With this post we continue our reading of Cathy O’Neil’s Weapons of Math Destruction. (If you’d like to catch up with the reading schedule, click here. All posts for this reading, including the schedule one, are grouped here.)
Here I’ll summarize this week’s chapters, then offer some discussion questions.
But first, some book club business. Last week’s reading elicited some fine comments on that post (scroll down). Elsewhere regular book club reader Tom Haymes blogged this meditation on the human role in data analytics, starting with a local baseball example. Mike Richichi posted about last week’s reading, thinking about education and data.
Beyond the book club, Slate has a good article sketching out the recent history of disillusionment with and criticism of big data. And I just finished Shattered, an account of the 2016 Clinton presidential campaign, which argues that overreliance on data models played a key role in that defeat (here’s my review).
Chapter 2, “Shell Shocked: My Journey of Disillusionment”
This section dives into the financial world in search of WMDs (the titular weapons of math destruction), while continuing the book’s autobiographical theme.
Finance: O’Neil explains how hedge funds like the one she worked for use math to make money. This includes applying historical data models to the present and future. It also involves working with ever more complex derivatives and securities, which lead up to the 2008 financial meltdown. Along the way an important distinction appears:
[T]he subprime mortgages that piled up during the housing boom… were not WMDs. They were financial instruments, not models…
But when banks starting loading mortgages… into classes of securities and selling them, they were relying on flawed mathematical models to do it. The risk model attached to mortgage-backed securities was a WMD. [emphases added] (40-41)
While we can find many problems with the financial strategies that led to the 2008 crisis, O’Neil focuses on one, with regard to data models: scale. (42)
One final point: the chapter points out that the people running these financial models, as well as the financial houses, tend to be drawn from economic and/or intellectual elites, including “elite universities like MIT, Princeton, or Stanford”, and become eager devotees of economic Darwinism. They are filled with confidence and marked by rewards, which confirms to them the virtue of their successes. However,. “it looks very much to the outside like a combination of gaming a system and dumb luck.” (47-8)
Autobiography: we follow O’Neil as she moves from academia to a hedge fund, then, disillusioned, takes up other positions to try to understand, and do something about, WMDs.
Chapter 3, “Arms Race: Going to College”
Here the book shifts to college ranking systems, and how they have changed the world of higher education. The chapter focuses on the famous and notorious U.S. News & World Report ranking service, deeming it to be “a bona fide WMD.” (54)
O’Neil criticizes the service for incentivizing gaming the system (54, 62, 66), for not incorporating costs (59), for relying on proxies (52-3), and for its scale (“[i]t forces everyone to shoot for exactly the same goials, which creates a rat race”, 58). The desirability of gaming the system encourages unethical behavior (62). She also draws attention to the “Flutie effect” whereby a successful campus athlete or team boosts student applications. (57)
This chapter also faults US News for taking advantage of escalating social anxiety about academics and economic status, “fe[eding] on these beliefs, fears, and neuroses” (60). I’m reminded of Tressie Cottom’s theory of the “education gospel“. The success of this WMD – growing a major audience, altering institutional behavior – has also led to spinoff businesses (64).
There are two more points which end the chapter. First, in terms of economic inequality, the author points out that the intensity of such a WMD rewards wealthy families, and punishes “the vast majority of Americans, the poor and middle-class families who don’t have thousands of dollars to spend on courses and consultants.” This speeds another feedback, loop, whereby the former win benefits which solidify their position, while opening wider the gap with the latter. (65)
Second, O’Neil reminds us that the Obama administration’s drive to produce an alternative scorecard flopped, partly due to strong resistance from higher ed. The result is an anti-WMD, one with open data, available to outside queries, and capable of individualization. “Think of it: transparent, controlled by the user, and personal. You might call it the opposite of a WMD.” (67)
- If creating or running a WMD is so profitable, how can we push back against them?
- Do you find other university ranking schemes to be preferable to the US News one, either personally or within this book’s argument?
- At one point the author suggests that gaming the US News ranking might not be bad for a university, as “most of the proxies… reflect a school’s overall quality to some degree” (58). Do you agree?
Next up: for October 30, chapter 4, “Propaganda Machine: Online Advertising” and chapter 5, “Civilian Casualties: Justice in the Age of Big Data”.