New book by Frank Pasquale on “The Secret Algorithms That Control Money and Information”: “Every day, corporations are connecting the dots about our personal behavior—silently scrutinizing clues left behind by our work habits and Internet use. The data compiled and portraits created are incredibly detailed, to the point of being invasive. But who connects the dots about what firms are doing with this information? The Black Box Society argues that we all need to be able to do so—and to set limits on how big data affects our lives.
Hidden algorithms can make (or ruin) reputations, decide the destiny of entrepreneurs, or even devastate an entire economy. Shrouded in secrecy and complexity, decisions at major Silicon Valley and Wall Street firms were long assumed to be neutral and technical. But leaks, whistleblowers, and legal disputes have shed new light on automated judgment. Self-serving and reckless behavior is surprisingly common, and easy to hide in code protected by legal and real secrecy. Even after billions of dollars of fines have been levied, underfunded regulators may have only scratched the surface of this troubling behavior….(More).”
Turns Out the Internet Is Bad at Guessing How Many Coins Are in a Jar
Eric B. Steiner at Wired: “A few weeks ago, I asked the internet to guess how many coins were in a huge jar…The mathematical theory behind this kind of estimation game is apparently sound. That is, the mean of all the estimates will be uncannily close to the actual value, every time. James Surowiecki’s best-selling book, Wisdom of the Crowd, banks on this principle, and details several striking anecdotes of crowd accuracy. The most famous is a 1906 competition in Plymouth, England to guess the weight of an ox. As reported by Sir Francis Galton in a letter to Nature, no one guessed the actual weight of the ox, but the average of all 787 submitted guesses was exactly the beast’s actual weight….
So what happened to the collective intelligence supposedly buried in our disparate ignorance?
Most successful crowdsourcing projects are essentially the sum of many small parts: efficiently harvested resources (information, effort, money) courtesy of a large group of contributors. Think Wikipedia, Google search results, Amazon’s Mechanical Turk, and KickStarter.
But a sum of parts does not wisdom make. When we try to produce collective intelligence, things get messy. Whether we are predicting the outcome of an election, betting on sporting contests, or estimating the value of coins in a jar, the crowd’s take is vulnerable to at least three major factors: skill, diversity, and independence.
A certain amount of skill or knowledge in the crowd is obviously required, while crowd diversity expands the number of possible solutions or strategies. Participant independence is important because it preserves the value of individual contributors, which is another way of saying that if everyone copies their neighbor’s guess, the data are doomed.
Failure to meet any one of these conditions can lead to wildly inaccurate answers, information echo, or herd-like behavior. (There is more than a little irony with the herding hazard: The internet makes it possible to measure crowd wisdom and maybe put it to use. Yet because people tend to base their opinions on the opinions of others, the internet ends up amplifying the social conformity effect, thereby preventing an accurate picture of what the crowd actually thinks.)
What’s more, even when these conditions—skill, diversity, independence—are reasonably satisfied, as they were in the coin jar experiment, humans exhibit a whole host of other cognitive biases and irrational thinking that can impede crowd wisdom. True, some bias can be positive; all that Gladwellian snap-judgment stuff. But most biases aren’t so helpful, and can too easily lead us to ignore evidence, overestimate probabilities, and see patterns where there are none. These biases are not vanquished simply by expanding sample size. On the contrary, they get magnified.
Given the last 60 years of research in cognitive psychology, I submit that Galton’s results with the ox weight data were outrageously lucky, and that the same is true of other instances of seemingly perfect “bean jar”-styled experiments….”
Democratizing Inequalities: Dilemmas of the New Public Participation
New book edited by Caroline W. Lee, Michael McQuarrie and Edward T. Walker: “Opportunities to “have your say,” “get involved,” and “join the conversation” are everywhere in public life. From crowdsourcing and town hall meetings to government experiments with social media, participatory politics increasingly seem like a revolutionary antidote to the decline of civic engagement and the thinning of the contemporary public sphere. Many argue that, with new technologies, flexible organizational cultures, and a supportive policymaking context, we now hold the keys to large-scale democratic revitalization.
Democratizing Inequalities shows that the equation may not be so simple. Modern societies face a variety of structural problems that limit potentials for true democratization, as well as vast inequalities in political action and voice that are not easily resolved by participatory solutions. Popular participation may even reinforce elite power in unexpected ways. Resisting an oversimplified account of participation as empowerment, this collection of essays brings together a diverse range of leading scholars to reveal surprising insights into how dilemmas of the new public participation play out in politics and organizations. Through investigations including fights over the authenticity of business-sponsored public participation, the surge of the Tea Party, the role of corporations in electoral campaigns, and participatory budgeting practices in Brazil, Democratizing Inequalities seeks to refresh our understanding of public participation and trace the reshaping of authority in today’s political environment.”
Transparency isn’t what keeps government from working
in the Washington Post: “In 2014, a number of big thinkers made the surprising claim that government openness and transparency are to blame for today’s gridlock. They have it backward: Not only is there no relationship between openness and dysfunction, but more secrecy can only add to that dysfunction.
As transparency advocates, we never take openness for granted. The latest example of the dangers of secrecy was the “cromnibus” bill, with its surprise lifting of campaign finance limits for political parties to an astonishing $3 million per couple per cycle, and its suddenly revealed watering down of Dodd-Frank’s derivatives safeguards. And in parallel to the controversy over the release of the CIA’s torture report, that agency proposed to delete e-mail from nearly all employees and contractors, destroying potential documentary evidence of wrongdoing. Openness doesn’t happen without a struggle…..
Academics, such as Francis Fukuyama, make the case that politicians need privacy and discretion — back-door channels — to get the business of government done. “The obvious solution to this problem would be to roll back some of the would-be democratizing reforms, but no one dares suggest that what the country needs is a bit less participation and transparency,” writes Fukuyama in his newest book. At a time when voter participation is as low as during World War II, it seems strange to call for less participation and democracy. And more secrecy in Congress isn’t going to suddenly create dealmaking. The 2011 congressional “supercommittee” tasked with developing a $1.5 trillion deficit reduction deal operated almost entirely in secret. The problem wasn’t transparency or openness. Instead, as the committee’s Republican co-chairman, Jeb Hensarling, stated, the real problem was “two dramatically competing visions of the role [of] government.” These are the real issues, not openness….
We are not transparency absolutists. Not everything government and Congress do should occur in a fishbowl; that said, there is already plenty of room today for private deliberations. The problem isn’t transparency. It is that the political landscape punishes those who try to work together. And if various accountability measures create procedural challenges, let’s fix them. When it comes to holding government accountable, it is in the nation’s best interest to allow the media, nonprofit groups and the public full access to decision-making.”
Mastering ’Metrics: The Path from Cause to Effect
Book by Joshua D. Angrist & Jörn-Steffen Pischke : “Applied econometrics, known to aficionados as ‘metrics, is the original data science. ‘Metrics encompasses the statistical methods economists use to untangle cause and effect in human affairs. Through accessible discussion and with a dose of kung fu–themed humor, Mastering ‘Metrics presents the essential tools of econometric research and demonstrates why econometrics is exciting and useful.
The five most valuable econometric methods, or what the authors call the Furious Five–random assignment, regression, instrumental variables, regression discontinuity designs, and differences in differences–are illustrated through well-crafted real-world examples (vetted for awesomeness by Kung Fu Panda’s Jade Palace). Does health insurance make you healthier? Randomized experiments provide answers. Are expensive private colleges and selective public high schools better than more pedestrian institutions? Regression analysis and a regression discontinuity design reveal the surprising truth. When private banks teeter, and depositors take their money and run, should central banks step in to save them? Differences-in-differences analysis of a Depression-era banking crisis offers a response. Could arresting O. J. Simpson have saved his ex-wife’s life? Instrumental variables methods instruct law enforcement authorities in how best to respond to domestic abuse….(More).”
Wikipedia and the Politics of Openness
New book by Nathaniel Tkacz: “Few virtues are as celebrated in contemporary culture as openness. Rooted in software culture and carrying more than a whiff of Silicon Valley technical utopianism, openness—of decision-making, data, and organizational structure—is seen as the cure for many problems in politics and business.
But what does openness mean, and what would a political theory of openness look like? With Wikipedia and the Politics of Openness, Nathaniel Tkacz uses Wikipedia, the most prominent product of open organization, to analyze the theory and politics of openness in practice—and to break its spell. Through discussions of edit wars, article deletion policies, user access levels, and more, Tkacz enables us to see how the key concepts of openness—including collaboration, ad-hocracy, and the splitting of contested projects through “forking”—play out in reality.
The resulting book is the richest critical analysis of openness to date, one that roots media theory in messy reality and thereby helps us move beyond the vaporware promises of digital utopians and take the first steps toward truly understanding what openness does, and does not, have to offer….(More).”
Governing the Embedded State: The Organizational Dimension of Governance
By drawing upon this research, the volume will explain how recent developments such as globalization, Europeanization, the expansion of managerial ideas, and the fragmentation of states, have influenced the state’s capacity to govern.
The result is an account of contemporary governance which shows the societal constraints on government but also the significance of close interaction and cooperation between the political leadership and the senior civil servants in addressing those constraints.”
Institutions, Innovation, and Industrialization: Essays in Economic History and Development
Book edited by Avner Greif, Lynne Kiesling & John V. C. Nye: “This book brings together a group of leading economic historians to examine how institutions, innovation, and industrialization have determined the development of nations. Presented in honor of Joel Mokyr—arguably the preeminent economic historian of his generation—these wide-ranging essays address a host of core economic questions. What are the origins of markets? How do governments shape our economic fortunes? What role has entrepreneurship played in the rise and success of capitalism? Tackling these and other issues, the book looks at coercion and exchange in the markets of twelfth-century China, sovereign debt in the age of Philip II of Spain, the regulation of child labor in nineteenth-century Europe, meat provisioning in pre–Civil War New York, aircraft manufacturing before World War I, and more. The book also features an essay that surveys Mokyr’s important contributions to the field of economic history, and an essay by Mokyr himself on the origins of the Industrial Revolution….(More)”
Making Futures – Marginal Notes on Innovation, Design, and Democracy
Book edited by Pelle Ehn, Elisabet M. Nilsson and Richard Topgaard: “Innovation and design need not be about the search for a killer app. Innovation and design can start in people’s everyday activities. They can encompass local services, cultural production, arenas for public discourse, or technological platforms. The approach is participatory, collaborative, and engaging, with users and consumers acting as producers and creators. It is concerned less with making new things than with making a socially sustainable future. This book describes experiments in innovation, design, and democracy, undertaken largely by grassroots organizations, non-governmental organizations, and multi-ethnic working-class neighborhoods.
These stories challenge the dominant perception of what constitutes successful innovations. They recount efforts at social innovation, opening the production process, challenging the creative class, and expanding the public sphere. The wide range of cases considered include a collective of immigrant women who perform collaborative services, the development of an open-hardware movement, grassroots journalism, and hip-hop performances on city buses. They point to the possibility of democratized innovation that goes beyond solo entrepreneurship and crowdsourcing in the service of corporations to include multiple futures imagined and made locally by often-marginalized publics. (More) “
Make policy for real, not ideal, humans
Martin Wolf at the Financial Times: “Out of the crooked timber of humanity, no straight thing was ever made. This famous remark of the German philosopher, Immanuel Kant, is particularly relevant to economists. “Homo economicus” is far-sighted, rational and self-interested. Real human beings are none of these things. We are bundles of emotions, not calculating machines. This matters
The World Bank’s latest World Development Report examines this territory. It notes that “behavioural economics” alters our view of human behaviour in three ways: first, most of our thinking is not deliberative, but automatic; second, it is socially conditioned; and, third, it is shaped by inaccurate mental models.
The Nobel laureate, Daniel Kahneman, explored the idea that we think in two different ways in his 2011 book Thinking, Fast and Slow . The need for an automatic system is evident. Our ancestors did not have the time to work out answers to life’s challenges from first principles. They acquired automatic responses and a cultural predisposition towards rules of thumb. We inherited both these traits. Thus, we are influenced by how a problem is framed.
Another characteristic is “confirmation bias” — the tendency to interpret new information as support for pre-existing beliefs. We also suffer from loss aversion, fierce resistance to losing what one already has. For our ancestors, on the margin of survival, that made sense.
The fact that humans are intensely social is clear. Even the idea that we are autonomous is itself socially conditioned. We are also far from solely self-interested. A bad consequence of the power of norms is that societies may be stuck in destructive patterns of behaviour. Nepotism and corruption are examples. If they are entrenched, it may be difficult (or dangerous) for individuals not to participate. But social norms can also be valuable. Trust is a valuable norm. It rests on one of humanity’s strongest behaviours: conditional co-operation. People will punish free-riders even when it costs them to do so. This trait strengthens groups and so must raise members’ ability to survive.
Mental models are essential. Some seem to be inbuilt; and some can be damaging — as well as productive. Ideas about “us” and “them”, reinforced by social norms, may well lead to results that range from the merely unfair to the catastrophic. Equally important may be mental models that create self-fulfilling expectations of who will succeed and who will fail. There is evidence, notes the WDR, that mental models rooted in history may shape people’s view of the world for centuries: caste is an example. Such mental models survive because they are reproduced socially and become part of the automatic rather than the deliberative system. They influence not just our perceptions of others, but perceptions of ourselves.
To illustrate the relevance of these realities, the report analyses the policy challenges of poverty, early childhood development, household finance, productivity, health and climate change….(More)”