Archive for the ‘productivity and performance’ Category
Do people know about social impact bonds? I hadn’t heard of them till recently. Since then, though, I’ve developed a train-wreck fascination. They have the potential to combine all the worst features of the public and private sectors. And they can be securitized, to boot!
Let’s take a step back. What is a social impact bond, anyway?
Well. Imagine you have a social problem you’d like to solve. Say that you want to reduce recidivism among young people in prison. That sounds good, right? The problem, of course, is that taxpayers don’t want to pay for rehabilitative programs, and there’s lots of disagreement about what kind of program would actually help solve the problem, anyway.
The government says, Wouldn’t it be nice if somebody would take care of this for us, and we’d only have to pay them if they actually succeeded?
Enter Goldman Sachs.
A recent article in the Journal of Economic Perspectives reports a recent attempt to curb grade inflation. High GPA departments at Wellesley College were required to cap high grades. The abstract:
Average grades in colleges and universities have risen markedly since the 1960s. Critics express concern that grade inflation erodes incentives for students to learn; gives students, employers, and graduate schools poor information on absolute and relative abilities; and reflects the quid pro quo of grades for better student evaluations of professors. This paper evaluates an anti-grade-inflation policy that capped most course averages at a B+. The cap was biding for high-grading departments (in the humanities and social sciences) and was not binding for low-grading departments (in economics and sciences), facilitating a difference-in-differences analysis. Professors complied with the policy by reducing compression at the top of the grade distribution. It had little effect on receipt of top honors, but affected receipt of magna cum laude. In departments affected by the cap, the policy expanded racial gaps in grades, reduced enrollments and majors, and lowered student ratings of professors.
My sense is that this shows that grade inflation, whatever its historical origins, acts as a competitive advantage for programs that few other market advantages. If you don’t have a strong external job market or external funding, then you can boost enrollments via grade inflation. It also absolves programs by masking racial under performance. The lesson for academic management is this: If you have inequality in funding, departments will compensate by weak grading. If you have inequality by race, departments will compensate by weak grading. Thus, academic leaders who care about either of these issues should implement policies where departments don’t choose standards and are accountable for results.
Over at Scatterplot, Jeremy’s been writing about his life gamification experiment, which involves giving himself points for various activities he’d like to be doing more of. I find this sort of thing totally compelling and have to admit I’m now giving myself all sorts of points in my head. (Finish unpacking one box — 5 points! Send an email I’ve been procrastinating on — 5 points!) Although not in 100 million years could I get my husband to play along with me, even for brunch, of which he is fond.
Anyway, the game brought to mind this post from Stephen Wolfram, in which Wolfram presents a bunch of data from the last 25 years of his life. Here, for example, are all the emails he’s sent since 1989. (Note the sharp time shift in 2002, when he stopped being completely nocturnal.) He’s also got keystroke data, times of calendar events, time on the phone, and physical activity.
Fascinating to read about, but perhaps not terribly healthy to pursue in practice. Although in Wolfram’s case, it sounds like he was mostly just collecting the data, not using it to guide his day-to-day decisions. Others become more obsessive. I don’t know if David Sedaris has really been spending nine hours a day walking the English countryside, a slave to his Fitbit, or if he’s taking poetic license, but it’s a heck of an image.
Clearly there are a lot of people into this sort of thing. In fact, there is a whole Quantified Self movement, complete with conferences and meet-up groups. One obvious take on this is that we’re all becoming perfect neoliberal subjects, rational, entrepreneurial and self-disciplined.
For me, though, what is fun and appealing as a choice — and I do think it’s a choice — becomes repellent and dehumanizing when someone pushes it on me. So while I’ll happily track my work hours and tally my steps just because I like to — and yes, I realize that’s kind of weird — I hate the idea of judging tenure cases based on points for various kinds of publications, and am uneasy with UPS’s use of data to ding drivers who back up too frequently.
It’s possible that I’m being inconsistent here. But really, I think it’s authority I have the problem with, not quantification.
Last week a judge struck down tenure for California teachers on civil rights grounds. (NYT story here, court decision here.) Judge Rolf Treu based his argument on two claims. First, effective teachers are critical to student success. Second, it is poor and minority students who are most likely to get ineffective teachers who are still around because they have tenure — but moved from school to school in what Treu calls, colorfully, the “dance of the lemons.”*
To be honest, I have mixed feelings about teacher tenure. I’d rather see teachers follow a professional model of the sort Jal Mehta advocates than a traditional union model. This has personal roots as much as anything: I’m the offspring of two teachers who were not exactly in love with their union. But at the same time, the attack on teacher tenure just further chips away at the idea that organizations have any obligation to their workers, or that employees deserve any level of security.
But I digress. The point I want to make is about evidence, and how it is used in policy making — here, in a court decision.
Org theorists know a thing or two about what happens when you rate things. People change their behavior. In this case, that’s the point — Arne Duncan et al. are hoping that the ratings will create incentives for colleges to graduate more students with less debt and higher post-graduation incomes.
Now, those are obviously not objectionable goals. There are some clear challenges in adjusting for the expected performance of different student bodies, and worries about disincentives to go into low-paying fields like teaching or social work, but who doesn’t want college to be more affordable, somehow?*
The big problem is the outcome that is missing in there: students who have learned things. If you create a system that measures access, completion, debt, and eventual income, and it has any teeth at all, you will get colleges that aim for those things. Unfortunately, those things have a limited relationship to actual learning. Where one conflicts with the other, learning will lose.
Of course, I’m kind of hesitant to say that, because heaven knows what would happen if we started trying to measure learning outcomes at the federal level. No Young Adult Left Behind, I guess. Coursera can sell us the curriculum.
* Another problem worth mentioning is that many adults without degrees don’t see graduation rates and average student debt levels as relevant to their college decision — they think it depends on them, not the school.
Ezra Klein interviews Kevin Roose, who has a new book about young Ivy League graduates who work on Wall Street. The take home point is simple: people who graduate from competitive schools graduate toward these jobs not because they love business, but because they want security. Wall Street jobs are high paid, require little experience, and have a bit of prestige. On the origins of the short term Wall Street job:
Wall Street invented this new way of recruiting in the early 80s. Before that they hired like any other industry. If you wanted to be a banker you applied for a job at a bank and they hired you or they didn’t. But in the early 80s Goldman Sachs and others figured out they could broaden their net and get lots of really smart people if they made it a temporary position rather than a permanent one.
So they created the two-and-out program. The idea is you’re there for two years and then you move onto something else. That let them attract not just hardcore econ majors but people majoring in other subjects who had a passing interest in finance and didn’t know what else to do. People now think going to a bank for two years will help prepare them for the next thing and keep them from having to make these hard decisions about the rest of their life. It made it like an extension of college. And it was genius. It led to this huge explosion in recruitment and something like a third of Ivy League graduates going to Wall Street.
Of course, it’s a mixed bag for the grads:
EK: So after writing this book, what would you say to a college senior thinking of going to Wall Street?
KR: First I would ask them why they wanted to work in an investment bank. If the answer is “because I’m tremendously in debt and need to pay it out” or “I’ve been reading Barron’s since I was 12 years old and I desperately want to be an investment banker” then those are legitimate reasons. Go ahead. But if it’s just about taking risk off the table and doing the safe prestigious thing, I’d tell them first that it will make them truly miserable, the kind of miserable it could take years to recover from, and that it also no longer has that imprimatur. It can actually hinder you. I’ve spoken to tech recruiters who say they only hire bankers in their first year or two because after that banking ruins them.
EK: How does it ruin them?
KR: It makes them too risk conscious. It gets them used to a standard of lifestyle they may not be able to replicate in any other industry. And it has a deleterious effect on creativity. Of the eight people I followed, a few came out very damaged by the experience. And not in a way a vacation can cure. It’s not about having bags under your eyes. It destroys your ability to think in creative ways about what it means to build something of value. The people I followed would admit they got a lot out of being a banker but I don’t think they’re all that tuned into the ways the experience changed them.
Check it out.
Vanity Fair has a new article on the Samsung-Apple litigation. Kurt Eichenwald makes the following case about Samsung’s business strategy:
- Pick a cool area of electronics.
- Quickly reverse engineer lower quality, low cost versions of the innovators.
- When sued for copyright or patent infringement, fight non-stop legal battles that only end with last-minute settlements.
- You win by either (a) grabbing insurmountable market share during the legal battle or (b) punishing small firms with exhausting litigation and high legal fees (Samsung counter-sues almost all plaintiffs).
If this is an accurate account of Samsung’s strategy, it has interesting implications. First, it contradicts resource based value theory in that the firm doesn’t need a monopoly on anything – just the ability to quickly mimic and exploit the system. Second, it suggests that markets are indeed stable in the absence of patents or enforceable intellectual property rights. Samsung has beat up some other firms, but most competitors have survived. Third, it suggests an interesting use of slack resources – throw them at emerging markets. Fourth, it suggests that the patent system is simply an ineffective means of enforcing intellectual property rights when the defendant is sufficiently large.
Strategy scholars and intellectual property gurus – go nuts in the comments.