Exploring the Internet

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Governance and Economics and Complex Systems

I recently read a paper by Elinor Ostrom, who won the Nobel Prize for Economics in 2009.  Beyond Markets and States: Polycentric Governance of Complex Economic Systems (2010) presents an overview of the study of polycentric governance and the roadmap for future studies that are probably currently underway.  It can be thought of as a very substantive refinement of economics, where the units of study are groups of individuals who seek to manage public goods.  Sometimes they cooperate effectively, to provide services such as access to water to a city, while other times competition can lead to chaos.  Many situations and conditions can lead to more cooperation where the determining factor is whether the situation builds up trust or breaks it down.  I was personally excited that Ostrom referenced Kenneth Arrow as one of the first economists to discuss the importance of trust.

I was very glad to have read this paper.  I really think all economists, especially those who then go into policy-making really should be familiar with the work on polycentric governance.

A similar, perhaps parallel, topic is complexity in interconnected systems.  In an interconnected system, such as the economy, identifying the key decision-makers and their networks can be enlightening.  The rules governing the system may also lead to some decision-makers to have out-sized influence, leading to outcomes that no one necessarily plans out meticulously but are nevertheless inevitable.  I am still not clear on what discipline(s) this work is emerging in, but I'm definitely excited to learn more.

Conan Rehearsals

This is my latest round of favorite Conan videos!

Messing around.





Mistakes are funny.

Phun with Phake Photoshop (Paint.net)

I was designing my own business cards yesterday, and so I was changing the colors of the UC Berkeley logo. Yeah I know it's kind of stupid because the whole point is that the logo is in the school colors. But...I mean...damn the man or something, right?

My Little Poster: Improving Metrics for Corporate Emissions Initiatives

I presented a poster on Thursday night for the BERC Innovation Expo, which is an event at the annual Energy Conference at UC Berkeley!

Here it is!  I had many stimulating conversations with people about it, which was pretty exciting.

Racial Profiling, Probability, and Stereotypes

I made a simple webpage this weekend to demonstrate how stereotypes can be self-reinforcing.  For me it was an exercise in making a kind of infographic.  It's not exactly an infographic since I don't actually use any real data.  It's more about learning the relationship between mental models and outcomes, which I think of as the "underlying system."

http://mirthbottle.github.io/rprofiling/

I would like to add some "exercises" at some point to guide people in playing with the assumptions.

I would also like to link to statistics and studies about racial profiling.  I didn't start with those because I believe that understanding the underlying system is a prerequisite for understanding empirical studies.

Debate About Fairness of the Stock Market

Throwdown!

It's Brad Katsuyama, the founder of IEX, a new exchange that touts itself as being more fair for investors.  Michael Lewis joins him in defending what he wrote in Flash Boys.  On the attack on behalf of HFT is Bill O'Brien, then president of the BATS exchange.



Since the debate, the BATS exchange had to issue a statement correcting something O'Brien said, and O'Brien has gotten fired.

http://www.efinancialnews.com/story/2014-07-22/bats-global-president-william-obrien-exits?ea9c8a2de0ee111045601ab04d673622

Ferguson: Lighting a Match in a Gas-Filled Room

What is the cause?  The person who lit the match or the broken stove that filled the room with gas or maybe the person who neglected to maintain the stove?

On August 9, a police officer shot and killed a teenager who was unarmed.  Officer Darren Wilson was white and Mike Brown was black.  Originally stopped because of jay-walking, he eventually gets shot dead in unclear circumstances.  Some witnesses say (and I'm more likely to believe for the record) that he initially ran away but then turned around to surrender with his hands in the air), while others claim that he had assaulted the police officer.  Since then there have been many protests organized by black communities all over the country as well as counter-protests.

I grew up in St. Louis in a mostly white community so I'm very familiar with the perspective of many white Americans.  It definitely bothers me that many white and Asian Americans do not understand why black Americans are upset.  I think it comes down to not understanding how stereotyping can lead to systematic injustice.  In other words, assumptions about other people can be self-fulfilling prophesies.  In fact, you will even reinforce stereotypes about yourself.

Everyone makes assumptions about other people, and it is often a useful practice.  You don't have to put as much effort into finding people who will appreciate your jokes, potential customers, employees who have the skills you need, etc.  However, just because it's less effort doesn't mean it's fair.  

There are in fact more men in engineering than women.  When you meet a woman at a party, and she says she works in the tech industry, you assume she works in marketing or HR.  Statistically speaking, you will be right probably at least 70% of the time.  If it's a man, you'd probably ask what he works on since it could reasonably be anything.  For a woman, you might not bother if you already think you know the answer.  You may even be embarrassing her or yourself if you do.  As a result, if you're looking to hire an engineer, women will be even less represented in your mind's eye than they even really are.  In fact, if you're recruiting you might not even bother talking to her because hey, you're busy and trying to find someone with the least amount of effort, which is a logical thing to do. 

For blacks of course it's even worse, especially if they don't dress like most other white people.  (You might think, "Why don't they just change how they dress?"  Well, they grew up dressing a certain way because their friends dressed that way when they were growing up.  Maybe they like the way they look!) 

As a result, anyone who is already underrepresented in an obvious way (race or gender) is less likely to get opportunities and more likely to meet resistance compared to whatever the majority is.  That is unfair.  This is how stereotypes can lead to systemically racist and sexist procedures.

This is why people object to racial profiling.  Yes, it would even be "efficient" if the actual rates of perpetration among minorities and whites are actually different, which is not necessarily true.  I don't actually have the statistics on this.  However, minorities will be even more over-represented among perpetrators than their base rate because the rate of catching them will be higher.  Furthermore, it is definitely unfair to the rest of the minorities who are much more likely to be harassed as well as fined.

But actually recruiters do look for women and minorities because of affirmative action!  Exactly.  If it weren't for affirmative action, they'd put even less effort into it.

Finally, there are many reasons why we have stereotypes.  Some of them do have something to do with reality, but everyone should also recognize that our brains are made for pattern recognition.  Even if something is completely random, your brain will try to come up with an explanation.  This is a problem for any minority because the few that you meet end up setting up your expectations for all of them.  If a minority or a woman makes a mistake at work, everyone including women tends to think, "wow, that woman made a mistake."  If a white guy makes a mistake, "you think, oh, dan (this particular guy) made a mistake."

I first became very aware of my own privilege in middle school.  I grew up in an upper middle class area where most people were white.  However, a large number of black kids from the city were bused in.  Sometimes I would wander around outside of class, sometimes for a good reason, sometimes for no good reason.  I would occasionally even leave the school.  Very very rarely would anyone ask me where I was going or why I was playing games in the computer lab.  This was even when I was wearing extremely baggy clothes with large holes in them.  If one of the black kids were outside of class, though, they would always be stopped and interrogated.  On the one hand, maybe it is really more detrimental to their education.  On the other hand, by not ever being questioned, I'm clearly benefiting from my reputation as well as the reputation of nerdy Asians.

Stereotyping has been routinely making black Americans feel like they're being picked on.  If they make any mistakes or act up they are reinforcing the stereotype.  They can't complain about it or else they're playing the "race card."  Exacerbating this is that many white Americans don't interact much with minorities so they are blissfully unaware about the issues. This has caused escalating racial tensions across America, which exploded into protests last month.  Any mistake in the logic of black protesters or rioting gives many white Americans reason to dismiss their grievances entirely.  Hopefully, there has actually been some productive dialogue as well.

I am not immune to stereotyping.  But at the same time, I'm not going to defend myself and say I'm always fair.  We should all acknowledge that making sure things are fair is difficult.  It may even be impossible to be completely fair, but we should still try to stop adding fuel to the fire.  We should keep thinking of ways to make things more fair.

Learn more about racism and Ferguson:

http://www.theatlantic.com/features/archive/2014/05/the-case-for-reparations/361631/

http://www.theatlantic.com/magazine/archive/1999/08/thin-ice-stereotype-threat-and-black-college-students/304663/

http://www.stltoday.com/news/opinion/why-gov-nixon-has-to-remove-prosecutor/article_0e297a8a-073b-5f0e-8bd5-fd31429e8072.html

My tech recruiting example in action!
https://medium.com/@trisha/a-hilariously-sad-tale-of-gender-bias-54919595e482

Corporate Lawyers Might Know What's Up

I asked Jamie O'Connell, a law professor at UC Berkeley, whether it is well known that in the US it is extremely difficult for shareholders to successfully sue a corporate board in the US for violating fiduciary duty.  Basically, a corporate board that is accused of violating their fiduciary duty to maximize shareholder value can always rely on the "business judgment rule" in court.  Shlensky v. Wrigley seems to be the case that is cited most often to demonstrates this principle.  Professor O'Connell said that among corporate lawyers and among lawyers generally, it's very well-known.  This surprises me because this does not seem to be well-known among MBA's or undergraduate business majors.  Professor O'Connell himself is a human rights lawyer, though, so he may be particularly familiar with this.

At the same time, corporate managers that don't maximize profit are likely to lose their bonuses and even their jobs.  Shareholders can and do campaign to fire board members they don't like.  Usually the imperative to maximize shareholder value is enforced this way.

Job Pitch

I'm going on the job market!

I wrote up a pitch about what I want to do.  I will probably want to keep editing it a bit.

Investors as well as environmental activists could be more effective if they better understood the pressures corporate boards face from the finance industry. For example, perverse incentives in the financial system may make long term planning difficult.
Corporations should sometimes be insulated from these pressures. I want to analyze how financial incentives influences corporate governance regarding climate change. Then I can help environmental organizations and long-term investors develop ways to respond.  Ways that corporations benefit from managing their emissions may also need to be identified and better publicized to the financial industry.
I'm also interested in improving corporate data management for GHG emissions. These software systems help corporations manage emissions reduction as well as report results to stakeholders such as investors or consumers. These systems always need to be customized for each organization because the operations of different organizations vary so much. As a result, experimentation and iteration is always needed. However, in order for the information to be useful for external stakeholders, these systems also need to be compatible with each other to some extent. For example, managing and reporting the emissions of a supply chain where suppliers have many other customers, can be challenging.

Jeff Goldblum and Conan

I've been watching a lot of videos while recovering and de-stressing from accident.  It's like procrastinating on steroids.  In addition to movies and Chinese TV shows, I've been watching many Conan interviews.  My favorite guest is Jeff Goldblum.

Over the years, Jeff Goldblum has kind of developed a character just for Conan's shows.  I really enjoy watching this character that always takes the show to strange places as it interacts with Conan.  This episode from May 2, 2006, is probably my favorite episode.  The Goldblum on Conan character emerges during the interview, or maybe it's really just Jeff Goldblum getting comfortable.

Robin Williams Was Depressed

Yesterday, I found out that Robin Williams committed suicide.

Since then I've been reading more about how many comedians are depressed.  It's especially sad to realize that Robin Williams was depressed, though, because so much of his work is about giving people hope, motivation, inspiration, and of course, comic relief.  He plays a mentor in many of his roles, like the Genie in Aladdin.  You can tell he really cared about other people.

Teeth

I was in a bicycle accident last month.  Of all things, my teeth sustained the most damage.  Everything else, lips, wrist, and leg, is healing fairly quickly, but teeth don't grow back.

after getting back

from the hospital

                                                                                                                                                                                                                                        

dental damage 

Anyway, I'm getting 2 implants and many crowns.  I already got 2 bone grafts to prepare for the implants.  I'm becoming quite the expert in dental work so one day, probably more like when you're 70 and need a dental implant, you can ask me for outdated information.

Also, drivers and cyclists beware of dooring!  Especially when parked or riding downhill because doors are more likely to swing out (because of gravity).  

Romance of the Three Kingdoms

The Romance of the Three Kingdoms probably wouldn't count as a pillar of Chinese culture, but it should be at least a gargoyle.  It's a novel from the 14th century attributed to Luo Guanzhong.  It is a dramatic retelling of the struggles between the three kingdoms in the 2nd and 3rd century in China.  There are many many Chinese movies and TV shows and other adaptations about this period of time based on this novel.  Sometimes they decide to be more accurate than the novel, sometimes less accurate.



I've heard the names of various characters for years but never really knew what they did or the whole story.  I've recently watched several movies based on this period of time, the most notable of which is Red Cliff, and read about the Three Kingdoms on Wikipedia.  I found that the prevalence of the story in Chinese culture is kind of like the Trojan Wars and the rise and fall of Julius Caesar.  Now I feel that learning about history and classic stories such as this is actually an essential part of learning the Chinese language if the primary goal is to communicate with Chinese people.  These stories illustrate the Chinese thought process as well as values, which in many ways is more important to communicating than words.  I wish this was a greater focus during Chinese school when I was growing up.

Michael Lewis

Michael Lewis is a best selling author of non-fiction books.  I just got a copy of "Flashboys" today, which is about how high frequency trading is a vehicle for many unfair practices in financial markets.  In promoting the book as well as his ideas, he's been making the rounds on TV and the internet.

He is surprisingly willing to call the stock market rigged against retail investors.  He is also very good at fielding criticism.  I am impressed with how good he is at not letting the interviewers change the topic.


Here's a long Charlie Rose interview.


He also has an hour-long interview with Conan O'Brien for Serious Jibber Jabber
http://teamcoco.com/video/serious-jibber-jabber-michael-lewis

And he lives in Berkeley!

Hypothesis Testing

I made a web page!

http://mirthbottle.github.io/likelihood/

Public Corporations and Investors: Theory vs. Reality

It's conventional knowledge, in the business world at least, that a corporation's primary purpose is to maximize shareholder value.  A corporation can only hope to maximize benefits to everyone through maximizing shareholder value. This idea is often presented as a law of the universe as immutable as the laws of physics.  In The Shareholder Value Myth by Lynn Stout makes a persuasive case that maximizing shareholder value is not always the best for the corporation, the market, or society.  Stout is a law professor at Cornell specializing in corporate governance law.  She argues that corporations are not legally required to maximize shareholder value at the exclusion of other goals.  Furthermore, the focus on stock price leads corporations to destroy fundamental value in favor of short-term gains, which is against the long-term interests of many shareholders as well.  Instead, corporations should invest in their employees and their communities to maximize long-term benefits.

I recommend anyone who is interested in corporate governance, business management, economics, finance, or social entrepreneurship to read this.  It is a fairly short and quick read, but since many people still won't read it, I will summarize the main points here.




        Shareholder primacy is the principle that the corporation's sole purpose is to increase shareholder value because this maximizes the welfare of the corporation as well as society at the same time.  This means that a corporation's performance is based completely on one number, and that is the stock price.  Yes, it is very conceptually elegant, not to mention convenient, if this were true.  This idea became popular in the 1980's coinciding with the rise of neoclassical economic theory.  (Although there is nothing wrong with neoclassical theory itself, it is often misapplied.  More on this later).  Since then, conviction in shareholder primacy became so strong that everyone believes that corporations have a fiduciary duty to maximize shareholder primacy and that this duty is enforced legally.

It's Not Legally Required
        Lynn Stout's first point is that shareholder primacy is actually not a legal requirement.  The case that is typically cited to demonstrate legal fiduciary duty to shareholders is Dodge v. Ford 1916 where Dodge was a minority shareholder in Ford Motor Company.  The court ruled that Henry Ford could not reduce the dividends to shareholders such as the Dodge brothers to build more plants and pay his employees more while profit was increasing.  Stout argues that the ruling is outdated as well as irrelevant because

1. Ford was not a public corporation.  It was a closely held corporation where the majority shareholder (Henry Ford) had a duty to look out for the interests of minority shareholders (Dodge).  
2. The comment that supports shareholder primacy, "a business corporation is organized and carried on primarily for the profit of the stockholders" was a "dicta."  In other words, it was not part of the legal rationale for the decision and therefore does not set legal precedent.
3. It is an old ruling. 
4. It was a ruling from the Michigan Supreme Court, which is not considered an authoritative source for corporate law compared to Delaware, where many more companies are incorporated.

        Instead, directors of public corporations have protection under the "business judgment rule," where corporations can do anything as long as it is lawful and directors do not have personal conflicts of interest.

The Theory is Flawed
        Stout's second and perhaps more interesting point is that economic theory is being misapplied to corporate governance.  The theory behind shareholder primacy is that shareholders are the owners and thus residual claimants of a corporation's profits.  They are the principals while directors are the agents and therefore if the agents maximize the welfare of the principals, welfare should be maximized overall.  This idea was popularized by Milton Friedman, a prominent neoclassical economist.  However, Stout argues that the principal-agent relationship isn't really descriptive of the relationship between the shareholder and corporation because

1. Shareholders do not legally or practically own corporations.  In fact corporations own themselves.  Shareholders own a share, which is a contract with some limited rights.
2. Shareholders are not the residual claimants.  The idea that they are comes from bankruptcy law, where the shareholders get whatever is left over after other contractual obligations are fulfilled as a company is being liquidated.  However, a company being liquidated is completely different from a living company, which has to plan for the future.
3. Shareholders are not principals.  Corporations are created before there are shareholders, but principals should exist before agents.  
4. The share price alone (probably) cannot be used to measure the worth of a company.  First of all, it doesn't really make sense to use something that fluctuates constantly.  Second of all, because of frictions that come with doing business in real life, a corporation can cause many externalities (public harm) while privatizing the benefits.  These externalities ultimately lower the quality of life of the public, including shareholders.  Stout claims that externalities can and do harm the private sector as well, stunting the growth of the market overall.

Justifying Myopic Behavior in the Finance Industry
        Another very rich topic that Stout digs into is how the realities of the finance industry interact with shareholder primacy to encourage myopic behavior in corporations and investors.  Short-term investing has been increasing.  By 2010, public stock is held for four months on average compared to eight years in 1960.  Therefore, even though investors should theoretically be primarily interested in long-term corporate performance, clearly many are profiting from short term gains.  An investor who only plans on holding a stock for a short time can and do lobby for actions that increase the stock price in the short term, after which the investor sells, thus relinquishing her interest in the long-term success of the corporation.  In fact, it would be good for these investors if the stock price subsequently went down so that she can invest again and start the cycle over.  Myopic behaviors include cutting back on R&D or marketing or laying off employees to boost quarterly earnings reports.  They also include splitting up the company, selling off assets, and getting acquired.
       These things happen because shareholders (and thus investors) are heterogeneous in their expertise as well as incentives.  Also, information is expensive and time consuming, especially more qualitative information as opposed to prices.  Long-term investors profit from the overall performance of the market.  They will hold diversified assets in order to reduce risk.  As a result, they "suffer" from rational apathy.  There is too much information and their stake in each company is so small that it is not worth it to investigate whether a company's earnings went up because of myopic behavior or because of a particularly successful new product or operational improvements.  In contrast, shareholders who are more involved in corporate governance are usually short-term investors who profit from buying and selling.  They will hold relatively large stakes in a small number of companies, and it is in their interest to create "news" that will change expectations one way or another.  Yes, the market eventually "corrects itself," but the profits and losses from the error and subsequent correction are real.  Misallocation of financial capital, hurting employee morale, losing talent, slower innovation, lower quality products, reduced customer loyalty are sometimes also tangible and lasting effects.  Another dynamic that exacerbates the prevalence of these behaviors is that long-term investors such as institutional investors, who invest on behalf of pensioners for example, hire active managers to manage large portions of their assets.  These active managers are judged by their quarterly performance.  As a result, they are often short-term investors because those strategies are more reliable as well as profitable.


Recommendations
        Ok, that sounds like a hairy mess.  Stout's recommendations aren't as crisp as her analysis of the situation.  Even so, there are four potential solutions that stood out to me.

1. Stop promoting shareholder democracy and giving shareholders more power.  This is one of Stout's main recommendations.  Shareholders do not act like responsible principals and cannot be counted on for effective corporate governance.  For example, even after the Great Recession and subsequent bailout, shareholders opted not to diffuse the power of the CEO and chairman of JPMorgan Jamie Dimon, much less fire him. 
2. Her second recommendation is to encourage companies to maximize stakeholder value.  She introduces the concept of team production, which expands on maximizing stakeholder value as a more descriptive theory of how corporations create value.  Basically, value is created as corporations build trust and commitment among employees, creditors, managers, consumers, and the community.
3. Institutional investors should change how they evaluate active managers.  Stout did not focus on this probably because she does not think that institutional investors have enough incentive to reform this.
4. Make information cheaper for long-term investors.  Stout also does not focus on this possibly because it is unclear if it is technically feasible.  However, I am personally very interested in this kind of solution.

The Legacy of Slavery

The Atlantic has published another great article by Ta-Nehisi Coates called "The Case for Reparations."

The wealth gap and continued segregation of African Americans is the legacy of centuries of exploitation by white Americans.

"When we think of white supremacy, we picture Colored Only signs, but we should picture pirate flags."

The exploitation starts with slavery but continues via housing practices and other predatory activities.  In the meantime it seems like the continued de facto segregation is causing all non-African Americans to be completely ignorant of and detached from African American communities.  They point to the handful of successful black Americans as proof that racism is no longer an issue rather than correctly recognizing them as the exceptional.

"...They ignore the long tradition of this country actively punishing black success"

"Some black people always will be twice as good. But they generally find white predation to be thrice as fast."

"...for all our exceptional ones, for every Barack and Michelle Obama, for every Ethel Weatherspoon or Clyde Ross, for every black survivor, there are so many thousands gone."

Coates' article calls for passing HR 40, the Commission to Study Reparation Proposals for African Americans Act, a bill by Congressman John Conyers Jr., who represents the Detroit area. The commission would study slavery and its lingering effects as well as recommendations for “appropriate remedies.”

I really hope people read this, including immigrants who need a deeper understanding of the historical context for the social issues in the US.

Even though I am fairly aware of many problems black Americans face, I was jarred by the specifics detailed in the article.  It highlights the importance of having patience for people you don't understand and communities you aren't immersed in.  Also, the article illustrates that many problems are systemic just as fairness is systemic.  One person's success or failure cannot prove that America is finally fair or not.  America will be fair only when a person gets as much encouragement, opportunities regardless of their race, class, or gender, but also no more likely than the next to get swindled or judged.

Dress Up

        

         

Mark and I dressed up for a friend's birthday party!

 
      the birthday girl!

The Cat I Love You

I watched a bunch of videos by Jackson Galaxy a few days ago.  I learned a lot about cats.  For example, when they blink slowly, that means they like you.  Also, since they really "don't give a rip about pleasing you," your only hope of changing their behavior is through something they do care about, which is food.



He also introduces the concept of Cat Mojo, which is basically cat self-esteem.  In fact, it makes working with cats sound really similar to working with humans, where you get people to cooperate by helping them meet their emotional needs.

GHG Intensities of Companies

I made this table today for my report.  The total GHG is the combined Scope 1, 2, and 3 for each company.  All of them reported the Scope 1 and 2 for 2013, but I had to estimate the Scope 3 for Exxon Mobil, Target, and TJX.  Which carbon metric should be used?  Well, if we are comparing between companies in the same sector, it doesn't seem to matter.  Exxon Mobil is always worse than Chevron, Target is always worse than TJX, and Google is always better than Microsoft.  So what does this mean?  Well, I'm not exactly sure.  

GHG/revenue (lbs/$)	GHG/marketcap	GHG/enterprise value	GHG/profit
Exxon Mobil	Exxon Mobil	Exxon Mobil	Exxon Mobil
Dow Chemical	Dow Chemical	Chevron	Dow Chemical Company
Chevron	Chevron	Dow Chemical Company	Chevron
Target	Target	Target	Target
Microsoft	TJX Companies Inc.	TJX Companies Inc.	TJX Companies Inc.
TJX Companies	Microsoft	Microsoft	Microsoft
Google	Google	Google	Google

Carbon Commoditization

I am reading a paper that describes my perspective on carbon disclosure and accounting.  Usually I struggle with articulating the implications and difficulties of measuring and reporting corporate emissions so I'm pretty excited to have found something that will help me communicate my interests.  In other words, I found some relevant google key words and jargon!  

Crucially, the institutionalization of carbon reporting as a form of governance relies on a successful project of ‘commensuration’, defined by Levin and Espeland (2002, p. 121) as ‘the transformation of qualitative relations into quantities on a common metric.’

The carbon market is not a naturally existing entity; the commodification of carbon is a political and institutional project, requiring an extensive legal and bureaucratic infrastructure to define and measure carbon units for various activities and gases, allocate and adjudicate property rights, and to establish rules for trading across national boundaries and different carbon jurisdictions.

Kolk, Ans, David Levy, and Jonatan Pinkse. 2008. “Corporate Responses in an Emerging Climate Regime: The Institutionalization and Commensuration of Carbon Disclosure.” European Accounting Review 17 (4): 719–45. doi:10.1080/09638180802489121.

Steve Job Pushed Legal Boundaries

Microsoft was always the big bad monopolistic corporation.  It should come as a surprise to no one that Apple is just as bad.

http://www.nytimes.com/2014/05/03/business/steve-jobs-a-genius-at-pushing-boundaries-too.html?hp&_r=0

Outrage on the Internet

Recent high profile events show that a type of political consumerism can be effective.  For example, the Clipper's owner Donald Sterling has come under fire for some racist comments he made.  Many basketball players and coaches have spoken out against it and are calling for action such as boycotting of Clippers games.  The CEO of RadiumOne, a large online advertising company, recently had to step down after being found guilty of domestic abuse.  The Mozilla CEO also had to step down after furor over his donation to Proposition 8, the campaign against legalizing gay marriage.  What's interesting about these controversies are that many of the people who objected aren't end consumers but rather employees (like basketball players) or other companies.  It seemed that the leadership of other companies were motivated to speak out because of the attitudes of their employees.  Is political consumerism more effective when the employees are more powerful?  The employees in these cases were basketball players or software developers.  Many of Mozilla and RadiumOne's downstream consumers are also in the tech industry.  Both of these groups happen to be in extremely high demand.  Large public forums (eg. Twitter) seemed to facilitate these events.

Talkin About the Issues

Thomas Piketty is talking about the issue of inequality in a book, Capital in the 21st Century.  Apparently it is popular, and there have been many articles written about it.

I wonder why this one has gotten so popular, and I wonder if it will help to change the dominant point of view that inequality is ok because the rising tide of capitalism raises all boats.  Definitely adding this one to my (imaginary) summer reading list.

http://www.slate.com/articles/technology/technology/2014/04/thomas_piketty_capital_in_the_twenty_first_century_surprisingly_entertaining.html

Controls in Policy?

Every so often, someone advocates for making the tax bracket indexed on the level of inequality.

http://www.nytimes.com/2014/04/13/business/better-insurance-against-inequality.html?_r=1

Is this the ramblings of an out-of-touch academic?  Maybe.

Sign up for Oroeco!

http://www.oroeco.com/

I'm still not sure what we're useful for, though, actually.  Hopefully we will figure that out soon through looking at user data.

Big Data and Data Science

Big data and data science have been generating a lot of excitement lately.  Excitement is great and all, but more importantly, more substantive articles about its limitations and uses have also been cropping up.  Here are some moderately substantive ones.

http://www.nytimes.com/2014/04/07/opinion/eight-no-nine-problems-with-big-data.html?_r=0

Highlights the general problems with 'big data' but actually it's more about data science as it's practiced in tech firms these days.  The problems aren't explained that comprehensively.  What's nice is that there is an example for each one, though.  

http://www.wired.com/2014/04/your-big-data-is-worthless-if-you-dont-bring-it-into-the-real-world/

This is a bit more substantive.  It makes the argument that big data needs to go from 'thin data' to 'thick data,' where 'thin data' are just traces of activities that are getting collected inadvertently.  'Thick data' is more information about the context of actions.  'Thick data' is probably more useful for making decisions but takes more effort to college, probably requiring one to get out and talk to people.  Then again, it's written by someone who sounds like an advocate of 'the humanities,' who perhaps is trying to justify all the 'qualitative analysis' skills she learned instead of big data analysis.  In fact, its main argument is interesting but largely unsubstantiated.

http://www.technologyreview.com/news/523646/the-power-to-decide/

http://www.technologyreview.com/news/523651/startups-embrace-a-way-to-fail-fast/

Good old MIT Technology Review.  The March/April issue had a Business Report on Data and Decision-Making.  It had several articles about trends in how businesses are using A/B testing.

aside : Yes, committing to blogging about an article (that takes more than 20 seconds to understand) is the only way I will ever actually read it much less remember what it said.

Corporate Social Responsibility

I'm taking a class this semester called Governance of Global Production with professor Dara O'Rourke.  He is a cofounder of Good Guide.  http://www.goodguide.com/about

It just occurred to me that he kinda looks like nerdier version of the lead singer of Tool, James Maynard Keenan.

They could be brothers!  or maybe just cousins?

Anyway, I was going to riff on the readings I did this week about corporate social responsibility.

In the past decade or so, the idea that a business should be more concerned with creating "shared value" has been gaining momentum.  This means that businesses have a responsibility to stakeholders beyond their shareholders such as their employees, their local community, and the global environment.  

So far, the prevailing attitude among most business leaders and investors is still that the most important thing to do is to maximize shareholder value.  I think it's safe to say that for the most part, corporations are only interested in sustainability as a way to increase the stock price through improving reputation and thus increasing the value of the brand.  

Even so, within a corporation there are likely to be champions of corporate social responsibility for its own sake.  And there are notable leaders in the corporate world who seem to be truly committed to CSR and sustainability in particular.  O'Rourke specifically singles out Unilever as one of them.  http://www.sustainable-living.unilever.com/

Those committed to CSR wouldn't say (admit) that CSR may sometimes reduce profits.  Instead, they would point out two concepts that change the perspective.  The first is that every corporation exists as part of an economy, where it depends on the well-being of the citizens.  So it may be true that their CSR initiatives actually benefit all companies in their industry not just themselves.  The second concept is that the corporation is planning on sticking around for many years to come.  In terms of game theory, it's a repeated game which can make it beneficial in the very long run to internalize more costs and take others' interests into account.  This is only slightly different from increasing brand value in that it is a more future-oriented perspective.  The brand value motivation would only justify CSR initiatives that would help the corporation get recognition in the near term.

I'm 2048 hero!!

I managed to avoid playing it most of the week, but I still had time to hone my strategy even more!!  I actually got kind of close to 8192...

Anyway...I'm not allowed to play again until the rough draft for my paper is done next week.

Carbon Metrics for Investors

Interest in measuring the GHG footprint and the GHG intensity of investment portfolios is growing!  On the one hand, it's not saying much since so few investors cared in the first place.  Still, it's enough to sustain a growing industry for generating these carbon metrics such as Trucost (and CAMRADATA?).  In fact, Bloomberg terminals (computers for traders) now have a Carbon Risk Valuation Tool.  For the investors that don't care, activist organizations such as 350.org have started calling for them to divest from fossil fuels.  There are also (maybe?) individuals who want to better understand the carbon impacts of their own savings, investments, and retirement plans.

There are several different ways to calculate the footprint for investments, often referred to as financed emissions.  There are then several different ways to calculate the carbon intensities of investments, where the carbon intensity is the carbon footprint normalized by something such as revenue.  This report by the 2 Degrees Investing Initiative presents a good overview of these different metrics.

Really, the metric one uses depends on what it is being used for, what decision it is informing.  These decisions depend on the investor (activist's) theory of change and ethics.  For example, an investor making decisions on how to allocate funds might be purely motivated to minimize exposure to carbon risks.  In other words, it is an investment strategy based on the theory of change that regulations and other future events will make carbon intensive companies less profitable.  The investor behavior is not based on the ethic that it is immoral to invest in carbon intensive companies.  It makes economic and professional sense that this investor should use a metric that will highlight the exposure to carbon risk.

An individual whose money is managed by said investor might think that it is immoral to invest in carbon intensive companies just as they might think it's immoral to invest in tobacco companies.  Then, regardless of what investment strategy was actually pursued, they might care about how much emissions his or investments are "responsible for."

I am working on a report that claims that the carbon metric used by investors to allocate investments doesn't have to be and in fact probably shouldn't be the same one used to evaluate the ethical (social?) responsibilities of the investments.

It Puts the Statistics in the Data Science

Data science is a trendy buzzword.

That doesn't mean I am not interested in it, though.

I'm reviewing my statistics by walking through this tutorial, which will soon be a book 'Statistics Done Wrong.'

I am finding it really helpful.  It highlights several common pitfalls of interpreting statistics.  The language is approachable and clear.

Yaaay!!!

ec-discuss 2048

Someone made an ec-discuss version of 2048!!  It's pretty awesome, although admittedly just a bunch of inside jokes.  I won!

Background information on ec-discuss.  It's actually a very large MIT undergraduate mailing list of the undergraduate dorm East Campus.  At MIT, mailing list permissions can be set so that anyone can join the mailing list so as a result there are many non-residents and alumni still on the list.

Someone might ask about getting help on homework or borrowing hair dye.  These innocuous requests might then snowball into a giant discussion or flame war.  The long email chains are semi-regular occurrences that usually pick up before finals' week or other stressful times when people really want to procrastinate.

In the past few years they have tended to be more inane and jocular in nature.  Some popular topics (regardless of the starting topic) are wanting to unsubscribe, Vlad the Impaler, and stud-finder finders.

2048

got obsessed with this game

http://gabrielecirulli.github.io/2048/

trying to get 4096

i've gotten pretty close...

there are other things going on in my life, but this one is the easiest to blog about.  haha