Archive for the ‘productivity and performance’ Category
I’ve always known that some city projects are simply bad deals, like sport stadiums. What I didn’t know is that there is new research showing that maga-projects of all types are a giant rip-off. Bent Flyvberg of Oxford discusses this finding a new Econ Talk podcast. What Flyvberg did was collect data on “mega-projects” – construction efforts that cost at least a billion dollars and affects a million people. What was found is that 90% of the time, mega projects are over budget, not completed on time, or do not attract the customers that were predicted (i.e., the demand was wildly over estimated). This applies to both private and public sector projects. Flyvberg also reports that smaller projects tend to do much better, for a variety of reasons.
A few comments here:
- This is pretty strong evidence that states should completely avoid the expensive mega-sports projects like stadiums above a certain size. The Olympics, for example, should only be hosted in nations that have preexisting facilities.
- Flyvberg points out that mega projects can even destroy the engineers and other professionals who build them. The architect of the Sydney opera only did one building in his life. The cost-overruns and delays ruined his reputation.
- It is mainly state actors, contractors, and land owners who receive benefits.
- I recently saw the Church of the Sagrada Familia in Barcelona. Big project, but built little by little over a 100 years. A better model?
- There are some cases of success, but they seem hard to predict ex-ante.
Bottom line: The next time they tell you that we need this multi-billion dollar road, just say no.
Plummeting grant funding rates are back in the news, this time in the U.K., where success rates in the Economic and Social Research Council—a rough equivalent to NSF’s SBE division—have dropped to 13%. In sociology, it’s even lower—only 8% of applications were funded in 2014-15.
I’ve written before about the waste of resources associated with low funding rates. But this latest round prompted me to do some back-of-the-envelope calculations. Disclaimer: these numbers are total guesses based on my experience in the U.S. system. I think they are pretty conservative. But I would love to see more formal estimates.
Mikaila Mariel Lemonik Arthur is an associate professor of sociology at Rhode Island College. She is the author of Student Activism and Curricular Change in Higher Education.
My state, Rhode Island, is in the process of beginning an experiment with performance funding for public higher education. Because of our small size, we have only three institutions of public higher education: The University (URI), The College (RIC—my institution), and The Community College (CCRI), and thus our performance funding initiative cannot involve comparative metrics or those based on what “the top” institution in the state is doing. Therefore, the legislature instead decided to craft a performance funding formula based on their own goals for higher education outcomes. The current version of the bill—considerably improved from prior versions, due in large part to the concerted efforts of my colleagues who testified before the relevant state House and Senate committees—includes among its metrics the 100% and 150% of normative time graduation rates; the production of degrees tied to “high demand, high wage” employment opportunities in our (very small) state; and an additional measure to be decided by each of the three institutions in consultation with internal constituencies; with the potential to adjust the weights of these measures to reflect institutional missions, student body demographics, and “the economic needs of the state.”
But this is not a post about performance funding, at least not really. Rather, it is a post about what “success” means for colleges and university.
Critics charge that Simchowitz often preys on vulnerable young artists without gallery representation — some say without talent — and buys up huge quantities of their work, then flips the pieces back and forth at escalating prices among a cultivated group of buyers: a network of movie stars, professional poker players, orthodontists, nightclub promoters, financiers, football players and corned-beef magnates, many of whom hold Simchowitz in such high esteem that they’re willing to purchase the pieces he acquires for them sight unseen, artist unnamed. In March, in an online screed for New York magazine, the art critic Jerry Saltz tore into Simchowitz with unusual ferocity, dubbing him a “Sith Lord” and the Pied Piper of the “New Cynicism.” Simchowitz’s artists may enjoy a temporary surge in prices, his critics argue, but they typically see little of the upside; in any case, or so the story goes, once their bubbles pop, they’re left for dead.
Many important galleries have blacklisted Simchowitz as a buyer, forcing him to take extreme measures to secure desired work, including using consultants as undercover mules. Simchowitz told me about a recent scheme in which he had a consultant buy three pieces from Essex Street, a Lower East Side gallery. The purchase was nominally on behalf of another client, but the ultimate recipient was Simchowitz; by the time the gallery suspected the ruse, money had already changed hands, but the pieces had not been delivered. The gallery requested that Simchowitz not only cancel the purchase but also return another piece by the same artist that was already in his possession, which he did. Moreover, the gallerist, furious over what happened, called the other client to inform him that he was colluding in fraud, an accusation that heartily amused Simchowitz. (Asked for comment, the gallery responded, “Essex Street has never done business with Stefan Simchowitz.”)
I am a lot less alarmed by Simchowitz and even delight in his irreverence and trash talk. Aside from the trash talk, one reason that he draws controversy is his embrace of the market side of art. He thinks “flipping,” which is just another word for “quickly selling at a profit,” is great and has argued that it indicates strength of an artist. Another source of the controversy is patronage of young artists. One could argue that being so dependent on one person creates too much risk.
I tend to think these arguments, for the most part, are misplaced, or overblown. For example, almost all relationships in the art world have ups and downs. People can get traditional gallery representation and then have stalled careers. There are routinely lawsuits filed against galleries because of shady business deals. Artists can get burned as well. Private “dealers” like Simchowitz have no monopoly on good, or bad, business decisions.
If an artist strives to be in the “right” collections, Simchowitz, and flipping in general, may not be optimal, but he’s still preferable to not having a career at all. He’s probably equivalent to having a good, but not elite, dealer behind you.
On a deeper level, I have to give Simchowitz a thumbs up simply because he puts his money where his mouth is. If he likes it, he pays in cash. The trade off is that you are locked in. But, so what? That’s a standard way to reduce uncertainty. Also, he’s like a good business manager in that he provides personal support to help younger people who may not know how to deal with the business side of things. And worse comes to worse, if you hate him, it seems like you can “paint your way out of it,” in the same way a musician can finish a contract by just chunking out the last few records.
He may be crass and direct, and he may embrace practices the art world deems inappropriate. At the end of the day, there’s some artists who stayed in the game and succeeded because he gave them a room and ten thousand bucks. I wonder if he’ll take my calls?
Puzzle for you all your org behavior/theory of the firm types: Why does Sears still exist? Normally, when we think about why successful firms exist, we think that they have a unique product, fill a niche, or have some sort of incumbent advantage. Or just overly aggressive management. But in a world of Amazon, Target, and Home Depot, it’s difficult to understand what Sears does well. Why aren’t they gobbled up by Lowes or Home Depot? Or dismembered by selling off its prime real estate holdings?
You see the occasional article on the topic. Forbes in 2011 claimed that it was generating good cash flow, which owners used to fund purchases of other firms. But the question is – where is the cash flow coming from? Yahoo readers claim that Sears is less a retailer and more of a holding company for a few brands (like Diehard batteries or Land’s End clothes) that just happen to be sold in Sears big box stores. But you’d think that competition would make this set up hard to sustain. The Forbes article does note a massive drop in sales… yet wiki reports that 793 (!) stores were open in 2014. Please use the comments.
“there’s no rankings problem that money can’t solve” – the tale of how northeastern gamed the college rankings
There’s a September 2014 Boston.com article on Northeastern University and how it broke the top-100 in the US News & World Report of colleges and universities. The summary goes something like this: Northeastern’s former president, Richard Freeland, inherited a school that was a poorly endowed commuter school. In the modern environment, that leads you to a death spiral. A low profile leads to low enrollments, which leads to low income, which leads to an even lower profile.
The solution? Crack the code to the US News college rankings. He hired statisticians to learn the correlations between inputs and rankings. He visited the US News office to see how they built their system and bug them about what he thought was unfair. Then, he “legally” (i.e., he didn’t cheat or lie) did things to boost the rank. For example, he moved Northeastern from commuter to residential school by building more dorms. He also admitted a different profile of student that wouldn’t the depress the mean SAT score and shifted student to programs that were not counted in the US News ranking (e.g., some students are admitted in Spring admissions and do not count in the US News score).
Comments: 1. In a way, this is admirable. If the audience for higher education buys into the rankings and you do what the rankings demand, aren’t you giving people what they want? 2. The quote in the title of the post is from Michael Bastedo, a higher ed guru at Michigan, who is pointing out that rankings essentially reflect money. If you buy fancier professors and better facilities, you get better students. The rank improves. 3. Still, this shows how hard it is to move. A nearly billion dollar drive moves you from a so-so rank of about 150 to a so-so rank of about 100-ish. Enough to be “above” the fold, but not enough to challenge the traditional leaders of higher ed.
So far, the Patriots have been nailed on two cheating scandals – deflation gate 2015 and the 2006 spying scandal. Each of these is interesting in its own right but there is one implication that few are willing to utter. The Patriots are probably cheating in more ways than we imagine.
The intuition is simple. Cheating incidents are not independent. It is not likely that every person will cheat with equal probability. Rather, people who want to cheat are the most likely to cheat and do so over and over. Also, consider incentives. They have been caught cheating multiple times and that hasn’t seemed to harm them much at all. The conclusion is that it is highly likely the Patriots are cheating in other ways.
I think it would be interesting for the fans of vanquished teams to conduct Levitt style analyses of the Patriots. I would guess that looking at other data in addition to the now famous fumble analysis will yeild some interesting answers.