Worth a quick look

Very worthwhile read on the nuances of economics. In particular:

"You see, in a capitalist economy, wealth and well-being are supposed to redistribute to everyone. As capital is allocated and risk managed more efficiently, more opportunities are created for all. Wealth and well-being are supposed to become less concentrated in the hands of a few and more dispersed to the hands of the (often more and increasingly) productive many. Much of Wealth of Nations is devoted to describing the instances and the conditions under which this seemed to be occurring as the economy of Great Britain transitioned from feudalism to one of commercial exchange, industrial production, and small business owners."

H/t: Mark Thoma

Diffferences in Professional Standards

I find it fascinating how the rules change between disciplines. In Epidemiology, the idea of a supervisor being an author on papers resulting from a doctoral discipline is completely non-controversial (and standard practice).

I think it is the difference in resources. The question is asked:

If, as an undergraduate, you handed in a paper that had partially been written by someone else, you would be sent down to the Dean's office, read the riot act with regard to academic integrity, and (probably) given an automatic F in the course.

Why doesn't the same thing happen with respect to a PhD thesis?

In Epidemiology the answer is that there would be no PhD theses under this rubric. Data takes too long to collect and analyze. Furthermore, granting agencies are simply unwilling to give massive amounts of grant funding to a PhD student. All of our research is deeply collaborative and single authored work can only happen in areas quite abstracted from reality or for very senior people who have access to data in a way that others do not.

A war with Iran would look nothing like WW II

When someone says something outrageous and stupid, there's a tendency (particularly on the blogosphere) to lock in on the outrageous part and give the stupidity a pass. Today's case in point comes from David Broder (via a suitably appalled Mark Thoma):

What else might affect the economy? The answer is obvious, but its implications are frightening. War and peace influence the economy.

Look back at FDR and the Great Depression. What finally resolved that economic crisis? World War II.

Here is where Obama is likely to prevail. With strong Republican support in Congress for challenging Iran's ambition to become a nuclear power, he can spend much of 2011 and 2012 orchestrating a showdown with the mullahs. This will help him politically because the opposition party will be urging him on. And as tensions rise and we accelerate preparations for war, the economy will improve.

I am not suggesting, of course, that the president incite a war to get reelected. But the nation will rally around Obama because Iran is the greatest threat to the world in the young century. If he can confront this threat and contain Iran's nuclear ambitions, he will have made the world safer and may be regarded as one of the most successful presidents in history.

Broder is, of course, suggesting just that, but while everyone is reacting to the indecency or, like Dean Baker, pointing out that infrastructure spending has the same effect, no one seems to be focusing on the stupidity of the analogy. So here I go in handy list form:

1. We don't have a draft. This war would mainly be fought with the forces at hand with minimal impact on unemployment;

2. WW II required a massive build-up in our air force and navy. How many more carriers are we going to need if we go war with Iran? In other words, this war would do little to absorb excess capacity;

3. We had a tightly controlled economy during the war that created a build-up in consumer demand. How likely is it that a GOP Congress would go along with that?

4. Immediately after the war, we extended a huge and unprecedented social safety net for the returning forces. Any chance of that happening?

If you're going to suggest fighting a war for economic gain, at least try to pick one that would actually do. Otherwise, you're being evil and stupid.

And now for something completely different...

I'll be taking a break from p-values and peer effects tomorrow to watch the latest instalment of Sherlock now airing on Masterpiece Mystery. Mark Gatiss and Steven Moffat provide the scripts. That alone should be enough to get you to tune in.

Now if we can just get them to air Jekyll.

The Volunteer Effect

Before I jump back into the weeds here, let's step away for a paragraph and remind ourselves that the question of the moment is "Do charter schools provide a good, workable model for the overall education system?" This is a high bar, but it's one that the reformers themselves set. There are things that many charter schools do which tend to improve student performance and attitude, but which would lose their effectiveness if applied to the general population.

Which brings us to the volunteer effect.

In Influence, Robert Cialdini observes that "we accept inner responsibility for a behavior when we think we have chosen to perform it in the absence of strong outside pressures." (I couldn't find my copy but it's on page 97 of the library's.)* It's part of the chapter on commitment which is filled facts and examples that are relevant to the current education debate.

Indoctrination plays a large part in the culture of schools like KIPP and HCZ. This isn't a bad practice -- all schools do it to some extent -- but it is particularly important when a school tries to greatly increase student work load. If you are assigning hours of homework every night and study sessions every Saturday and you expect reasonable compliance, you are going to have to make the students believe that hard work is the right thing to do and that it will lead to large rewards.

That kind of belief modification is easiest when subjects see themselves as volunteers who not only chose to engage in the accompanying behaviors but who actually made an effort to do so. This works well in the current incarnation of charter schools, but everyone can't be a volunteer. When educators show the ability to inspire these beliefs in the kids who don't want to be there, then we'll have something.







* As part of this discussion, Cialdini also mentions that small rewards tend to create more long-lasting behavior changes than large rewards. This sets up an interesting topic for a future blog post on economics and compensation.

Fortune's smartest business books

I came across this while looking up some background for an upcoming post and clicked the link mostly of a sense of morbid curiosity (cynical people should generally avoid the business section of their neighborhood book store), but I was very pleasantly surprised.

Covers everything from Wealth of Nations to Blackhawk Down. Definitely worth a browse.

Mysteries of resonance

Messages are always a bit strange when you're not the target audience, but usually you can manage some level of understanding if you look at it from the target's perspective.



I don't agree with this protester's tee-shirt but I understand how he feels. On some level we all consider politicians in the other party liars and I suspect we have all indulged in the fantasy of saying some variation of "you lie" to a politician we particularly dislike and disagree with.

But sometimes, no matter how you try to see things from the other guy's vantage, you simply can't understand how something provokes its intended response.

Carly Fiorina's campaign spent tens of millions of dollars on an ad showing a clip of Barbara Boxer insisting that a witness at a Senate hearing refer to her as 'senator' saying "I worked so hard for that title." Now another group is using this phrase as a tagline.



Perhaps it would be different if I could have gotten Zucker's video to work, but I can't imagine how hearing a senator say "I worked so hard for that title" would generate much of an emotional response. Kay Bailey Hutchison worked hard to get into the Senate. So did Orin Hatch. So did every senator I can think of.

Is there an emotional resonance I'm missing here? Or is this a miscalculation on the part of Fiorina and company (keep in mind, these are the same people who thought a Bond villain would make a good spokesman).

The most open-label of open-label experiments

A big part of being a statistician is knowing when to get nervous, knowing when cutting a small corner could produce massive bleeding. One of those cut corners we pay particularly close attention to is the open-label trial, where the subjects know exactly what treatments they are getting.

In a perfect world, neither the subjects in a trial or the people administering the treatments would ever know who was getting what. This double-blind approach protects us from the placebo effect, which has an unfortunate way of popping up whenever humans are the subjects of research.

At the risk of being obvious, it is next to impossible to perform a double-blind experiment in most areas of educational research -- everyone knows who got the treatment and who didn't -- but that doesn't mean that the underlying reasons for preferring double-blind tests aren't there. We routinely allow for the possibility that the placebo effect can affect pretty much everything from surgery to the immune system. Does ignoring the possibility that it might affect student performance seem like a safe assumption?

If anything, education is a textbook example of an area where we would prefer not to use an open-label approach. We are working with a test population that's highly suggestible and treatments that rely heavily on the subjects' attitude. Under these conditions, telling subjects that they are about to receive a treatment is highly likely to bias the results.

And in the case of charter schools, students aren't just told they are about to receive a treatment; they are often told, in the most dramatic way possible, that they are about to have their lives transformed. Pedagogically, this is a good idea. It helps establish the belief that the student will succeed, a belief that can easily become self-fulfilling. Statistically, though, it greatly muddies the waters.

Watch the first minute of this Sixty Minutes segment. Look at the expressions of the father leaping out of his seat with excitement and the mother and daughter crying with joy. You'd have to be emotionally dead not to empathize with this family's feelings, but you'd also have to be a poor statistician not to wonder if those emotions contributed to student success.



update: I probably should have mentioned that there is reason to suspect that group dynamics may amplify the placebo effect here.

Implications of "counseling out" part II -- missions

This is the second part of a reply to a previous comment about counseling out disruptive students. In the first part I discussed how charter schools' greater freedom to get rid of problem students makes reliable public-to-charter school comparisons difficult, but as important as that question is, there's another that's even more fundamental when discussing these practices: what exactly do we want charter schools to do?

We have two basic choices:

The first is that charter are what all schools should eventually be. In this model, charters provide the template for the American education system. If this is what we're asking from them, then charters' problems dealing with disruptive and non-cooperative students is a serious failure;

If, however, we look at charter schools as niche programs designed to target specific areas and subpopulations, then counseling out student for academic or behavioral reasons may not be a problem at all. If the purpose of these schools is to allow room for experimentation, pump additional resources into under-served areas and provide a better match for certain kids who aren't getting what they should from the one-size-fits-all approach, then counseling out is a necessary part of the model.

Most champions of charter schools would probably pick the first model but most of the major criticisms that have been made recently about charters schools (data biasing issues, accusations of cherry-picking, questions about scalability) largely go away under the second model.

I have a feeling we'll be coming back to this one.

Implications of "counseling out" part I -- metrics

This comment from Michael Bish raises a couple of big questions:

One important point is that there is a big difference between counseling a student out because they have low test scores and counseling them out because they are actively disrupting the education of their peers.

The first issue here involves metrics. The idea that you should build a school system around a handful of test scores is one of the central tenets of the reform movement. Test scores are supposed to drive funding, contracts, allocation of resources, evaluations, bonuses, even terminations, but if you give certain schools more freedom to get rid of disruptive students the whole system breaks down.

Disruptive students not only take up time from the teacher that could be used in instruction; they also make it difficult for students to concentrate and tempt other others to act up. The result is that everyone's test scores go down.

By getting this student transferred you've not only raised the scores of an entire classroom of your students; you've lowered the scores of a comparable number of students in a public school in the same area. Since your school's evaluation, funding, and future contracts are dependent on your performance relative to other schools in the area, you can get a substantial double lift out of that single transfer.

And since public school to a large extent have to work with the students they are given, charter schools always win this one.

Nobody loves an orphan technology

And the loneliest orphan of them all is over-the-air television. It's the kind of story you would expect to find in a Lemony Snicket novel, complete with evil guardian trying to kill it off to get to the family estate (bandwidth).

OTA television has few friends. Cable and broadband get all the attention while the media has been committed to the death of broadcasting/networks for more than three decades now.

Of course, one of the problems with being committed to a narrative is that it forces you to ignore the details that don't support the narrative and these have an unfortunate way of being the interesting ones.

Case in point: this story on the growth of Univision, though a bit credulous ("Univision set to become top U.S. broadcast network"), contains some impressive statistics about the growth of the network. It does not, however, contain any mention of this:

Univision is concerned because nearly 28% of Hispanic households — and 43% of homes where Spanish is the primary language — watch TV only via over-the-air transmissions, according to a 2005 National Association of Broadcasters report to the FCC.

Given that Univision skews toward the Spanish-language only households, that means a big chunk of its audience is coming in over the air. That means that selling off that part of the spectrum would have big consequences for the fast growing area of Spanish language media. That's an awfully important detail to leave out.

"Counseling out"

(This post also appears at Education and Statistics.)

Paul Tough writing in Slate recounts the following:

In Whatever It Takes, in one of the chapters on the Promise Academy middle school, I describe the impact of the KIPP schools in the Bronx and Harlem on the Promise Academy’s leaders and staff. This was during the first few years of the Harlem Children Zone’s middle school, which were a struggle, and those KIPP schools, which had very good test results, were for the Promise Academy administrators both a standard to be aspired to and a frustrating reminder that their own students weren’t performing at the same high level as KIPP’s students.

Terri Grey, the Promise Academy principal at the time, believed the attrition issue was part of what was holding her school back. As she put it to me in one conversation, “At most charter schools, if the school is not a good fit for their child, the school finds a way to counsel parents out”—to firmly suggest, in other words, that their child might be happier elsewhere. “Whereas Promise Academy is taking the most disengaged families and students and saying, ‘No, we want you, and we’re trying to keep you here, and we don’t want to counsel you out.” That policy made it impossible, she believed, for the Promise Academy to achieve KIPP-like results.

I’m not entirely convinced that that was the real problem at Promise Academy—or that the KIPP schools in New York were actually “counseling out” a significant number of students. But I do think it’s true that Geoffrey Canada’s guiding ethic has always been to go out of his way to attract and retain the most troubled parents and students. And that makes running a school, or any program, more difficult, even if it makes the mission purer and, in the end, more important.

For reasons I'll get to later, I suspect that the number of students you have to "counsel out" to have a significant effect on a school's test scores is lower than Mr. Tough realizes, but there are a couple of more important points.

The first is that selective attrition is recognized as a serious issue not just by critics of the reform movement but by responsible people within the charter school community.

The second is that all charter schools and charter school administrators are not interchangeable. There are some gifted educators with great ideas in that system. We've spent almost two decades overlooking the flaws in charter schools. It would be a serious mistake to try to compensate by overlooking the strengths.

Context in posts

This post by Megan McArdle was interesting for the context. I am certain that I will say something I regret sooner or later; it's probably a good thing not to be judged by hasty words.

But I also think it is important to remember that all quotes can be made to look bad out of context. In the "sound-bite" environment of the modern world it is already hard enough to discuss complex issues (*cough* education reform *cough*) without adding in misleading quotes.

It is just something to keep in mind . . .

"they are purging nonperforming students at an alarming rate"

(This post also appears at Education and Statistics.)

Mike at ScienceBlogs has some thoughts about selection by attrition:

A letter to Diane Ravitch from a Los Angeles school prinicipal documents just how dishonest and harmful this practice is (italics [Mike's]):

I received an email from Dr. DeWayne Davis, the principal of Audubon Middle School in Los Angeles, which was sent to several public officials. Dr. Davis said that local charter schools were sending their low-performing students to his school in the middle of the year. He wrote:

"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."

Ravitch concludes:

Doing better than an under-resourced neighborhood school is not the same as getting "amazing results." Very few charters do. Probably less than 5 percent. Charters are not a silver bullet. They are a lead bullet. Their target is American public education.

This is just par for the course for modern conservatism: have private systems skim the cream, and leave the public sector to clean up an impossible mess. When they can't, this supposedly shows the inability of government to solve problems.

I have a few points to add:

1. This is a brutal way to treat these kids. You build their hopes up, then crush them, then dump the kids in a new school in the middle of the year;

2. We are talking about getting an influx of students who are badly behind and who are ready to give up and/or act out. This will disrupt classes slightly less than having a nearby car alarm go off at random times once or twice an hour;

3. But I think Ravitch overstates the case against charter schools. I've dealt with some small, independent schools that have impressed the hell out of me and I can see them playing an important role in our system, though a radically different role than Arne Duncan sees.

Silence

This post from Worthwhile Canadian Initiative is probably the best reason for my recent lack of activity in the blogosphere. Coupled with a lot of travel, I am quite behind.

Hopefully a temporary condition.

In the meantime, Mark has been putting up some great material that is well worth reading, so at least radio silence hasn't struck yet.

Quick note on good stuff

No time to blog this afternoon but if there was I'd join in this discussion on polls and momentum. While you're there, take a minute to check out the comments.

On 'Good Morning America': Worthy defends plan to jail parents who skip school conferences

From The Detroit News:

Wayne County Prosecutor Kym Worthy defended her plan to jail parents who repeatedly miss conferences with their children's teachers during an appearance today on ABC's "Good Morning America."

Worthy said many people think she is looking to simply jail people for three days if they miss a parent-teacher conference, but she said her plan is not that strict. She is calling for the jail stay if a parent repeatedly misses conferences and isn't in touch with teachers and school officials.

Parents of achieving students are exempt and a parent who is in constant contact with the school also is exempt. Worthy said a parent could miss three or four conferences before officials would start looking as to why they were not attending them. Those with medical conditions also would be exempt.

I'm not going to get into the appropriateness or effectiveness of this proposal, but it is another reminder how different the population of charter schools is.

I taught in an inner-city prep school targeting serving lower income students, a school run by some of the most dedicated educators I've ever encountered. They took kids who were performing below grade level (sometimes by more two grades) and got almost all of them into college.

When I say almost all, I mean almost all. The drop-out rate was extremely low. This was possible partly because the administrators made it a priority and partly because schools with admission processes tend to select out many of the most at-risk students. (This is why we expect charter schools to have lower drop-out rates than comparable public schools, and why we are so concerned when we see the opposite.)

But as dedicated and hard working as the faculty and administration of that school was, every one of them would tell you that the engaged and supportive families of the kids made their jobs much, much easier. When there was a parents' night you could expect pretty much one hundred percent attendance and when there was a problem with a student you could pretty much count on a concerned response.

Public school teachers and administrators seldom have those advantages.

And yes, it does make a difference.

More fun and games

I've got a new post up at Education and Statistics on the topological doodling game, Sprouts. If topological doodling strikes you as an enjoyable way to spend your time, I highly recommend that you check this out.

Tax increases as landscape perturbation?

Over at Felix Salmon's site, Justin Fox presents an interesting counter-argument to Greg Mankiw:

[T]here’s a really fascinating tale in [Sam Howe Verhovek’s Jet Age: The Comet, the 707, and the Race to Shrink the World] involving tax incentives. During the Korean War, Congress enacted an excess profits tax meant to keep military contractors from, well, profiteering. In its infinite wisdom, Congress defined excess profits as anything above what a company had been making during the peacetime years 1946-1949.

Boeing was mostly a military contractor in those days (Lockheed and Douglas dominated the passenger-plane business), and had made hardly any money at all from 1946 to 1949. So pretty much any profits it earned during the Korean conflict were by definition excess, and its effective tax rate in 1951 was going to be 82%. This was unfair and anti-business. If similar legislation were enacted today, you could expect U.S. Chamber of Commerce members to march on Washington and overturn cars on the streets.

It being 1951, Boeing instead sucked it up and let the tax incentives inadvertently devised by Congress steer it toward a bold and fateful decision. CEO Bill Allen decided, and was able to persuade Boeing’s board, to plow all those profits and more into developing what became the 707, a company-defining and world-changing innovation. Writes Verhovek:

Yes, it was a huge gamble, but for every dollar of the dice roll, only eighteen cents of it would have been Boeing’s to keep anyway. For Douglas and Lockheed, both in a much lower tax bracket, that was not so easy a call.

So that’s it! High tax rates—confiscatory tax rates—spur innovation! Well, at least once in a blue moon they do. Which is an indication that there might be some important stuff missing from the classic economists’ view of taxation, as summed up by Greg Mankiw a few weeks ago:

Economists understand that, absent externalities, the undistorted situation reflects an optimal allocation of resources. It is crucial to know how far we are from that optimum. To be somewhat nerdy about it, the deadweight loss of a tax rises with the square of the tax rate.

Somehow I don’t think that formula held true in Boeing’s case.

This leads me to wonder if this reminds anyone else of algorithms that locate superior optima by slightly perturbing fitness landscapes (processes closely related to simulated annealing). Mankiw complains that certain taxes distort the economic landscape, but if local optimization is an issue (as was apparently the case with Boeing), then mild distortion from time to time is likely to lead to a better performing economy.

For background, here's an excerpt from a post on landscapes. The subject was lab animals but the general principles remain the same:

And there you have the two great curses of the gradient searcher, numerous small local optima and long, circuitous paths. This particular combination -- multiple maxima and a single minimum associated with indirect search paths -- is typical of fluvial geomorphology and isn't something you'd generally expect to see in other areas, but the general problems of local optima and slow convergence show up all the time.

There are, fortunately, a few things we can do that might make the situation better (not what you'd call realistic things but we aren't exactly going for verisimilitude here). We could tilt the landscape a little or slightly bend or stretch or twist it, maybe add some ridges to some patches to give it that stylish corduroy look. (in other words, we could perturb the landscape.)

Hopefully, these changes shouldn't have much effect on the size and position of the of the major optima,* but they could have a big effect on the search behavior, changing the likelihood of ending up on a particular optima and the average time to optimize. That's the reason we perturb landscapes; we're hoping for something that will give us a better optima in a reasonable time. Of course, we have no way of knowing if our bending and twisting will make things better (it could just as easily make them worse), but if we do get good results from our search of the new landscape, we should get similar results from the corresponding point on the old landscape.


* I showed this post to an engineer who strongly suggested I add two caveats here. First, we are working under the assumption that the major optima are large relative to the changes produced by the perturbation. Second our interest in each optima is based on its size, not whether it is global. Going back to our original example, let's say that the largest peak on our original landscape was 1,005 feet tall and the second largest was 1,000 feet even but after perturbation their heights were reversed. If we were interested in finding the global max, this would be be a big deal, but to us the difference between the two landscapes is trivial.

Nothing like a good graph to convey bad news

There's an extensive and erudite discussion of this over at Economist's View, with voices ranging from Krugman to Mankiw.

Nate Silver tries to disabuse political reporters of another favorite myth

In today's 538, Nate Silver takes down the myth that polls tend to show momentum. He left out some details that OE readers might be curious about (but, of course, we're not exactly the target audience), but it's an excellent piece of statistical writing.

The Misunderstanding of Momentum

By NATE SILVER

Turn on the news or read through much of the analysis put out by some of our friends, and you’re likely to hear a lot of talk about “momentum”: the term is used about 60 times per day by major media outlets in conjunction with articles about polling.

When people say a particular candidate has momentum, what they are implying is that present trends are likely to perpetuate themselves into the future. Say, for instance, that a candidate trailed by 10 points in a poll three weeks ago — and now a new poll comes out showing the candidate down by just 5 points. It will frequently be said that this candidate “has the momentum”, “is gaining ground,” “is closing his deficit,” or something similar.

Each of these phrases are in the present tense. They create the impression that — if the candidate has gone from being 10 points down to 5 points down, then by next week, he’ll have closed his deficit further: perhaps he’ll even be ahead!

There’s just one problem with this. It has no particular tendency toward being true.

Read the rest...

A probabilistic mystery from Alfred Hitchcock

Don't believe me? See for yourself.

Yet another trillionaire protesting the return to Clinton era taxes

And this guy's practically swimming in money.

Lucky pennies and constrained roulette

In a recent post about progressive taxation, Jonathan Cohn says the following about economic fairness:

One is that it fails to account for the power of luck. Almost by definition, people who are successful have benefited from some measure of good fortune. That fortune can take the form of obvious, material advantages -- like access to advanced technology and good schools. Or it can take the form of more subtle, but still important, assets for moving forward in life--like good health or loving parents.

There's no arguing with the basic thrust here, but it presents a very narrow view of luck. You can get a broader and more interesting view if you think in terms of probability distributions.

The idea of luck is closely tied to the idea of beating the odds. Having an unlikely positive outcome is more or less equivalent to the informal concept of being 'lucky,' but this often leads into one of those areas of probability that give people trouble.

There's a natural and entirely rational impulse to look for explanations when we see something unlikely. Unfortunately, there's also a natural tendency to get confused when we go back and assign probabilities after the fact.

One of the best known examples comes from Burton Gordon Malkiel in his classic A Random Walk Down Wall Street. Malkiel draws an analogy between a successful investment fund manager and a lucky coin-flipper.

Imagine a coin flipping competition. You start with a thousand coin-flippers. Every round consists of one flip. At the end of every round, those who came up tails leave the game. The contestants go from 1,000 to 500 to 250 to 125 to 63 to 31 to 16 to 8.

"By this time, crowds start to gather to witness the surprising ability of these expert coin-flippers. The winners are overwhelmed with adulation. They are celebrated as geniuses in the art of coin-flipping, their biographies are written and people urgently seek their advice. After all, there were 1,000 contestants and only 8 could consistently flip heads."

As presented here, this seems absurd but if you spend some time watching CNBC or browsing the business section of your local book store, you'll realize it's not exaggerated.

Related to the lucky coin-flipper is the grand prize winner.

We have a roulette wheel numbered 1 to 100, 100 spaces on the table and 100 players. On a first come, first serve basis, each player picks a number. Whoever is sitting on the number that comes up gets everyone's chips.

The winner can argue that he or she had some special skill at number picking, and that's entirely possible, but there's no way of confirming that claim by looking at the results of the game. Someone had to win and whoever won could make the same argument.

Just as it's not difficult to find lucky coin flippers, it's also easy to find CEOs and business leaders who benefited greatly from landing on the right number.

Consider Michael Eisner.

Eisner was CEO of Disney from 1984 to 2005. By any standard it was a good run, marked by growth, major acquisitions, prestigious and popular products. Eisner deserves credit for a lot of good decisions, but the single biggest factor behind Disney's resurgence came from a turn of the roulette wheel.

In the late Eighties, with the format war settled and VCR reaching saturation levels, parents discovered that the easiest (and often the only) way to keep a small child quiet was to pop in a video (I recall Robert Altman saying in an interview that Popeye was his most profitable film for just this reason). Suddenly Disney was sitting on the most valuable film library in the world.

It is true that Eisner pushed to speed up release of some of the studio's classics, but the home video division had started years before he got there and given the size of the market that opened up, it's hard to believe that even the most cautious of executives would have held back the films much longer.

Michael Eisner simply found himself sitting on a lucky number.

If a sock puppet had been appointed CEO of Disney in 1984, the home video market for kid-friendly shows would still have exploded and the company still would have made a mint. It might not have managed a Little Mermaid or a Lion King but it still would have had a fantastic run and you'd have no trouble finding numerous books exploring the business genius of Argus McArgyleSock.

In praise of orifice-derived numbers

HCZ founder Geoffrey Canada in an interview with City Limits Magazine:

You have set a 65 percent "tipping point" as a universal goal for your programs, after which you think success becomes inevitable. How did you determine that 65 percent was the tipping point?

Why that number? Why that number and not 70, 80 percent? There's no science there. You don't go look up, find the tipping point of a poor community—there's no science there. You take your best educated guess...

I'll tell you what my belief is, and what's my underlying logic. Kids do what their friends do. If your friends smoke, you smoke. If your friends drink, you drink. That's just the way things are. Kids do what they're around. If you're around kids who fight, you better learn how to fight. If you get a whole bunch of kids doing positive things instead of negative things, should you expect that to have an impact on other kids? Absolutely. But there's no science.

If the question is, is there science, has someone done a randomly controlled double-blind study? No, no. But ask anybody. You want the Harlem Children's Zone on your block, working with the kids on your corner, or not? You don't need a random study to decide what the answer to that is. You ask people, when a shooting happens, do you want folks from the Harlem Children's Zone to go in there and make sure no one else gets shot or not? You live in Harlem, guess who you're calling? You're calling me.

I liked this answer.

As a statistician, I am frequently asked quantify difficult-to-measure variables and estimate parameters for decision processes. In these situations I can always find some rational-sounding process for deriving a metric, but I can't always vouch for its robustness or even its relevance and there's a good chance all it will do is give the recipient a false sense of security. Some things just don't readily lend themselves to these approaches.

People like the notion of processes being data-driven. They feel safer knowing that there methodologies and statistics behind the decisions that affect them. Unfortunately a suspect methodology and a statistic that doesn't measure what it's meant to can do tremendous damage. If I'm ask to produce metrics when I don't have faith in the analyses or in our ability to measure what's relevant, then as a statistician, the best and most responsible answer I can give is often, "Hell, I don't know. What sounds reasonable to you?"*

There's a lot to be said for an arbitrary number that's reasonable to the people who actually work in the field, particularly if that number is also a good and useful rule of thumb. Of course, it could turn out to be a poor estimate of what you're after but the same holds for the results of bad data and analyses and it's a great deal easier to drop a number when it doesn't come with pages of impressive-looking but meaningless tables.






* I'm not going to wander off into a discussion of informative priors here, but these woods are filled with Bayesians so there's a good chance someone will pick up the scent.

LA Weekly doesn't just bury the lede; they hide the body

(It's Sunday so I'm taking a break from bitching about bad statistics so I can bitch about bad journalism.)

LA Weekly's Jonathan Gold is the first food writer to win a Pulitzer and for a first, it was a remarkably uncontroversial award. Gold has been widely recognized for his sharp, funny prose and his knowledgeable and discerning approach to criticism.

(That has nothing to do with the topic of the post but I wanted to start with something nice.)

With the exception of Gold, the Weekly offers pretty much the standard free-weekly fare, specializing in starkly-lit heroes-and-villains stories with obligatory swipes at the mainstream media (particularly peevish and resentful when focusing on their competition).

One of the problems with writing this sort of story is that, if you're going to stay true to the narrative you invariably have to leave out something funny and/or interesting because it undercuts your case.

For example, if you were writing a story about a sleazy conman slandering respectable businesses, you wouldn't be able to include a quote that made one of those respectable businesses look completely street-rat crazy. That's too bad, because it must be difficult to ask a journalist to pass up anything as memorable as this (from Felix Salmon, who almost never leaves out the good stuff):

On Monday, Barry Minkow put out a press release accusing a NYSE-listed company, InterOil, of being “nothing more than hype”. InterOil has had a large short interest for some time, and it seems that Minkow touched a nerve, because InterOil’s senior manager for media relations, Susuve Laumaea, went borderline insane via email in response:

you are a gutless coward of the highest order, a jealous and envious SOB… You are a loser, a non-achiever and a sour-grape. Piss off you good for nothing… Do not be afraid on account of me being a descendant of cannibals … no, no, believe me, I will not cannibalise you or feed you to the swamp crocodiles…

you are known crook, conman, convicted felon, a psychopath and a pathological liar who is jealously envious… You have no sense of common decency. You are neither here nor there among the cream of decent God- fearing humanity. You are a scum of the earth, a creepy-crawlie who should have been locked away and the key thrown away too so that you rot away like the dung heap you are. You are a coward of the highest order… I can’t use you as crocodile feed because you are too poisonous … those alligators will die eating you, cooked or uncooked…

Who gave you the authority to investigate InterOil, you piece of shitty non-entity? You are nothing more than an internet pirate, a low-life manipulator who is out to profit by your dishonest, fraudulent, slanderous and cowardly methods. Up yours.

How could the Weekly leave this out? It's like Beat poetry. It practically demands to be read aloud with dramatic pauses and bongo accompaniment.

Benoît Mandelbrot (1924 - 2010) and Education Reform

From A maverick's apprenticeship:

It was then and there that a gift was revealed. During high school and the wandering year and a half that followed, I became intimately familiar with a myriad of geometric shapes that I could instantly identify when even a hint of their presence occurred in a problem. “Le Père Coissard,” our marvelous mathematics professor, would read a list of questions in algebra and analytic geometry. I was not only listening to him but also to another voice. Having made a drawing, I nearly always felt that it missed something, was aesthetically incomplete. For example, it would improve by some projection or inversion with respect to some circle. After a few transformations of this sort, almost every shape became more harmonious. The Ancient Greeks would have called the new shape “symmetric” and in due time symmetry was to become central to my work. Completing this playful activity made impossibly difficult problems become obvious by inspection. The needed algebra could always be filled in later. I could also evaluate complicated integrals by relating them to familiar shapes.

I was cheating but my strange performance never broke any written rule. Everyone else was training towards speed and accuracy in algebra and reduction of complicated integrals; I managed to be examined on the basis of speed and good taste in translating algebra back into geometry and then thinking in terms of geometrical shapes.

Where did my gift come from? One cannot unscramble nature from nurture but there are clues. My uncle lived a double life as weekday mathematician and Sunday painter. My gift for shapes might have been destroyed, were it not for the unplanned complication of my life during childhood and the War. Becoming more fluent at manipulating formulas might have harmed this gift. And the absence of regular schooling influenced many life choices, but ended up not as a handicap but as a boon.

I realize we can't have an educational system focused entirely on the occasional Mandelbrot, but I can't help but wonder how the great man would have fared in the rigid, metric-driven system we're headed toward.

(also posted at Education and Statistics)

"No, I said 'self-select for attitude.'"

One of the many weird aspects of the charter school debate has been the non-exchanges over selection effects. Critics suggest that students who choose to go through the application process will tend to be more motivated, more committed to school, more interested in college, and more open to the idea of a heavier work load and will tend to have more stable, supportive families.

Here's an example:

Some observers, such as the authors of The Charter School Dust-Up, say that KIPP's admission process self-screens for students who are both motivated and compliant, from similarly motivated and compliant—and supportive—families. Parents must commit to a required level of involvement, which rules out badly dysfunctional families.

This would seem to be fairly straightforward. Almost every school could do a good job if it were populated solely by students who worked hard, followed instructions and had the full support of their families. A strong selection effect here could explain away most or all of the positive results observed in KIPP schools. This hypothesis even raises the possibility that KIPP schools are actually doing worse than public schools would under comparable circumstances.

(You'll notice that no mention is made of race, poverty or test scores.)

Now here's how SRI responds:

KIPP schools’ higher-than-expected test score results draw both attention and claims that they “cherry-pick” high-achieving students from poor neighborhoods. This is the first report to closely scrutinize the praise and criticisms associated with KIPP, as well as key challenges facing Bay Area KIPP schools today.

In the three KIPP schools where they were able to draw comparisons, SRI researchers found that students with lower prior achievement on the CST were more likely to choose KIPP than higher-performing students from the same neighborhood, suggesting that, at least at these schools, cherry-picking does not occur.

And here's the much-touted Mathematica report:

Our nonexperimental methods account for the pre-KIPP (baseline) characteristics of students who subsequently enter KIPP schools: not only demographic characteristics such as race/ethnicity, gender, poverty status, and special education status, but also their achievement test results for two years prior to entering KIPP. We examine the achievement levels of the students for up to four years after entering KIPP schools. In our preferred models, we compare these trajectories to the achievement trajectories of a matched set of local public school students who have similar achievement test results and demographic characteristics in the baseline period (typically third and fourth grades) but who do not enroll in KIPP.

Waiting for Superman... to get bored and drop you like a bad habit

From Roger Ebert's review of Waiting for Superman:

We have met five of these students, heard from them and their parents, and hope they'll win. The cameras hold on their faces as numbers are drawn or names are called. The odds against them are 20 to 1. Lucky students leap in joy. The other 19 of the 20 will return to their neighborhood schools, which more or less guarantees they will be part of a 50 percent dropout rate. The key thing to keep in mind is that underprivileged, inner-city kids at magnet schools such as Kipp L.A. Prep or the Harlem Success Academy will do better academically than well-off suburban kids with fancy high school campuses, athletic programs, swimming pools, closed-circuit TV and lush landscaping. [emphasis added]

Probably the most comprehensive study of the KIPP program was done by SRI, which looked at KIPP schools in the Bay Area. Here's one of their findings (again, emphasis added):

As researchers analyzed the student achievement data and KIPP’s approach, they also identified challenges facing Bay Area KIPP schools, including high student attrition rates, teacher turnover, and low state and local funding. For example, 60 percent of students who entered fifth grade at four Bay Area KIPP schools in 2003-04 left before completing eighth grade.

More that any other player in the charter school movement, KIPP has relied on the cheese effect to generate its results. It's a profitable and highly praised business model built entirely of the backs of discarded students.

"5 Myths about Federal Taxes"

From Bob Stoker via John Sides at the Monkey Cage, here are some relevant numbers for the tax debate:

Myth #1: Federal taxes are higher than they have ever been.

According to the Congressional Budget Office (CBO), the opposite is true. Budget analysts typically measure the federal tax burden as a proportion of GDP because this accounts for the amount of our economic output that is devoted to paying federal taxes as the economy grows or contracts. Federal taxes from all sources were 14.8% of GDP in 2009 and are projected to be 14.6% of GDP in 2010. See the CBO report, "The Budget and Economic Outlook: An Update," August 2010, Table 1-2 (pdf).

By comparison, the lowest tax burden during Ronald Reagan's Presidency was 17.3% of GDP. Under President Bush federal taxes reached their low point at 16.3% of GDP. See the CBO historic budget tables: http://www.cbo.gov/budget/data/historical.pdf

Myth #2: People at the top of the income distribution pay more than half of their incomes in federal taxes.

According to the Tax Policy Center, the average federal tax rate in 2009 (including income taxes, payroll taxes, estate taxes, and corporate taxes) among the top 20% of the income distribution was 22.9%. Among the top 1% of the income distribution, 26.1%; among the top 0.1 of the income distribution, 27.9. The top one tenth of one percent of the income distribution paid an average federal tax rate of less than 28%.

Myth #3: Poor people don't pay taxes.

It would be more accurate to say working poor families with several children don't pay federal taxes. According to the Tax Policy Center, the average federal tax burden on the bottom 20% of the income distribution is negative...that means, people in this income range typically get more money back from the federal government than they pay in federal taxes. However, this is a consequence of the Earned Income Tax Credit (EITC) and the Child Tax Credit. For most families the most generous benefits are provided by the EITC and you must work to receive this credit. The current value of the credit is $5,657 for families with three or more qualifying children. Although modest EITC benefits are available to childless taxpayers, the credit is much more generous for families with children. When the generous benefits that are provided for working poor families are aggregated with others in the bottom 20% of the income distribution, the overall federal tax rate for this group is negative.

Myth #4: Federal marginal tax rates always go up as income increases.

The marginal tax rate is the rate that is applied to the last dollar of taxable income. Although it is generally true that federal marginal tax rates increase with income (because the personal income tax is progressive), this is not always true. The FICA tax that supports Social Security and Medicare is a significant portion of the federal tax burden for many taxpayers. The part of the FICA tax that supports Social Security (a 6.2% tax on earned income that is paid by employees and employers) has an income cap (currently $106,800). Earned income above that cap is excluded from the tax. Beyond this, at present unearned income is entirely excluded from the FICA tax (though this is scheduled to change for the part of the FICA tax that supports Medicare under provisions of the federal health care reform). Because most calculations of the federal tax burden include both the employer's and employee's share, moving earned income just above the cap reduces the federal marginal tax rate by 12.6%. Here is a history of FICA tax rates from the Social Security Administration.

Myth #5: Only affluent people pay federal taxes.

It is true that people in the top 20% of the income distribution provided 67.2% of federal tax revenues in 2009. However, they receive 54.3% of cash income. Despite this however, most American households pay a share of the federal tax burden. Although 47% of households paid no federal income taxes, two-thirds of these households did pay social insurance taxes to support Social Security and Medicare. The "deadbeats" who paid neither tax were mostly elderly people and people with annual incomes below $20,000. See again the analysis of the Tax Policy Center:

Punch, brothers! punch with care!

Conductor, when you receive a fare,
Punch in the presence of the passenjare!
A blue trip slip for an eight-cent fare,
A buff trip slip for a six-cent fare,
A pink trip slip for a three-cent fare,
Punch in the presence of the passenjare!

CHORUS

Punch, brothers! punch with care!
Punch in the presence of the passenjare!

If you don't recognize these lines, you should probably go here before going any further. If you do catch the reference, be warned. Some news stories are like Sam's jingle and unfortunately this is one of them:

"Pat Sajak: Should Public Employees Always Be Allowed To Vote?"

MBA thinking , gestalt and the death of humanities

The following comes from Stanley Fish:

What he didn’t know at the time is that it had already happened, on Oct. 1, when George M. Philip, president of SUNY Albany, announced that the French, Italian, classics, Russian and theater programs were getting the axe.

For someone of my vintage the elimination of French was the shocker. In the 1960s and ’70s, French departments were the location of much of the intellectual energy. Faculty and students in other disciplines looked to French philosophers and critics for inspiration; the latest thing from Paris was instantly devoured and made the subject of conferences. Spanish was then the outlier, a discipline considered stodgy and uninteresting.

Now Spanish is the only safe department to be in. Russian’s stock has gone down, one presumes, because in recent years the focus of our political (and to some extent cultural) attention has shifted from Russia to China, India, Pakistan, Iran, Iraq. Classics has been on the endangered species list for decades. As for theater, the first thing to go in a regime of bottom-line efficiency are the plays.

And indeed, if your criteria are productivity, efficiency and consumer satisfaction, it makes perfect sense to withdraw funds and material support from the humanities — which do not earn their keep and often draw the ire of a public suspicious of what humanities teachers do in the classroom — and leave standing programs that have a more obvious relationship to a state’s economic prosperity and produce results the man or woman in the street can recognize and appreciate. (What can you say to the tax-payer who asks, “What good does a program in Byzantine art do me?” Nothing.)

President Philip cites as one justification for his action the fact “that there are comparatively fewer students enrolled in these degree programs.” Of course, in a bygone time seats in those programs’ classes would have been filled by students who were meeting quite specific distribution requirements; you remember, two advanced language courses, one course in American lit and another in British lit, and so on.

Those requirements have largely gone away. SUNY Albany does have general education requirements, but so many courses fulfill them — any one of dozens will meet your humanities requirement — that they are hardly a constraint at all, something the Web site acknowledges and even underlines with pride. This has happened in part because progressive academics have argued that traditional disciplinary departments were relics from the past kept artificially alive by outmoded requirements.

Perhaps this is being unfair to MBAs (God knows there are plenty of examples elsewhere), but there's a certain misguided kind of thinking that's common in business school graduates, an approach to complex problems that fetishizes metrics yet takes a dangerously naive approach to numbers. Factors that are difficult to quantify are casually dismissed. Synergy is a heavy-rotation buzzword but simplistic reductionism is the actual default.

New Coke was a notorious example of metric-driven thinking. The metric here was a taste-test score, a well-defined scalar that seemed to measure the nebulous concept of appeal. The executives were so pleased to have an actual number that they put one of the world's most popular and profitable brands at risk in an effort to optimize that metric.

What they overlooked was the need to look at every successful product, institution or organization as a gestalt where the success is a function of the whole.

I am certain president Philip can point to extensive cost benefit analyses justifying the school's decision. I am also certain that these analyses rely almost entirely on easy-to-measure quantities and short-term projections and largely (if not completely) ignore important factors that are more difficult to deal with.

The American university system has been a tremendous success over the past century or so and a major part of that success has been the rich and diverse intellectual gene pool that universities offered. It would be next to impossible to quantify the value of that gene pool but it's safe to say that narrowing it will come with hidden costs.

Wolfmeat

It's time to face the ugly truth: the readership of Observational Epidemiology tends to run more than a little nerd-heavy. That's okay. With the success of the Big Bang Theory, geek chic has never been less uncool.

So there's no reason not to check out this list of math-based games I put together for beginning teachers. You can even go here and find still more.

Of course, I still wouldn't mention it around the cool kids.

Greg Mankiw's reply -- dishonesty or just bad prose?

From Mankiw's follow-up to his NYT editorial:

Aren't you motivated by more than money? Of course. I have never suggested that money is my, or anyone's, sole motivation in choosing a lifestyle.

The phrase "sole motivation in choosing a lifestyle" is going to cause us some problems; it's difficult to rebut this kind of practiced vagueness, but we were talking about the choice to do certain work. If we read choice of lifestyle to mean choice of work, then yes, he did suggest exactly that.

Let's roll the tape:

By contrast, without the tax increases advocated by the Obama administration, the numbers would look quite different. I would face a lower income tax rate, a lower Medicare tax rate, and no deduction phaseout or estate tax. Taking that writing assignment would yield my kids about $2,000. I would have twice the incentive to keep working.

If doubling the money you're paid doubles your incentive, doesn't that suggest that your incentive is solely pecuniary?

Make sure to thank the senator

I forgot to mention in my last post that Senator Richard Shelby (also known for his work as a character actor in shows such as Dark Shadows and Nero Wolfe) was the one who pointed out the nominee's lack of qualifications.

So thanks, senator. We certainly appreciate everything you and your party has done to uphold the quality of the Fed.

If the President wants to get his nominees approved...

Maybe he should stop nominating boobs who can't even stay awake through a seminar.

The indispensable Professor Thoma

Having spent a lot of time recently on the issue of compensation, this post by Mark Thoma caught my eye:

Greg Mankiw complains that if taxes go up for people with incomes as high as his, he won't work as hard and that means he won't be able to leave as much for his kids. Incentives matter he says. If that's the case, I wonder why someone who is trying to take away the incentive for his kids to work hard and be successful on their own doesn't leave academia and become a high paid consultant.

I'm sure Greg Mankiw could clean up as a consultant. The same effort he puts into academics would be much more highly compensated somewhere else. The fact that he decided to become an academic in the first place indicates that it's not all about the money.

As Greg Mankiw makes clear every chance he gets, he's at Harvard. That tells me that the return to his ego is every bit as important as the financial return. I'd further guess that even if the New York Times stopped paying him for his column, he'd write it anyway. It's a boost to his ego and reputation that he'd want even without whatever small payment he gets for each column (he could make more by using the time to prepare a talk "to a business group, consulting on a legal case, [or] giving a guest lecture," so the opportunity cost of the column is quite high).

I have only anecdotal evidence for the following statement (but it is pretty damned extensive anecdotal evidence so here goes):

When it comes to assumptions, statisticians and economists (particularly freshwater economists) tend to take opposite approaches. Statisticians generally insist on running through more assumptions than the listener has any interest in hearing about, often including those of no relevance to the situation you're in. (A former manager of mine once joked that it was easy being a statistician -- whatever the question, you just answered "it depends.") Economists tend to leave assumptions unsaid, even the really important ones that probably aren't being met.

I can give you plenty of examples of these buried assumptions (if you can make it through a chapter of Freakonomics without finding a few you're not paying attention), but there are also economists who do their best to unearth these assumptions, to bring them back into the debate where they belong. One of the best and most diligent of those diggers is Mark Thoma.

Which brings us back to Greg Mankiw's recent column. On one level, Mankiw's argument is sound. Every product that reaches the marketplace did start with the producer asking "Is this worth my while?" Tax rates do factor into that calculation, so, yes, there can a situation where dropping the Bush tax cuts would cause someone to decide not to make a product.

But there are a couple of big assumptions here. First, since we're talking about a return to Clinton (not Eisenhower) era tax rates here, a product would have to be just barely worth doing now -- the drop in returns under the proposed change is very small. Since this is known economic territory, we know that Clinton's tax increase caused at most a trivial number of products and services to be dropped for the reason Mankaw suggests and the Clinton rates were as high or higher than anything proposed by Obama. (Mankiw gets around this by starting out talking about the income tax increases for people making over 250K then slipping in the estate tax about half a page down, leaving most readers with the impression that making the income tax slightly more progressive will cut his take home pay in half but that's more a case of lying through misdirection than of burying the assumption).

The second, and more important assumption is where Thoma really shines. The idea that a producer will stop making a product if the tax rate passes a certain point assumes that primary return on that product is taxable, an assumption that is in no way justified here. As Thoma points out, the compensation Mankiw receives in the form of ego-stroking and reputation-building far exceed the $650 he gets for each column. I would add to that the satisfaction of influencing the debate. Conservative groups spend millions of dollars getting anti-tax arguments in the papers. When Mankiw does it, the papers send him the check.

When the compensation for a product or service is overwhelmingly non-taxable, an increase in tax rates will almost never cause a provider to drop that product or service. Mankiw is smart enough to be aware of this (he is at Harvard, after all); he just doesn't want the rest of us to realize it.

"Who would have thought that Erik Estrada would have the more dignified career?"

Just to start your Monday off on a sufficiently weird note.

Education Reform

I want to very quickly return to first principles. When Mark and I began discussing tenure reform, it was in the context of a "crisis" in education. This terminology continues to this day.

However, the real impact of recent news is that proposed reforms don’t have the potential to make immediate and dramatic improvements in education outcomes. Why does this matter?

Because if there is an incipient crisis and known strategies can directly address them then it would be grossly unethical not to try and address this in the fastest way possible. However, if there is not an immediate crisis the correct way forward is one that addresses all of the stakeholders and not radical top-down driven reform. In other words, Baltimore and not Washington, DC.

In the long run educational reform may be inevitable and positive. One of our well versed commentators (Stuart Buck) opined about the evidence:

It's consistent with any number of stories, including increased quality of teaching, better curriculum, finding a better fit for each individual students (some do better in a smaller school, for example), and the factors that you mention.

In my view, this suggests that we are going to experiment with news modes of education. After all, many people who I respect are strongly advocating for experimenting further with education reform (Jon Chait, Megan McArdle, Matt Yglesias, Alex Tabarrok come immediately to mind).

So why are there concerns about the process by which educational reform is occurring? Because, the discussion began with a question of where to allocate resources. Seyward Darby was arguing that we needed to accept teacher layoffs as part of the price if educational reform:

The president's beef is with a provision to prevent teacher layoffs, which Democrats tacked onto the bill along with several other domestic priorities. To pay for the measure, the House agreed to cut money from some of the president's key education reform initiatives. Obama isn't happy about it. Nor should he be.

Now, if there is a real and immediate crisis in education than, of course, dramatic measures can make sense. But is this really the time to spark a round of teacher layoffs in order to make slow improvements in who decides to apply for teaching jobs? Maybe, but it seems naive to think that we should fuel the testing of educational reform with layoffs at this precise moment. Readers of Felix Salmon may remember this week's jobs report:

Meanwhile, as the school year begins, we have this:

Employment in local government decreased by 76,000 in September with job losses in both education and noneducation.

As states and municipalities around the nation start running out of money, they’re going to fire people; this is only the beginning. And if October is any indication, the job losses in the local government sector are going to be at least as big as the job gains in the private sector.

So the real issue is whether this is the time for radical teacher employment restructuring -- should we lay off teachers to test educational reform? We do have a duty to the future but we also have a duty to the current students as well. The conversation would be different if the net resources for education were increasing but claiming that education is a priority in the midst of layoffs due to lack of funding seems disingenuous.

My interest in this subject grew from two arguments in the blogosphere. One, that the crisis in educational was so bad that the state should massively break contracts without cause. Notice that in cases like AIG and TARP, we were willing to spend a lot of money as a society to preserve financial contracts. Two, that reform has likely to be so important that teacher lay-offs in the midst of a recession were an acceptable sacrifice as the students would be better off.

If we don't accept that there is an immediate crisis then we can still move forward. But then it becomes an American-style bottom-up reform and not a Soviet-style top down reform. I like the Baltimore example -- specific communities negotiating ways to respond to the crisis and continuing to try ways to create a better future for their children. The result of a thousand experiments with engaged communities could very well result in a far better educational system in the long run.

And I think that is a good outcome.

"The Secret of Doublets"

I've got a new (OK, newish) site up called "Education and Statistics." The idea is to have a place that's more focused on education and less scary to the general reader (I've noticed people tend to shy away when I tell them I blog at "Observational Epidemiology").

There will be lots of dual posts and reprints, but you'll also find quite a bit of E and S exclusives like this introduction to Lewis Carroll's addictive word game, doublets (a.k.a. word links, word ladders and word golf). Come by and see if you too can evolve APE into MAN

I don't like to go to the well too often, but...

(I know this is two in a row, but how could I let this one go?)

When mortgage bankers engage in strategic default, the cost in PR damage, public backlash and potential regulation far exceed the savings on mortgage payments. When a wealthy lawyer writes self-pitying articles about the difficulty of scraping by on three or four hundred K, he builds support for the very progressive tax policies he opposes. When Wall Street millionaires publicly and angrily insist they were entitled to every penny of support they were given, they make it much more likely that the next time they need assistance it will come at a cost to them.

These people are not stupid nor are they irrational. They do these things because of their worldview.

It is not just that we have a group of people who believe they are entitled to a special set of rules; it is that they have internalized this belief so completely that they no longer see it as a belief. The concept has become as intuitive and self-evident to them as Euclidean geometry. The thought that others might see things differently doesn't occur to them.

This can lead to some embarrassing spectacles, but it does make life easy for Daily Show writers.

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Mortgage Bankers Association Strategic Default
www.thedailyshow.com
Daily Show Full Episodes Political Humor Rally to Restore Sanity

Red Half-state, Blue Half-state

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Indecision 2010 - Divided Delaware
www.thedailyshow.com
Daily Show Full Episodes Political Humor Rally to Restore Sanity

Apparently we've reached the goalpost-moving stage of the game

We all knew the case for incentive pay for teachers. The argument was simple and it made a lot of sense: teachers' unions and tenure limited the consequences of poor performance and bad behavior while the lack of bonuses limited the incentives for excellence. You could hardly blame the reformers for pushing it. Who could disagree with the statement that people respond to incentives?

Unfortunately, like so many appealing theories, it didn't do that well in the messiness of the real word. First researchers concluded that the data was too volatile and confounded to identify poor teachers, and now a major study by Vanderbilt and Rand has failed to show anything more than trivial results from incentive pay. Faced with these unpalatable facts, reform supporters have stayed true to their conviction that education (or at least education reform) should be run like a business and have done what so many project managers before them have done: they've moved the goalposts.

Eric A. Hanushek, from the Hoover Institution, assures us that he knew it all along:

"The biggest role of incentives has to do with selection of who enters and who stays in teaching - i.e., how incentives change the teaching corps through entrance and exits," Hanushek said. "I have always thought that the effort effects were small relative to the potential for getting different teachers. Their study has nothing to say about this more important issue."

Jonathan Chait echoed the Hoover line (bet you never thought you'd hear that one):

Of course, the point of performance pay isn't to wring better results out of the same teaching pool. It's to change the composition of the teaching pool. Teachers tend to come from the lower ranks of college graduates. That's natural, because the profession pays poorly compared with other jobs requiring college degree and does not offer financial rewards for success. The idea of merit pay is that you lure into the profession people who want to be treated like professionals -- they run the risk of being fired if they're incompetent, but they can also earn recognition and higher pay for exceptional performance.

It's true that there important secondary selection benefits from a well-designed incentive system, but how credible is the claim that all the reformers were interested in from the beginning were the selection effects, that the Vanderbilt results were unimportant, even, according to Hanushek, expected?

Why did these reform supporters push ahead with high profile research that they believed would prove nothing and would make the movement look bad? This was not a cheap study. In addition to conventional funding, a private donor, presumably a reform movement supporter, put up 1.3 million dollars of his own money to test the hypothesis that incentive pay for teachers would improve student test performance. If "the point of performance pay [wasn't] to wring better results out of the same teaching pool," why waste over a million dollars to see how well performance pay did just that?

For a fraction of that money, you could have funded research that would have directly addressed the question of teacher self-selection by conducting a quick and cheap survey-based study that would look at the correlation between attitudes toward incentive pay and factors like GPA.

And even if we accept the I-meant-to-do-that response, the Vanderbilt study still presents advocates of incentive pay with a huge problem. The assumption behind their theory is that competent, hard-working people will go where competence and hard work are rewarded. Unfortunately, the study indicates that either the incentive metrics are largely out of teachers' control or teachers were generally doing what they could to maximize student performance before bonuses were on the table.

Keep in mind, we're talking about individual bonuses, not the kind you get for an organization meeting some goal. Do we have any evidence, even anecdotal, to show that more desirable employees are attracted to compensation plans with large individual incentive components even when the employees have been shown to have little if any influence over the value of those incentives?

If we were talking about a good, well-designed compensation scheme you could make a strong case for positive selection effects, but we're not even close. We are talking about incentive pay based on hopelessly confounded and volatile data. We are talking about incentive pay based on easily manipulated metrics. We are talking about incentive pay that does not incent.

You really need to read that last one out loud to get the full effect:

We are talking about incentive pay that does not incent.

Just so we're clear, the reform advocates are saying that we take money from things like salary and training and divert it to bonuses that are based on poor-quality data and have not been shown to provide incentive value. We should do this because this poorly-designed compensation scheme will attract a better class of applicant.

And on top of all that, they're asking us to believe this was their plan from the very beginning.

More thoughts on education reform

Dana Goldstein has a nice piece about how education reform can proceed without mass teacher firings. It seems that Baltimore has agreed to a new teacher contract (with the union) that will experiment with many of the reforms that are being proposed. In particular, I like the idea of defining "lead teacher" as being one per school. This nicely side-steps inter-school competition (where the incentive is to try and shift weak students to new schools) and puts the focus on doing one's best with the students they have. Plus, on an individual school basis it is likely that information will be more complete than would be the case when you focus entirely on standardized test scores.

Mark has noted the odd anti-union stance of even liberal education reform advocates. Curiously, I would hypothesize that if reforms are worthwhile and carefully thought out then it is possible to get teachers to agree to them (even if they are not entirely in the best interests of the teachers). After all, it's not a ridiculous idea that many of teachers went into teaching in hopes of helping children to succeed (those focused entirely on financial rewards may well have chosen other lines of work). But perhaps this is a good example of positive reform. I may not like every element of it but it is at least a reasoned attempt to experiment with modern reforms.

Matthew Yglesias buries the lede... deep

Matthew Yglesias again steps up to defend the honor of charter schools with a post on Anders Böhlmark and Mikael Lindahl's paper “Does School Privatization Improve Educational Achievement? Evidence from Sweden’s Voucher Reform” (PDF) from which he concludes:

In effect, Swedish practice is like what exists in American states (Arizona, for example) with lots of charter schools and it’s quite similar to what the Obama administration (and I) are pushing. The big difference is that for-profit operators are allowed to run schools in Sweden, which I’d be for allowing.

There is, however, an asterisk next to the name of the paper. The footnote is easy to miss (you have to click on the 'More>>' button to find it), but it's worth the effort. It reads:

* Their answer? It does in the short-term, but the gains fade. All else being equal I favor more choice, so I’d regard the reform as a good thing but I assume the architects of the reform were hoping for something more.

"New 'venture accelerator' coming soon to Michigan"

From Marketplace:

When the pharmaceutical giant Pfizer left Ann Arbor, Mich., more than three years ago, it left behind the equivalent of a small town: A collection of 30 buildings, including science labs, a water plant and drug factory, scattered across nearly 200 acres.

The former research park is on land that had been owned by the University of Michigan, so the university decided to buy it back and turn the facility into a kind of business incubator on steroids.

Listen to the rest of the story here.