We optimized these challenges to allow candidates to show as much of their skills they can show in a timed window, without killing their creativity. I'd be curious to know what do think is a good way to interview data scientists.
If representative isn't an option, highly correlated is the next best thing. In practice, for my team specifically, this means screening for math aptitude and general business acumen during a phone screen, data manipulation (moderately complex SQL + tidyverse/data.table/pandas) during a "take-home", and delving more into problem solving approach, model selection and validation, etc. during an onsite. Broad business questions (e.g., "How does a life insurance company make money?") and communication skills generally weed out the candidates who picked up the bare minimum math and programming background through Kaggle + MOOCs.
As an aside, I absolutely think that the sort of assessment in the OP kills creativity. I care a lot about whether a candidate would think to include covariates like Internet usage and segmented urban population when predicting mortality rates; I don't care at all whether they're able to write the trivial amount of code that's needed to include those covariates in a model, given a data set that already contains them.