This American Life on HCZ's Baby College

Joseph and I have spilled a lot of pixels recently trying to debunk some of the bad statistics coming out of the educational reform movement. We have, perhaps, gotten so caught up in that task that we have neglected some of the bright spots in the movement.

This is one of those bright spots and it's definitely worth paying for the download:

Act One. Harlem Renaissance.

Paul Tough reports on the Harlem Children’s Zone, and its CEO and president, Geoffrey Canada. Among the project’s many facets is Baby College, an 8-week program where young parents and parents-to-be learn how to help their children get the education they need to be successful. Tough’s just-published book about Geoffrey Canada and the Harlem's Children Zone is called Whatever It Takes. You can see a slideshow of more photographs from the project here. (30 and 1⁄2 minutes)

p.s.I'm still not entirely comfortable with some of the research around HCZ, but, as I said earlier, it's "an impressive, even inspiring initiative to improve the lives of poor inner-city children through charter schools and community programs."

"Crybabies"

With all do respect to Professors DeLong, Krugman and company, probably the best piece of reporting you'll find on the recent wave of self-pity among the wealthy is this revealing and appalling segment from the This American Life episode, "Crybabies":

Act One. Wall Street: Money Never Weeps.

Ira with Planet Money economics correspondent Adam Davidson on why—even after everything President Obama has done to save Wall Street, actions which have led to record profits and bonuses—Wall Street seems ungrateful. Adam and producer Jane Feltes head out to a Wall Street bar where they're told by three finance guys that there's no reason to thank the President for saving their jobs. Planet Money is a co-production of This American Life and NPR News. (14 minutes)

The episode is available for free download this week (though you might feel a little better about yourself if you donate a buck or two).

Principal Agents

I was talking to Mark about his post on retnetion policies in large corporations. One item came up that I think is quite interesting. Both schools and publically traded companies have a serious principal agent problem. In the case of the schools, the principals and school board act on behalf of the taxpayer. In the case of the publically traded company, the CEO and board act on behalf of shareholders.

One thing that we see in large companies is that it is impossible to completely eradicate the conflicts of interest that are so posed. Management will try to optimize their outcomes (see CEO pay) even whe it might not be in the best interest of the shareholders (see Mark's post).

In the same sense, it would be naive to assume that you won't have some of these principal agent problems happening in any publicly funded educational system. I suspect that this is the price we have to pay for having a universal education system. Shifting our education system to a more corporate model isn't going to remove these issues -- it is only going to change who the winners and losers in the system are.

Should we tolerate these issues? Why not private schools (with a much more direct link between the education producer and consumer)? I think the real reason is that a broadly educated population is a public good and that there are always going to be inefficiencies in providing public goods. We all know of cases where road construction was less than ideal (in terms of contractor extracting extra value). But that doesn't mean we whould either abandon roads entirely or go to subscription-based roads.

The trick here seems, to me, to be to develop an education system that provides high quality outcomes. Mark keeps asking why the Canadian model isn't more widely studied given that they have issues with a multi-cultural population, geographical distance, and english as a second language students. I think the conversation would benefit from seeing more about how they handle this principal agent issue.

"Ignore the parts about crystal meth and pancakes"

The education reform movement relies heavily on anecdotes of remarkable, odds-beating schools, but when you take a close look at those schools that had significantly superior performance, some if not most of the difference in scores could be explained by selection and peer effects.

This isn't to say these schools weren't benefiting their students. Regardless of the reason, these kids were better off. Nor is this to say that these schools weren't doing something right. I can tell you that many are well-run and highly innovative.

But even taking all of that into account, selection and peer effects are huge and can swamp almost any other factor you can think of. These effects are seldom if ever adequately accounted for (And before anyone says the word 'lottery,' please take a look at this). This makes it all but impossible to accurately measure the impact of these schools but people like Jonathan Chait continue to cite them without any caveats.

I came across a segment of This American Life that beautifully captured my feelings on the subject. Just play the clip below and every time you hear 'heroin,' substitute in 'selection and peer effects' (you can just ignore the parts about crystal meth and pancakes).

From Kumail Nanjiani:



So remember, selection and peer effects are doing the heavy lifting.

The trouble with clever theories

This issue is one of the more serious ones in modern academic research. Frances Woolley of Worthwhile Canadian Intiative details the case of Hepatitis B and missing women. The theory (that the imbalanced sex ratio seen in India and China could be explained by rates of viral infection) advanced by Emily Oster was both compelling and incorrect:

Someone arguing in Levitt's defence might say "well, no one could have known that Oster's hypothesis would turn out to be wrong." Could they? In 2005, the year that Oster's paper appeared in the JPE, Monica Das Gupta published a rebuttal in the Population and Development Review. She describes the results of a 1993 paper by Zeng et al, one cited by Oster:

...the sex ratio at birth varies sharply by the sex composition of the living children the woman already has.... Zeng et al. show that the sex ratio at birth was normal (1.056) for first births. For second births, it was strikingly different depending on whether the first child was male or female: women whose first child was a son had a low sex ratio (1.014) for the second child, while those whose first child was a daughter had a very high sex ratio (1.494) for the second child.

To produce a pattern like that, Hep B has to be one heck of a smart virus. So the first point is: anyone with even a passing familiarity with the literature would know there was something suspicious about the Oster results.

This is actually a really good point and one that deserves more thought. The hypothesis being put forward had very little chance of being true given the actual literature cited and yet it was widely accepted as an important theory (being given wide publicity). Why is this?

I think that modern academics love the counter-intuitive theory that turns conventional thinking on its head. These are compelling stories because they seem to show how careful observation and being clever can reveal important secrets. But the very fact that these theories rely on clever stories and unexpected twists makes them more likely (and not less likely) to be incorrect.

In a sense, this feature is what I dislike about instrumental variables. One needs to tell a story about why an instrument actually has the correct statistical properties. But this relies on strong and unverifiable assumptions that cannot be directly tested. So one ends up telling an interesting story . . . but it is one that could well be wrong.

Dr Oster is a very good scientist and I don't want to generalize to the rest of her work. But it is a trap we should all look out for!

One more thought on seeing McKinsey's “Closing the Talent Gap”

(And then I really have to be going)

I'm not sure they want to go with TIMSS here.

From the McKinsey report:

While Singapore does not participate in PISA, it ranked in the top three on math and science on the quadrennial Trends in International Mathematics and Science Studies assessments in 2007, after having come in first place in 1995, 1999 and 2003.

from the National Center for Education Statistics:

In 2007, the average mathematics scores of both U.S. fourth-graders (529) and eighth-graders (508) were higher than the TIMSS scale average (500 at both grades). The average U.S. fourth-grade mathematics score was higher than those of students in 23 of the 35 other countries, lower than those in 8 countries (all located in Asia or Europe), and not measurably different from those in the remaining 4 countries. At eighth grade, the average U.S. mathematics score was higher than those of students in 37 of the 47 other countries, lower than those in 5 countries (all of them located in Asia), and not measurably different from those in the other 5 countries.

My first thought on seeing McKinsey's “Closing the Talent Gap”

Where's Canada?

Here's the PDF of the report via this post from Matthew Yglesias. It just crossed my desktop and I have to be on the road in about five minutes. I've just had time to skim the report so I may be missing the obvious but the absence of our northern neighbor strikes me as strange, particularly given the report's use of PISA data.

Forget teachers-- hell, forget employees, what does it take to fire a CEO?

One of the fundamental tenets of the modern educational reform movement is faith in the private sector. In the last post, I discussed the contradictions in using that faith to justify attrition policies that are pretty much unheard of in the corporate world.

There's a second potential danger in looking to the private sector for answers. Companies are not very transparent. Most go to great lengths to hide incompetence and depict every effort as a success. There's nothing illegal or even unethical about this. If anything, the people who run a company have an obligation to present it in the best possible light.

Though you can't blame businesses for spinning their results, you can get into a great deal of trouble by imitating them. For example, a school system might adopt an innovative system of project management and never know that it was responsible for hundreds of millions in cost overruns.

Occasionally, however, you will run into a corporate screw-up so massive that no degree of opacity, no amount of spin can obscure it. When you encounter one of these, you should take a moment to remind yourself that the snafus that break the surface represent a minute share of the general population.

Which brings us to Jeff Zucker.

Zucker was brought in as president of NBC Entertainment in 2000 after a stint at the Today Show where his most notable accomplishments were moving the studio and introducing the Today Show's outdoor rock concert series.*

His tenure on the Today Show represented one of Zucker's two specialities: making tiny tweaks to a hit then claiming credit for its success. The other speciality was screwing up on an almost biblical scale. Under Zucker, NBC was the first network to ever go from first to fourth place and he came very close to destroying their lucrative late night slate. According to an executive for another network (quoted by Maureen Dowd), "Zucker is a case study in the most destructive media executive ever to exist... You’d have to tell me who else has taken a once-great network and literally destroyed it."

Zucker was grossly incompetent. The cost to share holders is difficult to estimate but it's probably in the hundreds of millions (possibly billions**). His poor performance was widely discussed in the industry.

And yet it took a change of ownership to force him out and he still gets terms like these:

Zucker's contract had been renewed last year to run through January 2013 with an annual salary of $6.3 million and a guaranteed annual bonus*** of $1.5 million. If he leaves by January, he can expect at least a $15.6 million check.

The moral of this story is: next time people tell you that schools should be run like a business, make sure to ask them which business they have in mind.




* Apparently the Today Show has an outdoor rock concert series.


** Here are some numbers from Wikipedia to put things in context:

On December 1, 2009, CNBC reported that a tentative agreement had been reached between Comcast and GE.^[26] The deal was formally announced on December 3, 2009.^[7] Under the agreement, NBC Universal would be 51% owned by Comcast and 49% by GE. Comcast is to pay $6.5 billion cash to GE. Comcast will also contribute $7.5 billion in programming including regional sports networks and cable channels such as Golf Channel and E! Entertainment Television. GE plans to use some of the funds, $5.8 billion, to buy out Vivendi's 20% minority stake in NBC Universal.^[7] After the transaction completes, Comcast will reserve the right to buy out GE's share at certain times. GE will also reserve the right to force the sale of their stake within the first seven years. The deal is subject to regulatory approval.^[7]

Vivendi will sell 7.66% of NBC Universal to GE for US$2 billion if the GE/Comcast deal is not completed by September 2010 and then sell the remaining 12.34% stake of NBC Universal to GE for US$3.8 billion when the deal is completed or to the public via an IPO if the deal is not completed.^[27][28]

*** I just love the idea of a "guaranteed annual bonus."

Forget teachers, what does it take to fire an incompetent corporate employee?

We have often heard (and I do mean often) that schools need to emulate the firing practices of corporations and promptly fire the incompetent regardless of tenure with the institution.

One of the flaws with this suggestion is that corporations don't actually do this. Anyone who has built attrition models for a large company can tell you that, unlike layoffs, firings of employees with more than four years of tenure are extremely rare. Defenders of corporate practices would argue that those employees who make it to the four year mark are almost all competent, that pretty much everybody you'd want to fire has quit or been fired by that time.

The trouble with this defense is that, though it may be perfectly reasonable in isolation, it is difficult to reconcile with the standard reform argument. You can't believe that the culling process is this effective and still accept the premises that education should follow the corporate model and large scale firings of tenured teachers will significantly improve our schools.

Moving past that paradox, how do corporations handle the occasional incompetent? Even if we stipulate to an amazingly effective culling process, a few losers will inevitably make it through. Anyone who has logged some time in cubeville will tell you these people can be difficult to dislodge. Removing them disrupts the company, hurts morale and entails admitting a huge mistake. Faced with with all this, companies often employ the same strategies that reformers decry in schools -- they either shuffle incompetents off into meaningless make-work jobs or they leave them where they are.

Most of the incompetents go unseen by the general public but there are some conspicuous exceptions, something I'll save for the next post.

Alphametics, the SAT and the theory behind math tests

I once saw an alphametic in an SAT question -- simpler than this one but with the same basic principle. My first thought (after, "Was that an alphametic?") was what a great question.

Of course, solving alphmetics is a completely useless skill. No one has ever or will ever actually needed to do one of these. It is that very frivolousness that makes it such a good question for a college entrance exam. It requires sophisticated mathematical reasoning but it comes in a form almost none of the students will have seen before.

For comparison, consider a problem you would not see on the SAT*, factoring a trinomial that wasn't the square of a binomial (this is another skill you'll never actually need but it's not a bad way for students to get a feel for working with polynomials). Let's look a two students who got the problem right:

Student one hasn't taken algebra since junior high but understands the fundamental relationships, finds the correct answer by multiplying out the possibilities;

Student two was recently taught an algorithm for factoring, doesn't really understand the foundation but is able to grind out the right answer.

Obviously, we have a confounding problem here, and a fairly common one at that. We would like to identify understanding and long term retention but these can easily be confused with familiarity with recently presented information (particularly when certain teachers bend their schedules and curricula out of shape to teach to the test). The people behind SAT have partly addressed this confounding by including puzzle-type questions that most students would be unfamiliar with.**

All too often, the people behind other standardized tests deal with the issue by pretending it doesn't exist.




* Not to be confused with the SAT II, which is a different and less interesting test.

** The type of kid who reads Martin Gardner books for recreation would generally do fine on the SAT even without the familiarity factor (though the prom may not go as well).

Battered Party Syndrome?

Joseph and I generally try to avoid being overly political in this forum but just in terms of behavioral science, the following question is going to bother me all day.

Have the Democrats actually reached the stage where they will refuse to take an overwhelmingly popular position because, when they win, it makes the Republicans mad?

An alphametic pre-footnote

Light posting today, but since I'll be mentioning alphametics in an upcoming post I thought I'd give you something to chew on while you're waiting.

In 1924, the great Henry Dudeney published the following puzzle in the Strand Magazine:

S E N D

+ M O R E
__________________

M O N E Y

Each letter here represents a digit 0 through 9. If you substitute in the proper digits, the first two numbers (words) should add up to the third.

No one who reads this blog should have any trouble with this, but if you do, Wikipedia has a good step-by-step solution (though it does assume a passing acquaintance with number theory).

One more while we're on the subject

Though my recent posts on the subject have been a bit one-sided, I have to share my favorite example of copyrights being used to suppress (or at least attempt to suppress) creative output.

In 1994, Saul Zaentz, the man who had acquired the rights to the music of Credence Clearwater Revival sued John Fogerty for plagiarism because a song on Fogerty's latest album (which Fogerty wrote, played and sang) sounded like a CCR song (which Fogerty also wrote, played and sang). In other words an artist was basically sued for sounding like himself.

Zaentz lost and had to pay the court costs, but if Fogerty hadn't been a famous rock star with a new hit record on Warner Bros., how for do you think he would have gotten?

Intellectual Property and Monopsony

Joseph and I seem to be on a binge (purge?) of intellectual property posts, collecting piles of facts and observations on the subject. Somewhere in one of those piles we need to make room for the concept of monopsony.

From Wikipedia:

In economics, a monopsony (from Ancient Greek μόνος (monos) "single" + ὀψωνία (opsōnia) "purchase") is a market form in which only one buyer faces many sellers. It is an example of imperfect competition, similar to a monopoly, in which only one seller faces many buyers. As the only purchaser of a good or service, the "monopsonist" may dictate terms to its suppliers in the same manner that a monopolist controls the market for its buyers.

In entertainment, the norm is to have a huge number of artists trying to sell their products or services to a small number of buyers. Not only are there few buyers but access to these buyers is tightly controlled. The result can be an effective monopsony.

The results can look like this:

CrazySexyCool eventually sold over 11 million copies in the US, and became one of the first albums to ever receive a diamond certification from the RIAA,^[12] and won a 1996 Grammy Award for Best R&B Album and a 1996 Grammy Award for Best R&B Performance by a Duo or Group for "Creep".^[6] However, in the midst of their apparent success, the members of TLC filed for Chapter 11 bankruptcy on July 3, 1995.^[16]

They declared debts totaling 3.5 million dollars, ... the primary reason being that each member of the group was taking home less than $35,000 a year after paying managers, producers, expenses, and taxes.

Here the New York Times spells out some of those expenses:

The arithmetic is simple and sobering for aspiring stars: The average wholesale price of compact discs and cassettes is about $8 a unit. Thus, an artist with a 12 percent royalty rate, which is typical, gets about 96 cents per unit, or $480,000 on a "gold" record. From that, the record label recoups a portion of its advances to the artist for recording costs, music video production, tour support, independent promotional efforts, limousine services and so forth -- often as much as $170,000.

In other words TLC, which was only getting a seven percent royalty rate, was paying for pretty much everything, including a million or so just for the video for "Waterfalls."

The history of popular entertainment is filled with examples of creators selling million (sometimes multimillion) dollar properties for the equivalent of kind words and PEZ. This is not something you find in an efficient market.

A very good point

Tyler Cowen has a very good point:

Social Security offers cash benefits, whereas Medicare is an in-kind benefit, in the form of health care (which in turn is distinct from health, itself another in-kind benefit). Therefore always cut Medicare first.

That's all.

I think there may be come cases where this view is incorrect on the margins. But as a general principle it should be front and center in the public debate (especially given that, at the moment, the two programs are roughly equal in cost).

After all, treatment for medical conditions is nice but basic food and shelter might be preferable, if one can only have one of the two. If one can have both that is obviously better but it is worth noting Paul Krugman's point on which program has sounder finances going forward.