"How do you make money doing this?" The answer is simple...

If they hadn't used cast members, I wonder how many viewers would have caught on?

Thoughts on Ray Fisman's much alluded-to charter school article

As mentioned before, Ray Fisman has a piece up at Slate discussing charter schools and it's quite good. Arguments for both sides are spelled out in a clear and balanced manner and, with a few exceptions (and only one of those major), data issues are addressed as thoroughly as is possible in a general interest publication.

That major issue is cheating and data manipulation and it's the one problem I would most like to get Fisman's take on, partly because I really do believe it's probably the biggest challenge facing the reform movement but mainly because of Fisman's expertise in the question of how best to set up metrics and incentives in order to keep things running smoothly.

My other issues are more the sort of technical points you probably couldn't get away with in Slate. For example, take a look at the following from Fisman:

At least part of the disagreement revolves around whether charter schools deliver on their promise to improve student outcomes. You might think this is a relatively easy proposition to evaluate—just compare whether charter school kids do better on tests than those in public schools. But any effort to compare performance is confounded by the fact that the kinds of parents who take steps to enroll their children in charter schools may be the kind of motivated and supportive parents whose children would have done just fine in any school system. (In the current study, charter school applicants do in fact have higher than average test scores even before they enroll. However, other analyses have seen charter school applicants with below-average scores, perhaps because kids struggling in the public system are more apt to look for other options.) And if the longer hours and additional school days that are a feature of many charter schools lead underperformers to drop out, the select group that remains may again be made up of those who would have tested well in any school environment.

This isn't just a question of underperformers. Based on my classroom and tutoring experience, I strongly expect we're seeing a strong interaction between treatment and selection. Different kids respond differently to different approaches. There's a very good chance that those kids (and families) who volunteer for more time and more work are also the kids who respond best to that approach. This is not an argument against charter schools; it is, however, an argument for caution in generalizing results.

A somewhat more serious issue shows up in the next paragraph

But for at least a subset of charter schools, researchers can come fairly close to running a clinical trial where some applicants are enrolled at charters and others are left in the public system purely by chance. The reason is that many charter schools are oversubscribed, and their scarce spots are allocated through a lottery. So whether a particular student gets assigned a slot at the charter school is luck of the draw. (This randomness in gaining admission to sought-after charter schools has been documented recently in the films Waiting for Superman and The Lottery.)

Numerous studies have used this lottery method to analyze the impact of charter schools on standardized test scores, and by and large they report similar findings: Charters in rural or suburban areas don’t do any better than public schools, while in urban areas they are associated with greater test score improvements in math and language. But another important point from past studies is that there is enormous variation in the effectiveness of charter schools. There are some great ones but also some real duds.

Normally, in clinical trials, we can treat our subjects as independent. After all, my odds of developing a side effect should have nothing to do with whether or not you developed that side effect. There is simply no way you can assume that the behavior of one student is independent of the rest of the class and that lack of independence can be extraordinarily difficult to account for. While useful, the lottery method is a long way from giving us the results we would expect from a good clinical trial.

But, that aside, Fisman's point about urban schools is tremendously important and is explored in more detail later:

Some charter school advocates will surely point to the new study as yet more evidence that public school districts should be replaced by a more decentralized approach to education, with a greater emphasis on charter schools. But that’s a very narrow interpretation of the mounting evidence of charter schools’ successes. Focusing on these successes glosses over the many cases where charter schools fail to outperform their public peers. For suburban districts in Massachusetts, for example, the numbers don’t favor the charter school advocates, in large part because suburban public schools in the state are pretty effective already.

This is a huge point and it addresses one of the biggest concerns of reform skeptics, namely that real problems might be used as cover to change the parts of the system that are working but which are ideologically disagreeable to some of the reformers and, as a result, leave a system more broken than it is now.

From the beginning of the debate, the question of how to close the achievement gap has gotten conflated with the question of general education reform. The wretched state of education in high poverty areas was often used to argue that we needed to make immediate sweeping changes to all areas of education and some of those changes were truly radical.

Until recently, many of the reform proposals (firing 80% of new teachers, extensive privatization, effectively removing teachers' right to unionize, and quite a few more) allowed for little if any middle ground, particularly given the amount of data that was not breaking in the reformers' favor. I strongly suspect that Diane Ravitch's Road-to-Damascus conversion came from her inability to move gradually away from her previous positions.

I realize I'm reading a lot into one recent article, but this seems to be where serious reformers like Fisman and Jonah Rockoff are now:

1. Charter schools have a great deal of promise;

but

2. They aren't right for all kids or all situations;

3. and there may be scaling limitations both in terms of teachers and parents;

4. so we should focus on areas where the need is greatest and the evidence for effectiveness is strongest.

This is not the exact list I would have made (OK, technically I did make this list but you know what I mean), still there's nothing here that I would disagree with. What we have now are questions of degree, which tend to be more productive and are much more likely to be convergent.

Which would be nice for a change.

Give my regards to bean town, but...

I found quite a bit to agree with in Ray Fisman's recent piece on charter schools (and even more to like about it), but I do have a couple of issues I wanted to get out of the way. The first involved the threat to reform presented by people who cheat and/or game the system. The second revolved around some of the issues with the heavy reliance on a small set of Boston schools as examples.

I haven't had time to go through the Boston report in detail, but assuming that it's solid (and I have no reason to think otherwise), there are still a couple of reasons to be careful about drawing overly broad inferences from this particular city at this particular point in history.

The first (which is pretty much self-evident) has to do with Boston's unique relationship with higher education. The second, and more important, goes to the heart of the problems with modern urban schools.

Here's Fisman:

Why wouldn’t parents try to get their children into charters that would get the kids on track to go to college? One explanation is that the debate about whether charter schools “work,” with its focus on testing and college placement, loses sight of the many reasons why people choose a school and what they value in an education. Charter schools can be set up for any purpose. Some focus on the arts, others emphasize cultural heritage (there are multiple Hmong charter schools in the Twin Cities alone); some are vocational, others rigorously academic. As Rockoff puts it, asking whether a particular school is good based on test scores or college placement is in many cases the wrong question: “To extend the restaurant metaphor, some people like Italian, others like Thai food. Similarly, many [charter] schools focus on tested subjects, while others might emphasize creative writing or the arts.” Not every charter school is right for every kid. Nor would it be an unmitigated good if all parents could segregate their children by their interests and beliefs.

But a big reason, maybe the big reason, that urban parents send their children to charter/magnet and parochial schools is left out of that paragraph. In general, parents want their children to be successful happy and safe, but of those, safety is the most immediate. These non-standard schools usually have a low or no-tolerance approach to gangs. More significantly, there's a huge anti-gang selection effect.

If you want to compare different urban education initiatives, you have to take into account gang activity and neighborhood violence, not just in terms of absolute levels but in terms of attitudes and expectations, and, while I have no expertise in the area, I do know enough to know that understanding urban crime in Boston over the past twenty years, a period that saw both the advent and apparent collapse of the "Boston Miracle," is something that does require considerable expertise.

None of this undercuts the findings of the study, but it does greatly complicate the process of drawing inferences from it. It's possible that what worked in Boston won't work as well in most urban areas. It's also possible that what worked there will work even better elsewhere. I'm not being cute here -- I could honestly see this going either way -- I'm just trying to emphasis just how messy this data is.

We have here everything your stat professor warned you about. Interactivity. Non-linearity. Heteroskedasticity. Nesting. Selection effects. Missing not at random. Falsification. Hawthorne effects. Volunteer effects. Peer effects. Researcher bias. Sample size issues.

Though I'm not a Bayesian by training, I think the appropriate response is at least in spirit, Bayesian. We will have to factor our doubts about the research in when we weigh our conclusions but that's not the same as ignoring those conclusions entirely.

This brings me back to what I liked about Fisman's article. It's balanced, it acknowledges the limitations of the data, and it suggests focus on areas where reforms will do the most good if their assumptions are sound and will do the least damage if they aren't.

But more on that later.

Two things you should read in their entirety

The first is Mike Konczal's analysis of the drivers of mass incarceration, "Against Law, For Order"

As Bernard Harcourt examines in The Illusion of Order, broken windows policing is predicated on separating neighborhoods into regular, ordered insiders and disordered strangers. [James Q.] Wilson’s view is that regular insiders are the “decent folks” who need to be protected from the disorder generated by strangers. The police, rather than upholding laws and the rights of citizens, uphold order by regulating the behaviors of disorderly insiders and excluding the disorderly outsiders. Criminals lose their insider status in this telling, and excluding them from the community becomes a goal of law. The approach is based on a privileging of order over law, for a lack of order is what attracts criminal behavior, always waiting in the wings to descend.

The second is this short piece from TPM.

A Texas man, Ezekiel Gilbert, has been acquitted of murder after shooting and killing a 23 year old escort he found on craigslist because she would not have sex with him even after paying her $150 fee.

Gilbert was acquitted under a Texas law that allows you to use deadly force to protect your property during a nighttime theft. In this case, the property was either the $150 or the use-rights to the body of 23 year old Lenora Ivie Frago. Frago said she couldn’t give back the money because she had to give it to the driver who was waiting for her.

At the risk of putting too fine a point on this, these deadly force laws have always been about keeping people in their place, socially, economically, racially. Crimes against people who rank low on the hierarchy are seen as less heinous in this Wilson-like view and Ms. Frago ranked low in the eyes of the jury. I think it's safe to say that if a prostitute had killed a man in Texas because he had refused to pay after sex, she would certainly be in prison and probably be on death row.

Contests big and small

This is a follow up of sorts to the recent Project Gutenberg Project post, not in that it involves similar data or statistical techniques but in that both are part of a loose thread on the possible (and in some cases, inevitable) tranformative movements in statistics and research that are generating a lot of talk but perhaps not enough discussion.

Last time I had a post on how we might want to open big data. This time the focus is big contests. Things like the X-Prizes or proposals to offer awards for the development of new drugs. The qualifier 'big' is important; scale plays a significant role in the second half of the post and I'll get to some smaller contests then. For now though, let's consider big contests for huge organizations.

If you put aside reputational capital (which might be a big deal to a small start-up but which wouldn't have much impact on a big multinational), in order for contests to make sense, you're left with the following two inequalities:

Existing incentives < Cost of development

but

Existing incentives + (Prize * Probability of winning) > Cost of development + Uncertainty penalty

That's the picture for the competitors and it's hard to imagine them being satisfied that often.

What about the party offering the prize? For them, much of the benefit comes from the number of groups competing for the prize; presumably the quality of the winning entry should increase monotonically as you add competitors. Number of entries is, of course, inversely related to cost of development.

These contests have long had a special appeal for freshwater economists, but when you get past the open enrollment aspect, the process looks awfully bureaucratic. The competitions are driven by artificial criteria determined by a committee. What's more the criteria generally only have to be met once during a relatively short time frame rather than over the lifetime of the product. This produces a great incentive to cheat.

If you were to sit down and, given these factors, try to come up with the worst possible product to develop with a contest it would probably be in pharmaceuticals. Drug development has huge costs, is largely limited to a small pool of players and is highly vulnerable to fraud (fraud which comes with substantial social costs). Despite this drugs are one of the most frequently proposed applications of the contest model.

The various X-prizes are fortunately not vulnerable to fraud, but they are also poor choices for the contest model: massive projects (though, with the exception of the tricorder, not necessarily that ambitious from a technological standpoint) requiring huge start-up costs that can be undertaken by only a handful of competitors (think dozens instead of hundreds).

The contest model can, however, make a great deal of sense assuming you can meet the following conditions:

A relatively large pool of potential competitors;

Relatively low cost of development;

A relatively high secondary reward/cost of development ratio (secondary rewards include reputation, access to future contracts, publications and for students, grades and thesis material);

Largely ungameable criteria;

Significant positive externalities (for example, a text mining competition might increase the competitors' programming skills and thus increase the skilled labor pool).

For example, DARPA's Grand Challenge contests met all of these conditions. Hundreds of teams competed in the various events and almost certainly produced more quality research and innovative thinking than we would have gotten spending the same money in a straight grant arrangement.

Here, however we run into a different question of scale, not in participants but in number of projects. The Grand Challenge worked not only because it met the conditions listed above but because it took advantage of a certain slack in the system. There were enough people in engineering and computer science departments who were looking for an interesting, high-profile project and who didn't care that the expected value of the compensation didn't come close to paying for the time, facilities and equipment required to compete. How many of these competitions can we introduce before we start cannibalizing the talent pool?

When done badly, contest-based research makes little sense, but even when done well, it can't really be more than a small part of our overall research strategy.

More thoughts on dumping

I'll have more (mostly positive) on this Slate article by Ray Fisman, but first here's (hopefully) one last point on looting.

As part of a good discussion of the state of charter schools, Fisman uses a not-so-good example:

The secret of many charter schools’ success isn’t a mystery: longer hours and additional school days, which are part of a “no excuses” philosophy that emphasizes frequent testing and often requires even longer days from charter school teachers. When public schools integrate these elements—as in a pilot project run by Harvard economist Roland Fryer in Houston, early evidence suggests those schools are seeing the same gains as high-performing charters.

But the success of charters doesn’t necessarily provide us any answers about what will improve education on a larger scale. KIPP, the nationwide network of charter schools and one of the great success stories of the charter movement, has 125 schools serving 41,000 students, making it less than one-twentieth the size of the New York City Department of Education. It isn’t clear that there are enough teachers willing to put in 10-hour days or enough parents who will force their kids to endure the extended hours of instruction. To this point, one recent study by MIT graduate student Christopher Walters argues that lack of demand by parents will be a significant limiting factor in the further expansion of charter schools.

Before we jump to success story in this case, we need some context. We know that KIPP at the very least tolerates principals who engage in large scale dumping (see here and here) and for reasons I've mentioned before and will recap shortly, dumping is one of the nastiest but most effective ways of gaming the system.

Of course this isn't just a KIPP issue. Here's an excerpt from a letter sent by a principal of an LA public middle school principal to Diane Ravitch:

Since school began, we enrolled 159 new students (grades 7 and 8). Of the 159 new students, 147 of them are far below basic (FBB)!!! Of the 147 students who are FBB, 142 are from charter schools. It is ridiculous that they can pick and choose kids and pretend that they are raising scores when, in fact, they are purging nonperforming students at an alarming rate—that is how they are raising their scores, not by improving the performance of students. Such a large number of FBB students will handicap the growth that the Audubon staff initiated this year, and further, will negatively impact the school's overall scores as we continue to receive a recurring tide of low-performing students.

The specific problem here is that even though principals at most charter schools (including KIPP) are almost certainly concerned about their kids, the incentives are tragically misaligned, encouraging schools to shuffle students in ways that are far worse than zero sum.

If you've taught in one of these achievement-gap-closing schools, you know that a small number of students demand a disproportionate amount of your resources, both in terms of instruction and classroom management (particularly for inexperienced teachers). These same students also tend adversely affect morale and social norms.

While it's true that sometimes a transfer turns out to be a good thing for a kid in the long run, at the time, being forced out of one school and shoved into a strange one is disruptive, stressful and insulting. Kids who were confused by the material will generally find themselves even more confused. Kids who were angry will generally find themselves even angrier. Kids who were overwhelmed and stressed out will... You get the drift.

This is a serious, perhaps even fatal flaw in the current configuration of most reform proposals, a misalignment of incentives that actually allows administrators to improve their schools' ratings and make life easier for themselves and their faculties by increasing one of the worst possible outcomes for students.

It is also a surprisingly easy flaw to fix. You simply assign an appropriate penalty for attrition. The difficult part is getting the issue into the debate.

I should add that most administrators don't treat this question lightly. When I taught at a parochial prep school in Watts, the principal agonized over every decision to transfer out a student and I believe she was much more representative of administrators than is KIPP's Randy Dowell. Most educators will try to do the right thing despite the incentives, but that's not a set-up you want to rely on. Incentives have a way of eroding good intentions, particularly in systems where the ethical players actually have less job security.

At the risk of pounding this point in too hard, you cannot have a reform movement without trustworthy data. The level of gaming and outright cheating we've seen greatly undercuts our ability to make rational, data-driven policy decisions and that level is only going to get worse until we fix the incentive system that's driving it up.

You can listen to this before I do... if you hurry

A couple of years ago, This American Life did one of the best pieces of reporting to date on patent trolling. Now they have a followup which Felix Salmon calls "fantastic," though I'm not sure if he means 'great' or 'the stuff of fantasy' (both would seem to apply).

I just downloaded the episode and I didn't pay these guys a dime:

Host Ira Glass and Zoe Chace from NPR’s Planet Money talk with Jim Logan and Richard Baker of Personal Audio, which claims it holds a patent used by all podcasters. Podcasters, they say, owe them money. Only catch: their company never made a digital podcast or invented a way to download it into a listening device. What they did, back in 1996: they patented the idea that such a thing can be done. Now they’ve asked podcasters to pay them licensing fees.

Thomas Friedman demonstrates the Roommate Effect

I have mixed feelings about criticizing Thomas Friedman. For one thing, it's been done. For another, he did some really impressive reporting on the Middle East and I suspect that, if he stuck to that topic, he would still be adding a great deal to the conversation.

In the role of public intellectual, though, he's pretty much been a disaster (insert Peter Principle digression here), and he keeps coming up with passages that are simply too representative not to use as examples of bad punditry.

Which brings us to the roommate effect. The roommate effect is one of the reasons that people who go to elite schools to tend do well professionally.

Imagine a small town populated predominately by people in their early 20s with similar backgrounds who are new to the area. Young people are good at making friends and this scenario is almost perfect for forming new relationships. You have roommates and friends and friends of roommates and roommates of friends. You meet people in the cafeteria and in the coffee houses and in the bars. You find people with common interests in music or movies or art or sports. These people tend to form much of the base of a social network that you will rely on for the rest of your life.

This part of the experience is common to anyone who has gone to a traditional college. But in an elite school, there is a fairly good chance that a new friends will be someone who is or is connected to someone who is rich/famous/powerful. Playing in a college pool league with the son of a Fortune 500 CEO is likely to be a good career move.

And that brings us to this recent Friedman column (mercilessly but not inaccurately satirized by Timothy Burke). The column is basically an unpaid advertorial for the job placement firm HireArt. The weaknesses of the column are a subject for another post; Friedman's lack of understanding of education and the job market is genuinely profound. However he does manage, quite unintentionally, to make an important point about the way things actually work (emphasis added for those who like to skim):

One of the best ways to understand the changing labor market is to talk to the co-founders of HireArt (www.hireart.com): Eleonora Sharef, 27, a veteran of McKinsey; and Nick Sedlet, 28, a math whiz who left Goldman Sachs. Their start-up was designed to bridge the divide between job-seekers and job-creators.
...

The way HireArt works, explained Sharef (who was my daughter’s college roommate), is that clients — from big companies, like Cisco, Safeway and Airbnb, to small family firms — come with a job description and then HireArt designs online written and video tests relevant for that job. Then HireArt culls through the results and offers up the most promising applicants to the company, which chooses among them.

In case you're wondering, Eleonora Sharef got her bachelor's from Yale.

Making hand-to-mouth as difficult as possible

Over at the better-than-it-ought-to-be Cracked.com, columnist John Cheese has a very good piece called "5 Things Nobody Tells You about Being Poor" which includes this sharp observation:

Because having a checking account while poor doesn't just mean you have to be responsible and good at math -- you have to be perfect. Meticulous, flawless record keeping is the difference between surviving and having the bank seize your next paycheck.

It turns out things are even worse than Cheese thought according to this excellent article by Denise Grollmus:

In May, she wrote a check for $91 at an Albertson's grocery store. A few days later, while reviewing her bank account, she noticed that the check had bounced. Orr headed back to Albertson's to make good on her payment. But she was told that the store had already placed her in collections. It was out of the grocer's hands.

A month later, Orr received a letter from the district attorney's office. It inexplicably accused her of intent to commit fraud, noting that she was now eligible for "up to one year in the county jail." The only way to avoid criminal charges: participate in the county's "voluntary" bad-check restitution program.

"The letter really made me think I'd go to jail if I didn't," she says.

But the DA wanted more than $91 back. Though California law restricts the penalty on bad checks to $25, the letter demanded $333.51, which included $175 for a "voluntary" financial accountability class she'd have to take.

Orr didn't even consider arguing her innocence. She just wanted the problem solved. So she called the phone number on the letter to make arrangements to pay in cash at the sheriff's department. When she was told she could only send a check to a P.O. box, Orr grew suspicious.

"That's when I asked if I was actually talking to someone in the DA's office," she says. "And they said no, that they were a company being paid to represent the DA."

In fact, Orr had contacted Corrective Solutions, a private company from San Clemente. According to its website, it handles bad-check cases for 140 district attorneys nationwide — jurisdictions that oversee 65 million people, from Colorado to Florida, Michigan to Washington.

Consider it the privatizing of justice. Instead of investigating bad-check complaints, prosecutors simply pass them along to Corrective Solutions. The company then uses official DA letterhead to threaten jail time if consumers don't pay up. Corrective Solutions also runs the "voluntary" financial-accountability classes, and prosecutors get a cut of the profits while barely lifting a finger.

The entire system runs on a one-size-fits-all presumption of guilt. No one's bothering to investigate whether the check-writer was working a scam or merely suffering from a momentary lapse of mathematics.

Orr e-mailed Corrective Solutions, saying she'd be happy to repay the $91 plus a $50 fee, though she wanted to skip the "voluntary" class, which she couldn't afford.

Corrective Solutions didn't respond — but the threatening letters kept coming.
...
"That's what they do," Arons says. "Whenever we win one of these cases, they declare bankruptcy in order to avoid paying out damages. It's absolutely maddening."

The same thing had happened a year earlier, when Arons won a similar suit against American Corrective Counseling Services. A federal court ruled that, despite the company's claims of immunity, it had misrepresented itself, made false threats of prosecution and charged exorbitant penalties.

Once again, Arons's clients were unable to collect on their victory. American Corrective also declared bankruptcy, saying it couldn't repay investors — despite having collected $47 million in fees over the previous four years.

A few months later it was back in business, re-formed as Corrective Solutions and "free and clear" of all liability, according to court records.

Today it's the biggest bad-check collector of them all.

...
Consumer-rights lawyers estimate the company sends out around 2 million letters annually. (The company did not respond to repeated interview requests.)

The Corrective Solutions website does its best to imply that it's an arm of law enforcement. A slide show gently fades in and out with statements about "holding offenders accountable for their actions." An interactive map shows its 140 contracts with DAs nationwide.

Nowhere does it say that most of these "offenders" have never been investigated or formally charged with a crime.

The site boasts dozens of quotes from pleased prosecutors, who sing praises of reduced caseloads and crime rates. Contra Costa District Attorney Robert Kochly offers the most telling endorsement, noting he's grateful for "more revenue to my office."

District attorneys don't pay a cent for Corrective Solutions' services. Instead, the company pays them to run their bad-check programs. All a prosecutor must do is hand over official letterhead, along with a list of bad-check writers and a bit of "case criteria."

Between 2005 and 2008, Los Angeles County raked in more than $1 million. Miami-Dade made over $375,000.

Looting phase in education reform part... [damn, lost count again]

I apologize to long-time readers who have had to listen to this rant for years now but if you:

1. Spend billions of taxpayer money on privatization projects

2. with little scrutiny and easily gamed metrics

3. and view the whole process through a simplistic hero/villain narrative conducive to charlatans and con artists

... what in the hell do you expect to happen?

Laura Macomber writing for Bill Moyers and company:

On to education: Among ALEC’s 2013 legislative priorities is a call for “improving education” — a goal that, conveniently, can also improve corporate bottom lines. In 2011, Tennessee passed an ALEC-inspired bill allowing taxpayer money to be spent on for-profit education. K12 Inc., an online education company, pounced immediately — and landed a multi-million dollar deal to provide online education to Tennessee students. K12 is one of ALEC’s corporate members and a member of its education task force. The company helped to craft the ALEC model bill that inspired Tennessee’s for-profit education law. And the legislators responsible for introducing the bill? That’s right: they’re ALEC members too.

Fast forward to February 2013, when Nashville’s News Channel 5 conducted an investigation into K12’s Tennessee Virtual Academy and found what appears to be evidence of grade-fixing. An internal school e-mail reads: “After looking at so many failing grades, we need to make some changes… [Each] teacher needs to take out the October and September progress; delete it so that all is showing is November.” If, as the email suggests, student progress reports for September and October included “so many failing grades,” then simply excluding them might mislead parents — and K12 investors — into thinking that the school is succeeding — even if it’s not. Is this the kind of “educational improvement” ALEC was striving for when it published its 2013 priorities?

I came across this as part of a good piece by Charles Pierce arguing that the political press needs to focus on events outside of DC.

If you have the stomach for more on the topic, both the New York Times and Nashville's CBS affiliate have done good reporting on the story. Here's a taste of the NYT story:

Some teachers at K12 schools said they felt pressured to pass students who did little work. Teachers have also questioned why some students who did no class work were allowed to remain on school rosters, potentially allowing the company to continue receiving public money for them. State auditors found that the K12-run Colorado Virtual Academy counted about 120 students for state reimbursement whose enrollment could not be verified or who did not meet Colorado residency requirements. Some had never logged in.

p.s. I've got a thread on charter schools in the pipeline prompted by this generally well-balanced article by Ray Fisman. That makes this a good time to emphasis something about these looting stories. These incidents represent an existential threat to the reform movement. If you believe in choice, competition and accountability, then your biggest obstacle isn't unions or reform skeptics; it's the people who cheat and game the reforms. As long as we have widespread issues like test answers being changed, results being suppressed, and extensive student-dumping, then none of our data will be trustworthy enough for data-driven strategies.

Interconnectivity

One of the things that is easy to forget is just how interconnected everything is in the modern economy.  Consider this discussion of public employee conferences versus private industry conferences:

When much more lavish conferences are held by private sector US corporations or professional associations (including academic associations, if your university doesn’t pay for it), they cost the US government lots of money too. Within various rules and strictures, they’re considered legitimate tax deductible expenses which people and (as best as I understand it) businesses can declare against earnings. You can make the case, obviously, that these conferences and events are mostly useless boondoggles. You can equally well make the case, if you want to, that they’re useful opportunities for social networking, building up esprit de corps and all of that good stuff. What you can’t make the case for, unless there’s some very subtle argument which escapes me, is a distinction under which conferences (for government employees) that cost the US government lots of money are obvious cases of abuse and waste, while more lavish conferences (for non-government employees) that cost the US government lots of money, are perfectly legitimate business expenses that we shouldn’t be bothering our pretty little heads with.

While this argument does gloss over some important distinctions (in theory, corporations can do all sorts of sub-optimal things if their owners agree), it does point out that the modern economy is deeply interconnected and all sorts of demarcation points miss just how interconnected it is.  It is true that we see a difference between reducing a bill and giving money.  But if charitable deductions are tax deductible then we have made the decision to subsidize things that people who give money value.  This may be a completely sane and wise decision -- I am not going to take a side on that point -- but it is a reduction of government revenue under the current social structure that we have. 

This sort of thing is common in all sorts of ways -- governments are also customers and act as important service providers in a number of contexts (I think it is reasonably non-controversial that purely private armies has tended to result in sub-optimal outcomes whenever it has been tried). 

As for the conference piece -- it is a big country and personal relationships improve the operation of any organization.  It seems to me that we pay a lot for government and it makes sense to have it run smoothly.

A new* kind of poker

[*Probably not -- as with chess, fresh variants on poker are rare]

I've been thinking that some of our recent threads come down to how information flows or fails to flow through a system and sometimes when trying to find a new way of thinking about a problem, I find it useful to find an analogous situation in a game, or, failing that, to tweak a game to get an appropriate analogy out of it.

Here's what I came up with. I'm not sure it's all that playable (and I'm open to improvements), but it does raise some of the right questions.

This is  a variant of seven card stud with one major addition.

Start by dealing the cards, three up, four down. Players check their cards then complete a normal round of betting.

Starting with the player to the left of the dealer, the bidding round starts. The bidder indicates another player and offers a certain amount to see a certain card* (for example "five dollars for the second hole card from the left"). If the offer is accepted, the card is shown to the bidder. A bid can be extended even if the other player has folded. Each accepted offer starts another round of betting. Additional bidding rounds continue until there is a round with no offers accepted.

Would this work? I'm not sure, but it does give one a chance to think through different situations involving the exchange of information in a zero sum game. For example, the information of what's in your hand is almost certainly worth more than what you'd be offered if you intended to play out the hand but is of almost no value (other than giving some insight to your playing style) if you intend to fold. I believe that bids should run the highest with seven players, a large pot and a small number of folds.

I believe there are other games with negotiated exchanges of information but I'm drawing  blank on what they are.


*Unlike roll-your-own games where the player chooses which card to reveal.

Drug Policy

Megan McArdle has the goods on a really depressing reverse correlation between people in prison for drug offenses and drug prices.  Insofar as harsh prison sentences were intended to keep the price of illegal drugs high, they have failed. 

Drug policy is really complicated.  Drugs that are essential for helping people cope with acute pain can become problematic with long term use.  The incredible efficacy of opioids at reducing short term pain has led to less assessment of the efficacy for long term use for chronic pain.  Ironically, these sorts of dilemmas can lead to both under use and over use of the same medications. 

I wish I had a happy and optimistic solution.  I remain interested in the experiments in Washington and Colorado in hopes that this might show some evidence of harm reduction.  But no path forward is without tough compromises. 

Burger King vs. Jack in the Box -- More thoughts on corporate competence

While on the subject of corporate competence, this recent story  seems like a good excuse to do a post on on one of the most consistently incompetent companies on the business landscape.

One of the most intriguing and for those inclined toward schadenfreude entertaining things about Burger King is the way that for about the past thirty years, with a variety of managers and owners, the company has been so bad at so many things.

Their PR is often clumsy (you generally want to avoid headlines about you copying your competitor's products).

Their relationship with their franchisees is terrible.

Relations became so antagonistic that last year the [franchisees'] association took the extraordinary step of filing two class-action lawsuits challenging management decisions. One suit, filed in U.S. district court in San Diego, came after the company sought to divert to national advertising millions of rebate dollars that franchisees get from Coca-Cola Co. and Dr. Pepper Snapple Group Inc. for selling their beverages. That suit was dropped after the company agreed to augment its ad budget by other means.

The other association suit opposed a company mandate that franchisees sell a double cheeseburger for $1. That suit, still pending in federal district court in Miami, contends that management can only suggest prices franchisees charge. Franchisees had voted down the proposed sandwich, arguing they would lose money at $1, but Burger King introduced it anyway. In court papers, the company argued that an appeals-court ruling in another suit involving pricing gave it the right to make the move. Since the filing, Burger King has taken the double cheeseburger off its $1 Value Menu, and raised its suggested price, but announced plans to add more items to that menu.

Burger King also faces a suit brought by three franchisees—two are in the company's Hall of Fame for exceptional franchisees—challenging a mandate that they keep their restaurants open late at night. It "costs franchisees $100 an hour, but they gross only $25 to $30 an hour," says Robert Zarco, a Miami attorney representing the plaintiffs. The two sides are awaiting a hearing on the company's motion to dismiss that litigation, which was filed in Dade County Circuit Court in Florida in December 2008.

The dealings with the franchisees demonstrates another reason why BK schadenfreude is so satisfying. The incompetence often comes mixed with a curious nastiness.

Here's Eric Schlosser, author of Fast Food Nation, writing for the New York Times:

In 2005, Florida tomato pickers gained their first significant pay raise since the late 1970s when Taco Bell ended a consumer boycott by agreeing to pay an extra penny per pound for its tomatoes, with the extra cent going directly to the farm workers. Last April, McDonald’s agreed to a similar arrangement, increasing the wages of its tomato pickers to about 77 cents per bucket. But Burger King, whose headquarters are in Florida, has adamantly refused to pay the extra penny — and its refusal has encouraged tomato growers to cancel the deals already struck with Taco Bell and McDonald’s.
...
Telling Burger King to pay an extra penny for tomatoes and provide a decent wage to migrant workers would hardly bankrupt the company. Indeed, it would cost Burger King only $250,000 a year. At Goldman Sachs, that sort of money shouldn’t be too hard to find. In 2006, the bonuses of the top 12 Goldman Sachs executives exceeded $200 million — more than twice as much money as all of the roughly 10,000 tomato pickers in southern Florida earned that year. Now Mr. Blankfein should find a way to share some of his company’s good fortune with the workers at the bottom of the food chain.

And then there are the ad campaigns. You would be hard pressed to find a comparable company with a worse run of advertising. You have to go back to the Seventies and early Eighties to find effective BK commercials. Since then a variety of agencies have produced a steady stream of mediocre ads ranging from forgettable to off-putting (try Googling "creepy Burger King").

Actually, there is at least one BK campaign that people in the advertising industry are still talking about, but not in a good way. In response to the proto-viral success of Joe Sedelmaier's "Where the Beef" ads, BK engaged J Walter Thompson (who were and are kind of a big deal) to set up a massive nation wide campaign of ads and cash prizes for people who spotted "Herb."



Here's Wikipedia's description of the aftermath:

The promotion met with some positive reviews. Time called it "clever", and a columnist for the Chicago Tribune stated that Herb was "one of the most famous men in America". Ultimately, however, the Herb promotion has been described as a flop. The advertising campaign lasted three months before it was discontinued. One Burger King franchise owner stated that the problem was that "there was absolutely no relevant message". Although some initial results were positive, the mystique was lost after Herb's appearance was revealed during the Super Bowl. Burger King's profits fell 40% in 1986. As a result of the poorly-received campaign, Burger King dropped J. Walter Thompson from their future advertising. The US$200 million account was given to N. W. Ayer.

Recently, an MSNBC article listed this as the second worst Superbowl ad of all time.

Burger King has little competition for worst managed large fast food company and absolutely for worst marketed. McDonald's, Wendy's, Subway, Hardee's/Carl's Jr, and the Yum brands have all had better campaigns, but my vote for best (at least for the past 18 years) is the smart and innovative regional chain Jack-in-the-Box.

The commercials come from the aptly named ad agency, Secret Weapon which has an interesting policy.

We will never take on more than three clients at a time. This means our clients get hands-on attention from the principals of the agency. You may have been promised this before by other agencies, but it’s tough to give 25% of your time to 18 different accounts.

Our three client rule means you get to work with the people you meet in the pitch. And since we rarely pitch we’re able to keep our attention on existing clients, not potential ones. As it should be.

The ads are sharp and funny (sometimes too sharp -- certain competitors were decidedly unamused by an ad for a sirloin burger that pointed at a diagram of beef cuts and asked "where's the angus?"). More importantly, they're good ads; they focus on the product.





Check out Jack's expressions on this one.




The following comment appeared on the site where I found the following mini sirloin burgers ad.  Could say something about the cultural impact of advertising but I'll just leave you with the image.

"Shit you not, guard controlled TV for the cell block, most of 128 inmates singing along to this. Almost magical except for the whole incarceration thing."



And in the did-they-just-say-that-? category.

Interesting article in the New York Times by Motoko Rich on why it seems to be more difficult to raise reading scores than it is to raise math scores. I don't have time to discuss this in depth, but I will say that having taught math, English and  reading, I always found math to be the easiest subject to teach. By comparison I never felt I had a handle on the best way to teach language (or even if there is a best way).

That said, these are all excellent points:

Teachers and administrators who work with children from low-income families say one reason teachers struggle to help these students improve reading comprehension is that deficits start at such a young age: in the 1980s, the psychologists Betty Hart and Todd R. Risley found that by the time they are 4 years old, children from poor families have heard 32 million fewer words than children with professional parents.

By contrast, children learn math predominantly in school.

“Your mother or father doesn’t come up and tuck you in at night and read you equations,” said Geoffrey Borman, a professor at the Wisconsin Center for Education Research at the University of Wisconsin. “But parents do read kids bedtime stories, and kids do engage in discussions around literacy, and kids are exposed to literacy in all walks of life outside of school.”

Reading also requires background knowledge of cultural, historical and social references. Math is a more universal language of equations and rules.

“Math is really culturally neutral in so many ways,” said Scott Shirey, executive director of KIPP Delta Public Schools in Arkansas. “For a child who’s had a vast array of experiences around the world, the Pythagorean theorem is just as difficult or daunting as it would be to a child who has led a relatively insular life.”

Education experts also say reading development simply requires that students spend so much more time practicing.

And while reading has been the subject of fierce pedagogical battles, “the ideological divisions are not as great on the math side as they are on the literacy side,” said Linda Chen, deputy chief academic officer in the Boston Public Schools. In 2011, 29 percent of eighth graders eligible for free lunch in Boston scored at proficient or advanced levels on federal math exams, compared with just 17 percent in reading.