Theory or Theories, Applied to A Range of Subjects – Page 2

The Why Axis – Bonus Post

This blogger skimmed the ebook, “The Why Axis” by Uri Gneezy and John A. List, published in 2013. The co-authors discuss their experiments in behavioral economics– the decisions and actions people make and take when they must allocate limited resources in their professional and personal lives.

The authors concluded from their research that gender-related competitiveness is learned– taught by society, rather than inherited. They write that many studies have also shown that when men appoint a leader, they choose someone who resembles them.

Read the book to learn about other interesting findings, such as the risk factors for teenagers’ getting shot, the fastest way to: meet fundraising goals; modify behavior in marketing products; and increase factory-worker productivity by using incentives, punishment or a combination of both.

Super Crunchers

The Book of the Week is “Super Crunchers” by Ian Ayres, published in 2007. This is a book about how projections based on vast quantities of numerical data in various areas of life are spurring innovations and controversy.

Improvements have been made in health, education, welfare, politics, marketing and other aspects of the day-to-day existence of humans because technological advances have greatly facilitated large volumes of number-crunching; however, not without heated debates.

People who are “experts” in specific disciplines whose projections can be quantified, are being obsolesced by machines that make predictions better than they can. For instance, software has been created to project the duration of celebrity marriages. Such duration has been found to have an inverse relationship with Google web traffic. Horror.

When this ebook was published, Farecast.com (Now Bing Travel), a company known for its online airfare search engine– processed its information with a five-terabyte database– “… fifty billion prices that it purchased from ITA Software, a company that sells price data to travel agents, websites, and computer reservation services.” The sheer amount of data minimizes bias. Such “randomization” lets researchers “… run the equivalent of a controlled test without having to laboriously match up and control for dozens or hundreds of potentially confounding variables.”

A hue and cry was heard at teaching hospitals when internet users acquired the ability to diagnose themselves by Googling their symptoms. Around the same time, software was created by medical professionals concerned about the high percentage of misdiagnoses. Such software allowed medical-school students to make diagnoses with the use of a statistical algorithm in a database of diseases, syndromes, disorders, symptoms, causes, drug side effects, clinical findings, lab results and patient histories. The data consisted of “…word patterns in journal articles that were most likely to be associated with each disease.” The computer was more accurate than the medical school professors.

One profession in which jobs are not threatened by large-scale data processing, is psychoanalysis. It’s inferential and subjective– hard to quantify. In financial services, ego and feelings interfere with securities trading and the granting of loans. But computer programs’ regression equations are completely impartial. So they do better than humans at making predictions that make money. Even when a combination of a human and a machine are used to determine whether to grant parole to convicts (based on the probability they’ll go back to committing crimes after being released from prison), the machine alone makes better decisions in a larger percentage of cases.

Read the book to learn why number-crunching software is: inappropriate for making major one-time decisions; making some teachers into robots; good at predicting Supreme Court decisions; sometimes poorly understood by healthcare professionals; raising privacy concerns, and much more.

Word of Mouse – Bonus Post

This blogger skimmed the ebook, “Word of Mouse” by John Riedl and Joseph Konstan, published in 2002.

It is about the concept called “Collaborative Filtering.” That means the ability to make product-recommendations to consumers based on a significant number of their self-reported likes of products via an algorithm in a computer program.

The authors claim that the program makes recommendations with a high degree of accuracy, once a subject provides sufficient data on likes and dislikes. Such data are superior to demographic data such as age, occupation and sex, when it comes to predicting future preferences.

Collaborative filtering can be applied to sales of clothing, books, movies and goods sold on the internet– simple products that are purchased according to taste. “Cultural tastes seem to run in patterns.”

This blogger theorizes that the algorithm would do poorly on complex offerings that involve customer service– restaurant meals, hotel rooms, flights or personal services, because they are an experience that varies every time and are more likely to be enjoyed multiple times. A singular product like a book or movie, is a one-time experience.

When polled by the computer program on a book or movie, consumers express their like or dislike only for the book or movie, not bookstore atmosphere or moviegoer rudeness. Consumers might rate a hotel room on hotel-staff friendliness, room decor, cleanliness, and a host of other variables; if they have stayed at the hotel more than once, the rating might also reflect consumers’ general vibe about the hotel for all their stays. On any given day, the consumer might have a good or bad experience at a hotel. Anyway, the algorithm might achieve the same degree of accuracy by recommending a hotel simply based on other hotels with similar amenities and features, as by recommending based on the consumer’s likes of other hotels.

The authors discuss an online business that was started in 1998, Priceline, which allows customers to name the highest price they are willing to pay for a product or service, and if their purchase is approved, (presumably) receive it at a deep discount. For the most part, this appears to be irrelevant to collaborative filtering. Nevertheless, interestingly, the “reverse-auction model” has turned out to be profitable for travel-related services but not for gasoline, groceries and financial services. The reason is that airlines and hotels suffer a total loss on each plane seat and hotel room unfilled on any particular flight or night, respectively. Recouping some revenue from passengers and guests, even at a deep discount, is preferable. The authors make a point about how Priceline displays local geographic expertise in selling its services. Displaying expertise is important for online selling.

The authors boldly proclaim, “We envision recommenders moving out more into the public and the bricks-and-mortar sphere… Recommenders can limit the number of items a customer needs to see on each [Web]page… Recommenders can also be used in voice interfaces where the limiting factor is low bandwidth…” Clearly, Riedl and Konstan underestimated the algorithmic proficiency of Google.

Read the book anyway to see the authors’ enthusiasm for collaborative filtering and get numerous tips on online selling, marketing, and what we now know about the internet. 🙂

Antifragile

The Book of the Week is “Antifragile, Things That Gain From Disorder” by Nassim Nicholas Taleb, published in 2012. In this repetitive ebook, Taleb reiterates a few of the concepts from his earlier book “The Black Swan” and again appears to derive pleasure from pointing out human fallibility. He writes that “Uncertainty, incomplete understanding, disorder, and volatility are members of the same close family.” He shows how people generate inaccurate predictions and draw the wrong conclusions through spurious causality, or “epiphenomena.”

Taleb discusses a state of being he calls “antifragility” (or more often, a lack thereof) in the realms of politics, economics, science, academia and medicine, taking swipes at all of them as he goes along. He gives tips on how systems and individuals can make themselves more antifragile (the opposite of fragile), a good thing. The author also provides real-life and theoretical scenarios that perpetuate fragility. Humans appear not to be learning from past scenarios, as they continue to make the same mistakes over and over. One example of a real-life scenario includes the economic bailout of certain big companies, by the United States government (and by extension, American taxpayers) in 2008.

Fragility is vulnerability to negative occurrences. Antifragility is the ability to withstand negative occurrences due to various measures taken to reduce risks; this state of being actually benefits from volatility and randomness.

Humans tend to overestimate their ability to predict shocks and rare events (like revolutions, crises or budget deficits), and when the worst happens, it is worse than the previous occasion. Taleb writes that after havoc strikes, blame incorrectly gets assigned to one factor of the big picture. “The focus is wrong even if the logic is comforting.” People need to study the system and its fragility, not events.

One general example Taleb provides of spurious causality includes the questionable, widely-held assumption that academic research is the generator of wealth because so much research comes out of countries that are wealthy. Taleb thinks it is actually the other way around. “We have no evidence that academia helps science and technology, which in turn help practice.” One narrow instance of this was the building of the atomic bomb, in which there was directed research. But in that, there was selection bias and confirmation bias.

Another example that Taleb provides– a theoretical one– is when an Ivy League university scientist lectures a bird on how to fly. The bird takes flight. The scientist hastily writes books, articles and reports stating that the bird listened to him. The university is now an authority on aerial transportation by the avian species. It will implement further studies with funding by the government. Unfortunately, birds do not write books and papers, so we cannot get their side of the story.

The author advocates interventionism in particular areas and not others. He thinks the government should impose restrictions on the size, concentration and speed of entities including itself (obviously idealistic of him) because bigness increases fragility and the probability of disasters. He thinks less is more (do nothing or implement minimal intervention unless a medical condition is life-threatening) when it comes to medicine.

Taleb says education is useful in that it helps a family retain wealth insofar as its descendants use their educations to enter professions that were more lucrative than those of their ancestors. Almost all projects take longer and cost more when an element of uncertainty is added. “We have never had more data than we have now, yet have less predictability than ever.”

Read the book to learn more about: a) errors in human reasoning that aggravate adverse situations; b) why fragility is increased with fiscal deficits and awarding of prizes in the fields of literature, finance, and economics; c) which actions are helpful in promoting antifragility and d) an inopportune event caused by Taleb’s own fallibility and his reasoning in dealing with it.

In sum, “The problem with people who do not incur harm [suffer no punishment for their influential opinion-making that causes economic collapse or a war] is that they can cherry-pick from statements they’ve made in the past, many of them contradictory, and end up convincing themselves of their intellectual lucidity on the way to the World Economic Forum at Davos.”

Outliers

The Book of the Week is “Outliers” by Malcolm Gladwell, published in 2008. This short, repetitive yet fascinating ebook is a hodgepodge of commentaries on human nature.

The author argues that extremely successful people in specific areas of expertise, such as professional sports, computer programming, music, science and lawyering “…are invariably the beneficiaries of hidden advantages and extraordinary opportunities and cultural legacies…” that give them a helping hand with regard to pursuing their passions. He also touches on a few peripheral topics, such as cultures of honor, plane crashes, rice paddies, education and slavery, all of which involve complex systems of teamwork and communication.

Outliers take advantage of the chances they get over the course of about a decade, or 10,000 hours, in which they hone their abilities in one area that, at the time, happens to become valued by society. An outlier is what some business commentators refer to as a “hedgehog” rather than a “fox.” The former becomes an expert in one or two areas– the outlier mystique; the latter gains some experience in many areas– useful in times of crisis, but never conducive to outlier status.

Gladwell names real-life examples of various celebrities, mostly Americans, explaining why their incredible achievements were attained with assistance from fate. He writes that stories about outliers are often exaggerated, failing to mention the set of lucky circumstances that led to success.

For example, the nurturing of talent of young Canadian ice hockey players is based on a biased selection process. Players are grouped in leagues by their playing abilities within age ranges determined by their birthdates. The ones who are older, even by a few months, have a statistically significant advantage in terms of size and strength. Thus, it so happens that a large percentage of players are born in January, February or March. These lucky ones are provided with a superior experience, whose success feeds on itself, called “accumulative advantage.”

The maximally successful achiever is one who is both book-smart and street-smart, as was J. Robert Oppenheimer, project manager of the atomic bomb. According to Gladwell, street-smart consists of attitudes and skills instilled by one’s family. If one happens to be born into a wealthy, nurturing family, one is much more likely to become an outlier.

Read the book to learn: 1) which countries’ students are best at math and why; 2) the reason there is an achievement gap between high-income and low-income American elementary schoolers; and 3) other interesting findings.

Inviting Disaster

The Book of the Week is “Inviting Disaster” by James R. Chiles, published in 2002. This is an ebook that describes the causes of fatal mechanical failures in aviation and industry.

Human error is always a factor. There is never just one cause. “A disaster occurs through a combination of poor maintenance, bad communication, and shortcuts.” Taking shortcuts such as omitting the testing of newly manufactured machine parts leads to improper, unsafe modification by end users.

In the stages leading up to a catastrophe, when workers realize they are in trouble, most react with intense concentration, anger at the malfunctioning equipment, fear and even panic.

Hypervigilance is a form of extreme panic with trembling hands, hyperventilation and heart palpitations; the mind blanks on what one was taught in training, and perception narrows. Often this causes people to take a course of action with the best of intentions– that makes conditions worse.

Architectural engineers must make sure buildings are designed to withstand the natural disasters that typically hit the areas where they are located. About every sixteen years, Manhattan gets hit by a hurricane that might cause, say, a particular building to collapse. That was why, shortly after it was built in 1978, the Citicorp Building had to be structurally modified at great expense. However, many deaths were likely prevented.

A common chain of events precipitates disasters in third world countries. A light manufacturing plant might be erected in a lower-class residential area. As time passes, however, the owner might want to begin making hazardous products.

Certain conditions prevail: There is a dearth of laws governing environmental impact; the local economy would suffer if the plant couldn’t expand; the local residents enjoy living there. Over time, people become sloppy about safety.

Before lots of accidents, internal memos warning of an unsafe situation go unheeded. “The bureaucratic solution is to let the memo sit in the inbox for a while– then send it back for more explanation.” It is easier than making trouble, and in the short term, economically advantageous.

One way companies such as Boeing are checking themselves from making the same mistake twice is by continually adding to a knowledge base– confidential archives of troubleshooting reports that are actually read by designers.

Read the book to learn about other ways deadly mishaps could have been, and can be avoided.

Thank You For Arguing

The Book of the Week is “Thank You For Arguing” by Jay Heinrichs, published in 2007. This is a book on debating. The author teases apart the differences between arguing and fighting, and logic and rhetoric.

There are three kinds of persuasive language: blame, values and choice. Each is of a different tense. Blame is past tense. Values depict the present. Choice talks about the future. The author advises the reader to switch tenses if an argument gets heated. The future, though, is the tense most likely to bring about peace.

People in a courtroom recount past events that involve blame. However, to get their points across, lovers and politicians should try to stick to the present and future. Two useful questions to ask when a problem crops up are, “What should we do about it?” and “How can we keep it from happening again?”

Values, which involve morals, are undebatable. The author says, “Argument’s Rule Number One: Never debate the undebatable. Instead, focus on your goals… If you want your audience to make a choice, focus on the future.” Also, “When you argue emotionally, speak simply. People in the middle of a strong emotion rarely use elaborate speech.”

One more tip: When one is deciding on an issue to argue, the most persuasive issue will be the broadest one. For instance, in launching a protest against consolidating two departments in a workplace, one should seize upon the issue of productivity, rather than fairness.

The author sadly concludes that universities used to teach rhetoric, but stopped doing so in the 1800’s when “…academia forgot what the liberal arts were for: to train an elite for leadership.”

Read the book to learn more debating techniques.

Multipliers

The Book of the Week is “Multipliers: How the Best Leaders Make Everyone Smarter” by Liz Wiseman with Greg McKeown, published in 2010. This repetitive ebook discusses two kinds of leaders: “Multipliers” and “Diminishers.”

Multipliers positively influence the people around them so as to draw out almost two times what they previously believed their capabilities to be, as reported by senior professionals interviewed by the authors. “People reported actually getting smarter around Multipliers.”

A study conducted in a non-workplace arena showed that people who were lauded for their efforts rather than for their intelligence “actually increased their ability to reason and solve problems.” The book’s authors relate this to Multipliers, saying that Multipliers create a self-fulfilling prophecy of greatness by recognizing their colleagues’ accomplishments, spurring better thinking from everyone.

The authors cited many examples of this, including one in which a company did not hire additional talent in order to meet its goal of increasing sales quickly, but instead, utilized Multipliers to better leverage the brain power of its existing sales force. Another company used Multipliers effectively in that “They didn’t box people into jobs and limit their contribution… [they]… let people work where they had ideas and energy and where they could best contribute.”

In addition, Multipliers have a great sense of humor– the trait of a great leader– it represents security with oneself, and a lack of self-consciousness. Multipliers search for talent all over, identify and draw out the positive behaviors that come naturally to the people they influence, maximize performance, and remove obstacles.

Read the book to learn the many other ways Multipliers bring out the best in their coworkers, and how Diminishers negatively impact their coworkers.

The Black Swan

The Book of the Week is “The Black Swan” by Nassim Nicholas Taleb, published in 2010. In this book, the author explains his theory about rare, unexpected events, “Black Swans”– unexpected by those affected, because human traits and uncertain situations cause people to draw the wrong conclusions, formulate the wrong predictions, and make the wrong decisions. “Black Swan events are largely caused by people using measures way over their heads, instilling false confidence based on bogus results.” The author applies his ideas mostly to “experts” who manipulate the financial markets.

While Taleb makes some good points, this blogger suspects that very few readers of this book will come away fully understanding what a Black Swan is. Taleb tries to provide several examples; his illustrations are unclear as to why one event is a Black Swan and why another is not.

One example consists of five trading managers at a European-owned financial institution who wrote a five-year plan. Having neglected to consider all possible adverse future events, they were done in by “the Black Swan of the Russian financial default of 1998 and the accompanying meltdown of the values of Latin American debt markets.” Yet, Taleb writes that the 2008 financial crisis was not a Black Swan. He says such a cluster screw-up will happen again. A Black Swan is a negative or more rarely, a positive occurrence that in general, has never happened before.

One human trait people have is that they are reluctant to attribute events to randomness. But Taleb thinks randomness plays a part in all sorts of events, including long winning streaks of investors. He even generated a computer simulation showing how it would be impossible not to have money managers who beat the market year after year– he says they did so simply by luck alone. Another reason these investors are overrated is that people hear more often about winners rather than losers.

Taleb writes, “We want to be told stories, and there is nothing wrong with that– except that we should check more thoroughly whether the story provides consequential distortions of reality… Just consider that the newspapers try to get impeccable facts, but weave them into a narrative in such a way as to convey the impression of causality (and knowledge).”

The 7 Habits of Highly Effective People

The Book of the Week is “The 7 Habits of Highly Effective People” by Stephen R. Covey, published in 1990. The author tells readers how to improve their social skills to achieve their goals. He illustrates his points with anecdotes on parenting in his own large family. One phrase in the book that stuck in this blogger’s mind is, “Use your resources and initiative.”