byrneseyeview

But if it does work, then overall mortgage rates will marginally decline. Better information will lead to better choices, so mortgages will become less risky overall. Some people will suffer, but keep in mind that when those people oppose this, they are saying "I want to hide material information from the people with whom I do business; if they knew the truth about me, I would get a worse deal." That's fraud.

Yes, there will be false positives. And it's easier to visualize being the victim of one of those than it is to visualize the tiny collective improvement in human welfare that tends to result from better decisions.

I would be interested in an argument that applies in this specific case, but doesn't apply to the general class of rough but useful heuristics, like "Kids with bad grades who drive recklessly are probably less responsible than 40-year-old moms who drive minivans, even though there is some C-student with a red car who is safer than some particular 40-year-old minivan-driving mom."

- An algorithm is a step-by-step process for transforming any valid input into a specific valid output. - A heuristic is a process that brings you closer to something that looks like an answer, but does not necessarily find the best possible answer.

That brings up an interesting question: in historical terms, the subject of this story is quite well-off; he's not always physically at risk, he has ready access to probably non-toxic food, he has shelter, etc. Over a long enough timeline, his life is pretty good. Even his home situation--mom is a prostitute, but he can't tell anyone lest the authorities separate them--is in all likelihood less common than it might have been centuries ago.

So if these conditions are so awful that we can't possibly expect people to improve without fixing said conditions, how do we explain historical economic growth. We're descended from people who had really miserable lives: sleep in a cave, hope you can hunt or gather enough food to stay alive, go to sleep hungry more often than not, risk death by infection every time you get a cut that's more than skin deep, and reproduce through what any modern person would call serial rape. Beings that were physiologically human (basically us, but probably lactose intolerant) had to deal with all of those circumstances, and managed to bequeath to the next generation some slightly less miserable circumstances.

It comes back to the anthropic principle: if misery is a strong disincentive for progress, how did we progress to the point that we have leisure time to discuss this?

(I've asked the same question on Quora here: http://www.quora.com/How-do-adherents-to-the-bee-sting-theor... . I am very interested in the answers.)

And the analogy breaks down here because the online ecosystem adapts very fast. It would work if there was some sort of gene that led to premature births plus high Apgar scores (the equivalent of a malicious website that ranks well).

That's why search is so tough: search engines and gaming have coevolved to the point that in plenty of areas, search quality would go down if people weren't trying to game the algorithm.

The median is more representative of what a founder's expected financial return is, but many folks aren't optimizing for that. If they are, you need to look at the off-balance-sheet asset: the six-figure job offer from Google, FB, MS, Yahoo, etc. etc. etc. that is generally available to people of the viable startup-starting caliber.

Since the mean startup return is so driven by a small number of massively successful outliers, it makes economic sense that the median outcome will not look so great. (If startups presented a good chance of being as good as the next best option, plus a small chance of F-U money, nobody would work anywhere else.)

Google is very good in these situations, but Google has a hard time differentiating between a popular movement and a single determined astroturfer. I'm sure Google would rather display a commitment to good journalism ("You want to know about topic X? Here's what people are saying about it.") rather than a pursuit of the truth, at least when it comes to organic results.

If optimizing for the median outcome is your goal, VC funding is probably not a good plan.

Agencies have gotten very clever at measuring the indirect effect of ads; most of them don't get a direct click, of course, but you can still look at things like how likely someone was to search for your company's brand name the week after they saw the ad.

It's very easy to voluntarily blind yourself to ads. Plus, if I see something egregious on my employer's site, I can let them know.

I use Ghostery to see who's buying data from whom.

http://www.quora.com/What-is-the-covariance-between-cognitiv...

The phrase "does not necessarily correlate" needs some unpacking. I think anyone would agree that for N=2 that's true, but for higher numbers it would indicate sample error.

"Anonymous Internet commentator: Here's a bunch of common knowledge you can glean from any basic investment book. I'll omit the half that makes my argument look bad. Also, I can pretend to be someone who wouldn't naturally agree with you."

I don't know why the Internet eats this stuff up. It might be fun to go to conservative-monoculture forums and start posting: "I am an OWS organizer. I'm only here to appear more virtuous than my friends, and also to sleep with girls who have weird piercings and tattoos."

Politics articles in general are an utter black hole for intelligent discussion, but this one is also a portal into a completely new dimension of pointlessness.

This is a very relevant alternative view. Money quote:

At Zynga, however, Mark Pincus apparently likes to do things a bit differently. Rather than simply firing under-performing employees and handing unvested options over to the replacement, Pincus often likes to find another position within Zynga where the employee might still be able to contribute. But because that new position was often lower down the corporate totem poll, Pincus basically wanted to cut the person's compensation by reducing his or her number of unvested options (vested options were not touched).

Whenever I heard about this, I fantasized about being VP of marketing at basically any big company. Being on the other side of that transaction is surely a lot of fun.

Nobody is denying the basic facts you've cited, so it'll be very hard for you to find someone whose ignorance of those facts you can use to your advantage. Groupon won't be as liquid as, e.g., AMZN. But buyers and sellers both know that.

And selling pressure is intrinsically short-term; Groupon's underlying value is completely independent of the number and motivation of selling shareholders. In a Bayesian sense, you could respond to insider selling--except that insiders are almost always selling, and the more successful the company is, the more they ought to sell. The biggest insider sellers are, by necessity, the founders of the biggest and most successful companies.

In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, "I don't see the use of this; let us clear it away." To which the more intelligent type of reformer will do well to answer: "If you don't see the use of it, I certainly won't let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it."

In most technology fields, it seems like Onion Theory works: we can gradually get rid of the hacks we used to get round limitations. But when you're dealing with people and institutions, Fence Theory dominates: human interactions have lots of complicated nth-order effects.

Onion Theory and Fence Theory are deeply similar. In both cases, the point is: be aware of practices that don't make sense. Either they illustrate long-ago hacks and compromises, or they tell you something important but non-obvious about the nature of what you're doing.

Of course SAT scores won't be predictive in that case. You'd want to look at SAT scores controlling for other admissions factors, which is basically SAT scores controlling for every variable admissions cares about, which of course means that no variable in particular has predictive power.

But if you want to see how strongly SAT scores correlate with academic performance, the way to do it would be to take some students who belong at, e.g., ASU, and somehow sneak them into Harvard.

As usually, Taibbi is vaguely correct (investment banking is a middleman between two groups that are individually worse-informed than the bank is). But he either doesn't understand how this actually works, or deliberately obscures the facts in order to make his point slightly stronger.

Obviously, it's possible to imagine a world in which IQ is not largely heritable, and in which rich people pay lots of money to game their kids' IQ numbers, and then the kids somehow use these IQ test numbers to get better jobs (even though IQ testing from employers is basically illegal).

But we can adjust for that. I'd be happy to do the same bet controlling for parental socio-economic status.

That's also a completely different argument from the one I was addressing. It sounds like your version is that 18 to 22-year-olds are too dangerous to be unleashed on society (the person getting the "operation" in your analogy), so we need to send them to school to keep them out of trouble.

But I don't understand why school is a better alternative than the job market.

What kind of odds would you give me that a group of people in the 10th percentile will have a higher average income than a group of people from the 90th percentile? If all IQ measures is your ability to take an IQ test, I think you'd be pretty confident that the bottom 10% will perform about as well as the top 10%. So, would you up up for 1:1 odds on that?

If you're willing to bet consistently with your beliefs, please get in touch; my email address is in my profile.

Search result pages and destination pages serve completely different purposes, and you can't apply the same UI to both. If you ran a restaurant, you might decide to laminate the menus, but I hope you wouldn't laminate the entrees, too.

r/K selection is a nice addition to the mental toolbox. (I learned about it while in high school, because I cut class to hang out in the library.)

There is a difference between liking an outcome (people who have the intellectual tools necessary to contribute to society) and being wedded to any particular means (ever more students going to ever larger institutions to spend ever more money learning ever, ever less).

One of the limiting factors on early-stage civilizations is that it takes pretty much a lifetime to transmit information from one generation to the next; between books, specialization, urbanization, and price signals (which are basically an API on human desires and the resources necessary to fulfill them), we need far less general knowledge than we used to.

You know what provides that atmosphere? New York. Or SF. Or Boston, Seattle, Austin--pretty much any city. I did not miss out on those opportunities from dropping out. The difference was that I was in the real world that colleges theoretically prepare you for: no RAs, no meal plans, fewer second chances, etc. I don't know why a fake version of the real world is a better preparation for the real world that the real real world.

There was one other difference: not going to school is far, far cheaper. And you have enough free time to defray even that minimal cost by working.