Results for “manipulation”
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The Randall Collins theory of ritual

Much of it concerns the origins and application of violence, but this blog post on Randall Collins and his theory of ritual, by Xavier Marquez, is interesting throughout.  Here is one excerpt:

The (relative) insignificance of ideology. Taken in its strongest terms, Collins’ theory seems to suggest that ideology is generally unimportant. Whether a symbol acquires socially motivating value depends much less on its “generalized” meaning than on its place within chains of interaction rituals; we are not generally the dupes of rhetorical framings and persuasive strategies except in the context of successful ritual situations. (Collins notes, for example, that most advertisement seems to be unsuccessful at actually persuading people to buy products, and is mostly intended to preserve attention space against competitors). From this perspective, the decline of labor movements worldwide, for example, may owe less to any ideological changes (“persuasion” and “manipulation” taken in a very broad sense) than to (intentional or unintentional) changes in the conditions for the ritual production of solidarity. Chris Bertram recently mused on the occasion of Margaret Thatcher’s death that UK society used to be socially more class-differentiated (there were strong institutions where class solidarities and roles were produced) but is now less so (since these institutions have vanished), despite very low levels of economic mobility and higher levels of economic inequality; many people now “feel” that there is more equality. From the interaction ritual perspective, these changes are not the result of the working class becoming simply convinced of lies due to clever persuasive strategies by elites, but of the less central place of rituals and symbols reinforcing class solidarity in their lives. This is in turn due to any number of causes: laws that made labor unions more difficult to organize, structural changes in employment patterns, the decay of rituals of deference, the emergence of rituals focused on celebrities that cut across social class, etc.

Collins is one of the most important social scientists in the world today, though in many circles he remains underdiscussed.  You will find previous MR coverage of him here.  The pointer is from @HenryFarrell.

A Bet is a Tax on Bullshit

Nate Silver, whose models give Obama a high probability of winning reelection, has offered one of his critics a bet. “Putting your money where your mouth is,” is a time-honored principle of integrity in my view but the NYTimes Public Editor is very upset. Margaret Sullivan, however, never offers an argument against betting instead treating it as unseemly.

[Betting is] inappropriate for a Times journalist, which is how Mr. Silver is seen by the public even though he’s not a regular staff member.

“I wouldn’t want to see it become newsroom practice,” said the associate managing editor for standards, Philip B. Corbett. He described Mr. Silver’s status as a blogger — something like a columnist — as a mitigating factor…

…When he came to work at The Times, Mr. Silver gained a lot more visibility and the credibility associated with a prominent institution. But he lost something, too: the right to act like a free agent with responsibilities to nobody’s standards but his own.

The closest to an argument against betting is this:

…whatever the motivation behind it, the wager offer is a bad idea – giving ammunition to the critics who want to paint Mr. Silver as a partisan who is trying to sway the outcome.

My best parse of the argument is that by betting Silver has given himself an interest in the election and this hurts his credibility. Nothing, however, could be further from the truth.

A properly structured bet is the most credible guarantor of rigorous disinterest. In order to prove his point, Silver is not required to take the Obama side of the bet! At the odds implied by his model (currently between 3 and 4 to 1) Silver should be willing to take either side of a modest bet. Indeed, we could hold a coin toss, heads Silver takes the Obama side, tails he takes Romney.

In fact, the NYTimes should require that Silver, and other pundits, bet their beliefs. Furthermore, to remove any possibility of manipulation, the NYTimes should escrow a portion of Silver’s salary in a blind trust bet. In other words, the NYTimes should bet a portion of Silver’s salary, at the odds implied by Silver’s model, randomly choosing which side of the bet to take, only revealing to Silver the bet and its outcome after the election is over. A blind trust bet creates incentives for Silver to be disinterested in the outcome but very interested in the accuracy of the forecast.

Overall, I am for betting because I am against bullshit. Bullshit is polluting our discourse and drowning the facts. A bet costs the bullshitter more than the non-bullshitter so the willingness to bet signals honest belief. A bet is a tax on bullshit; and it is a just tax, tribute paid by the bullshitters to those with genuine knowledge.

Noble Matching

In honor of the Nobel prizes to Al Roth and Lloyd Shapley, here is a primer on matching theory. Matching is a fundamental property of many markets and social institutions. Jobs are matched to workers, husbands to wives, doctors to hospitals, kidneys to patients.

The field of matching may be said to start with the Gale-Shapley deferred choice algorithm. Here is how it works, applied to men and women and marriage (n.b. the algorithm can also work for gay marriage but it’s a little easier to explain and implement with men and women). Each man proposes to his first ranked choice. Each woman keeps her top-ranked suitor but defers accepting the proposal. Each woman also rejects her lower ranked suitors. Each rejected man proposes to his second ranked choice. Each woman rejects again any lower-ranked suitors, which may include previous suitors who have now become lower-ranked. The process repeats until no further proposals are made; each woman then accepts her top-ranked suitor and the matches are made.

A similar process works when proposal receivers may accept more than one suitor, not that useful for marriage in most of the United States but very useful for when students are applying to schools and each school accepts many students.

Now what is good about this algorithm? First, Gale and Shapley proved that the algorithm converges to a solution for a very wide range of preferences. Second, the algorithm is stable in the sense that there is no man and no woman who would rather be matched to each other than to their current match. There are of course, men who would prefer to marry other women and there are women who would prefer to marry other men but no mutually preferable match is possible. Thus, the algorithm produces a stable match.

The application to men and women is somewhat fanciful, although Match.com should clearly adopt this idea!, but the application to students and schools is very real. Gale and Shapley concluded their paper by writing:

It is our opinion, however, that some of the ideas introduced here might usefully be applied to certain phases of the admissions problem.

Indeed, this is exactly what has happened. Students in New York and in Boston are now matched to schools using versions of this algorithm. Even before Gale and Shapley the algorithm had been used, without much theorizing, by doctors allocating residents to hospitals and since Gale-Shapley and Roth the idea has been used much more extensively all over the world .The algorithm, by the way, has been picked up and extended by computer scientists notably including Knuth.

I said above that the men propose to the women–this matters because when the women propose to the men you also get a stable match but it may be a somewhat different match and in general it is better to be the one proposing. Matching becomes more difficult when, as in modern times, both men and women may propose. Fortunately, in many problems, such as with students and schools, the proposers and receivers can be fixed.

Another question is whether the algorithm can be strategically manipulated. In an Impossibility Theorem with much the same flavor as Arrow’s Theorem and the Gibbard-Satterthwaite theorem, Roth and Roth and Sotomayor proved that there is always some possibility for manipulation but the G-S algorithm can be said to minimize the opportunity for strategic manipulation; in particular for the proposers, men or say students applying to schools. it is a dominant strategy to reveal one’s true preferences.

The importance of a stable matching algorithm can be seen in what happens when such algorithms are not used. In trying to allocate residents to hospitals, for example, what typically happens when a stable algorithm is not used is unraveling and chaos. Unraveling occurs when offers are made earlier and earlier in an attempt to get a jump on the competition. Prior to the currently used National Residency Matching Program, for example, hospitals were making offers to residents up to two years in advance! All kinds of chaos arose as hospitals would make exploding offers, accept now or the offer explodes! Such offers would inevitable lead to recriminations and backing out of the offers as better matches were sought.

What Roth has done is extend the Gale-Shapley algorithm to more complicated matches and to actually design such algorithms to solve real problems. In the 1970s, for example, the medical residency algorithm began to run into trouble because of a new development, the dual career couple. How to match couples, both doctors, to hospitals in the same city? By the 1990s assortative matching in the marriage market was beginning to derail matching in the doctor-hospital market! Roth was called in to solve the problem and moved from being a theorist to a market designer. Roth and Peranson designed the matching algorithm that is now used by Orthodontists, Psychologists, Pharmacists, Radiologists, Pediatric surgeons and many other medical specialties in the United States.

Most famously, Roth has worked on improving kidney allocation. I first wrote about this in 2004 (see also these posts):

Your spouse is dying of kidney disease. You want to give her one of your kidneys but tests show that it is incompatible with her immune system. Utter anguish and frustration. Is there anything that you can do? Today the answer is yes. Transplant centers are now helping to arrange kidney swaps. You give to the spouse of another donor who gives to your spouse. Pareto would be proud. Even a few three-way swaps have been conducted.

But why stop at three? What about an n-way swap? Let’s add in the possibility of an exchange that raises your spouse on the queue for a cadaveric kidney. And let us also recognize that even if your kidney is compatible with your spouse’s there may be a better match. Is there an allocation system that makes all donors and spouses better off (or at least no worse off) and that maximizes the number of beneficial swaps? In an important paper (Warning! Very technical. Requires NBER subscription.) Alvin Roth and co-authors describe just such a mechanism and show that it could save many lives. Who says efficiency is a pedestrian virtue?

Since that time we have seen many such swaps including this record of 60 people and 30 kidneys. Truly a noble match.

Minor editing Oct. 23.

What is a disability?

 Swimming has 10 classifications for athletes with different physical impairments, plus three more for visual impairments and one for athletes with intellectual deficits. For that reason it is particularly prone to challenges, and swimmers say they sometimes suspect that athletes have not been classified correctly.

Three weeks before she was set to compete in the London Paralympics, Mallory Weggemann, an American swimmer who is paralyzed from the waist down, learned that officials from the International Paralympic Committee had questions about her level of ability and were requiring her to submit to reclassification in London.

And this:

The most notorious example of Paralympic classification manipulation took place at the 2000 Games in Sydney. The Spanish men’s intellectual disability basketball team was stripped of its gold medal after it emerged that many of its members were not intellectually disabled at all.

After that, mentally disabled athletes were barred from the Paralympics while officials revised the classification process; they are back again this year.

The athletes say they sympathize with the difficulties faced by the classifiers, who are forced to determine how to sort people who have several hundred different types and degrees of disability.

There is more here, interesting throughout and yet also more interesting than the article itself as well.

The Myth of Chinese Meritocracy

No doubt you have heard how the leadership of China is meritocratic and composed of technocrats with PhDs. Minxin Pei suggests that there is less than meets the eye.

…Contrary to the prevailing perception in the West (especially among business leaders), the current Chinese government is riddled with clever apparatchiks like Bo who have acquired their positions through cheating, corruption, patronage, and manipulation.

One of the most obvious signs of systemic cheating is that many Chinese officials use fake or dubiously acquired academic credentials to burnish their resumes. Because educational attainment is considered a measure of merit, officials scramble to obtain advanced degrees in order to gain an advantage in the competition for power.

The overwhelming majority of these officials end up receiving doctorates (a master’s degree won’t do anymore in this political arms race) granted through part-time programs or in the Communist Party’s training schools. Of the 250 members of provincial Communist Party standing committees, an elite group including party chiefs and governors, 60 claim to have earned PhDs.

Tellingly, only ten of them completed their doctoral studies before becoming government officials.

Simply put, Chinese institutions are not as good as those in say Mexico. Thus, China will not overtake Mexico in terms of GDP per capita any time soon, hence Chinese growth rates will fall. All we are seeing today is the logic of the Solow model in action.

Outcome Unbiased Journals

Chris Said, a neuroscientist, prods the NIH to support outcome-unbiased journals:

The growing problems with scientific research are by now well known: Many results in the top journals are cherry picked, methodological weaknesses and other important caveats are often swept under the rug, and a large fraction of findings cannot be replicated. In some rare cases, there is even outright fraud. This waste of resources is unfair to the general public that pays for most of the research.

The Times article places the blame for this trend on the sharp competition for grant money and on the increasing pressure to publish in high impact journals. While both of these factors certainly play contributing roles…the cause is not simply that the competition is too steep. The cause is that the competition points scientists in the wrong direction.

…scientific journals favor surprising, interesting, and statistically significant experimental results. When journal editors give preferences to these types of results, it is obvious that more false positives will be published by simple selection effects, and it is obvious that unscrupulous scientists will manipulate their data to show these types of results. These manipulations include selection from multiple analyses, selection from multiple experiments (the “file drawer” problem), and the formulation of ‘a priori’ hypotheses after the results are known.

…the agencies should favor journals that devote special sections to replications, including failures to replicate. More directly, the agencies should devote more grant money to submissions that specifically propose replications….I would [also] like to see some preference given to fully “outcome-unbiased” journals that make decisions based on the quality of the experimental design and the importance of the scientific question, not the outcome of the experiment. This type of policy naturally eliminates the temptation to manipulate data towards desired outcomes.

Greece and Benford’s Law

To detect manipulations or fraud in accounting data, auditors have successfully used Benford’s law as part of their fraud detection processes. Benford’s law proposes a distribution for first digits of numbers in naturally occurring data. Government accounting and statistics are similar in nature to financial accounting. In the European Union (EU), there is pressure to comply with the Stability and Growth Pact criteria. Therefore, like firms, governments might try to make their economic situation seem better. In this paper, we use a Benford test to investigate the quality of macroeconomic data relevant to the deficit criteria reported to Eurostat by the EU member states. We find that the data reported by Greece shows the greatest deviation from Benford’s law among all euro states.

The full article is here, hat tip goes to Chris F. Masse.

Have track and field performances peaked?

I don't know much about track and field, but I found this article interesting, excerpt:

Today 64 percent of track and field world records have stood since 1993. One world record, the women’s 1,500 meters, hasn’t been broken since 1980. When Berthelot published his study last year in the online journal PLoS One, he made the simple but bold argument that athletic performance had peaked. On the whole, Berthelot said, the pinnacle of athletic achievement was achieved around 1988. We’ve been watching a virtual stasis ever since.

It seems unlikely to me that we have reached a true peak, rather a temporary plateau with slower-than-average growth, until the next breakthrough in training, technique, genetic manipulation, or whatever.  Does that sound familiar?

Request for movie opinions

From DL, a loyal MR reader and correspondent and link sender: "Mine [request] would be: what movies have you seen recently and were they good or not? I have recently seen Black Swan, The King's Speech, The Fighter, Rabbit Hole, Casino Jack and Somewhere."

I wrote: "Aronofsky's *Black Swan* = *Red Shoes* + *Repulsion* + Cronenberg + Tchaikovsky + something else too."  Overwrought, but I liked it.  The King's Speech was an extremely well done hammy manipulation, tugging on all the right strings and targeting the American soft spot for Brits.  True Grit suggests the Coen brothers are more superficial than they seem, rather than the contrary; rewatch the original for a better time.  The rest remain below my watch threshold for now, though Somewhere is due to come to Fairfax.  Even good movies about boxing I don't seem able to enjoy.  Political biopics I never like.

Catch Shares

Catch Shares are expanding in California, Oregon and Washington starting in January.

Under the catch-share system, fishery managers set an overall catch limit at the beginning of the season. Each fisherman will own a percentage of that catch. Just like shares in the stock market, the quotas can be traded or sold. The idea is that a market-based system will give fishermen more flexibility.

Not everyone is happy. Larry Collins, president of the Crab Boat Owners Association in San Francisco, is doubtful.

Collins is concerned that a market-based system will bring market manipulation. Under the rules, you don't have to be a fisherman to buy fish quotas, so it's possible that speculators or even environmental groups could buy into the market.

"You want hedge fund managers deciding when the people catch fish? Is that who you want to own your fish, or do you want to own them?" Collins asks.

Collins is also concerned about fishermen who make smaller catches. In Alaskan fisheries that use catch shares, some smaller boats opted to sell their fish quotas.

"That concentrated the resource in fewer and fewer hands. Now, I tend to think that public trust resources should be used to employ as many people as possible," he says.

Both of these features are benefits not costs. It's true that speculation can create bubbles and other problems but speculators also make the market more future-oriented and this will help to avoid the collapse of fishing stocks by making prices a better early warning system. Moreover, if environmentalists want to buy catch shares to increase the fishing stock then I am all for it.  In Modern Principles, Tyler and I discuss how we bought and retired some SO2 making the air cleaner for everyone (you are welcome! :)). 

Fewer, larger boats is also a benefit not a cost. Under the current system the influx of small boats is simply a form of rent-seeking which raises net social costs–too many fisherman chasing too few fish. Catch shares reduce over-capitilization in the industry raising productivity (see also Modern Principles on this point).

The main problem with catch-shares is setting the size of the catch, which inevitably is a politicized process. Massachussetts congressmen, for example, are trying to withold funds from NOAA until catch shares are increased. Nevertheless with so many fishing stocks nearing collapse it is clear that some limits are needed. Moreover, before catch-shares are put in place few people in the industry appreciate that temporary limits can lead to long-term increases in catch as the fishing stocks recover to sustainable levels. After catch-shares are put in place, however, it is sometimes the fishermen who lobby for greater limits not for monopoly reasons but as they come to recognize that a smaller limit leads to a larger stock and larger profits.

Here is my previous post, Reversing the Decline in Fish Stocks, on catch shares with more links.

Hat tip: Daniel Lippman.

If aggregate demand is so low, why are profits so high?

That's not a facetious or sarcastic question, I am puzzled.  Here is one story from yesterday:

Major corporations are expected to report some of their strongest profits in years.

“It has been one of the strongest profits recoveries ever,” said David S. Bianco, chief United States equity strategist for Bank of America Merrill Lynch. “You have got to go back to the Depression to find a profits recovery that outpaces this one.”

What are the options?

1. It's earnings manipulation and real economic profits aren't high at all.  Or they may represent capital consumption.

2. It's an oligopoly model and mark-ups are countercylical (NB: this would eaier to maintain if the recovery in output had been weaker).

3. Aggregate demand is recovering but a) workers are unemployed because, at current margins, their labor simply isn't worth very much, and b) real interest rates are low because of cushions of corporate cash.

4. We're seeing a lot of cost-lowering positive supply shocks, but AD remains stagnant.

Each of these explanations has its problems.  What other hypotheses should I be considering?

Addendum: Arnold Kling comments.

Getting tough with Germany?

Maybe I've covered too many Paul Krugman posts lately, but since he blogged Germany, and I'm now covering Germany, it's worth a quick look.  After proposing that we get tough with the Chinese, Krugman wrote:

And it’s also important to send a message to the Germans: we are not going to let them export the consequences of their obsession with austerity.

Nicely, nicely isn’t working. Time to get tough.

Yet Germany already has passed a constitutional amendment mandating a more or less balanced budget by 2016.  Germany also has EU treaty obligations (admittedly, they broke them in the past, though I suspect they view those lawless days as behind them) limiting the German fiscal deficit to three percent of gdp.

Would trade sanctions on Germany lead to a trade war with the entire EU directly, or only indirectly?

There's also a distinction between a balanced budget and the overall level of government expenditure, the latter being quite high in Germany.  The German government spends a lot of money, in various ways, putting people to work.  It's called the city of Berlin!  Plus they have stronger automatic stabilizers than does the U.S..  Deficits are not the only tool of job promotion or aggregate demand promotion.

Germany also transfers a good bit of money (or for that matter political capital) to the poorer EU nations and in that manner boosts global consumption.  Not to mention the billions the country has borrowed and spent, designed to turn the Ossis into permanent consumers, including at a global level.

Germany, unlike China, has not been engaging in currency manipulation.  In large part German exports are so high because Germany is a productive economy, with quality outputs well geared to world markets.  There are plenty of fiscally austere countries, at various points in time, which do not have Germany's track record of export success.

You can make an argument that bundling with some weaker countries has artificially lowered the value of the German currency.  But even now the Euro is stronger than the deutschmark had been and in that sense Germany gave its currency an artificial boost, the opposite of what China has been doing.

It seems that Krugman is interested in helping the U.S. through a get tough measure.  Yet the last time Germany borrowed lots of money, spent massively on consumption, on an unprecedented scale, and ran a current account deficit…well, the country still ran a significant trade surplus with the United States.  Without the fiscal deficit maybe it would have been a bigger surplus, but still how much can we expect to gain here in terms of AD?

On another front, Germany is finding itself unable to much control the fiscal policies of Greece and they have entered in a common political union with a (supposedly) binding fiscal rule.  Germany also has numerous European countries on its side in its struggle with Greece and is much larger, relative to Greece, than the United States is to Germany.  If Germany can't control the fiscal policy of Greece, how much can we control Germany?

This is one "get tough" program that is headed nowhere fast.

Assorted links

1. The words that NYT readers look up most often.

2. Robin Hanson's earlier post on movie manipulation.

3. Bob Litan on derivatives reform; one idea in this piece is that clearing works easiest under highly capitalized monopoly yet monopoly brings other problems, such as stifled innovation and less favorable terms of trade.

4. Buy real estate in Panama?

5. The size of the called strike zone varies with the count.

6. Races.

7. Why did Texas escape the housing bubble?

Hollywood opposes betting markets on film revenue

While the industry’s opposing comments were not yet final on Wednesday afternoon, Mr. Pisano and others said they were expected to cite a host of potential problems. Those include the risk of market manipulation in the rumor-fueled film world, conflicts of interest among studio employees and myriad contractors who might bet with or against their own films, the possibility that box-office performance would be hurt by short-sellers, difficulty in getting or holding screens for films if trading activity indicated weakness and the need for costly internal monitoring to block insider trades.

Among the potential abuses, the studios contend, is that a speculator might leak an early version of a film to the Internet and then profit from its subsequent poor performance at the box office.

The full story is here.  I suspect that once you cut past the rhetoric the most important factor on that list is: "difficulty in getting or holding screens for films if trading activity indicated weakness…"

The recorded music industry has collapsed for a number of reasons, but one is that pre-purchase web listening helps consumers avoid songs and albums they don't really want to buy.  There are fewer mistaken music purchases today than in say 1986 but of course that also means fewer music purchases.  That's good for consumer welfare, even if it's not always good for the music corporations and artists.  If the same trend came to the movie sector, many current business models would prove unsustainable.  As it currently stands, previews often try to trick audiences rather than enlighten them; sampling a pre-purchase MP3 file in contrast can only enlighten you.

Counterintuitively, introduction of the betting markets could make movies worse in quality (relative to my tastes at least), by inducing producers to focus on making "the sure thing," especially if betting on the movie starts very early.  (Keep in mind that the fixed costs of using theaters may require a minimum level of market interest above some threshold.)  I don't so much mind bad movies because I simply walk out of them, so I prefer a higher variance in quality than may be socially optimal.

So much of our cultural industries have been built on consumer mistakes and those days are coming to an end, rapidly.