (so companies that treat their workers better wouldn’t lose out competitively).

    As citizens: cities and states produce tons of data, both numbers and text, that are close to worthless for most of us. Using city data to find out when’s your next bus is good; using city data to find out which One Percenters are getting taxpayer subsidies is even better. Or, lots of cities are starting to track CO2 emissions as part of plans to reduce them, but turning that data into info the rest of us could use politically is pretty hard. Quants for the 99% & open source software to the rescue!


    • madalife
      March 9, 2012 at 10:50 am

      Most of labor right activists in poor countries (especially in Africa) focus on wages for civil servants but not for those who work in free zone textile companies (in Madagascar, for e.g., they used to make around $20 a month 6 years ago). Lots of those workers may not have access to the Internet, let alone Twitter. You may have heard Charles Kernaghan (http://hellocoolworld.com/files/TheCorporation/Kernaghan.pdf, page 1) and Naomi Klein (http://hellocoolworld.com/files/TheCorporation/Klein.pdf, page 3) talking about labor rights and working conditions in the documentary movie “The Corporation”.
      It’s up to us consumers to get to know where our food, products come from. Who doesn’t like chocolate but did you know that in Ivory Coast, they use child labor for cocoa production (http://www1.american.edu/ted/chocolate-slave.htm, http://video.cnbc.com/gallery/?video=3000023564)


      • rethinkecon
        March 9, 2012 at 11:47 am

        Actually, the idea came from friends who are involved in international labor organizing campaigns & folks who used to be part of United Students Against Sweatshops (and some experiences from when I used to work for a union). You don’t need all or even most workers to have Net access, just enough who are activists & have access via cell phones (or access to emai via cell phones). But my broader point is that it’s worth exploring how quants could make it easier for consumers and activists around the globe to work together.


      • March 9, 2012 at 12:08 pm

        Or was it internet cafes that the folks they were working with had access to? It’s been a while..


  5. March 8, 2012 at 4:02 pm

    I recently met someone who works for ideas42, which is a behavioral econ think tank / non-profit consultancy. They seem to be not quite as quant-minded as what you’re envisioning, but concerned with similar problems. For example, the guy I met was working on smart disclosure: lobbying for the new disclosure requirements on home loans, etc. to be machine readable. Here’s the relevant website section: http://www.ideas42.org/social_problems.php.


  6. March 9, 2012 at 2:40 am

    Along similar lines as AutoSlash, there’s Priceonomics: “Make Sure You Don’t Get Ripped Off!” http://priceonomics.com/


  7. plm
    March 9, 2012 at 6:33 am

    Those are really great ideas. They could be funded by taxes on advertising. :}


  8. March 9, 2012 at 9:11 pm

    b^.^d – double


  9. Richard Yeh
    March 19, 2012 at 8:33 pm

    On the quantitative side, it sounds like you agree with Thaler and Sunstein. Here’s an excerpt from Nudge (2008, p. 93):

    “Credit cards are not alone in having complex pricing schemes that are neither transparent nor comprehensible to consumers. Think about mortgages, cell phone calling plans, and auto insurance policies, just to name a few. For these and related domains, we propose a very mild form of government regulation, a species of libertarian paternalism that we call RECAP: Record, Evaluate, and Compare Alternative Prices.”


  10. May 12, 2012 at 12:49 pm

    I don’t see the problem with recommendation technologies as being that they’re predatory. I think they’re just not very good. If recommendations were truly united with preferences it would be capitalism-as-social-welfare wet dream.


  11. May 12, 2012 at 12:52 pm

    I don’t see how 1, 3, or 4 are quantitative. Trying to quantify “good doctor” sounds like what preceded teaching-to-the-test. Whatever gets measured, gets managed.


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