Thursday, July 08, 2010

The professor and the turkey

Fresh from a semester of badgering and buffaloing freshmen, King Banaian is apparently ready to try to badger and buffalo the rest of us. Banaian is one of the Republican Party’s more elastic retainers, always prepared to stretch his brand of academics to bring it to bear on behalf of the Party.

Unless you’ve spent a few days away under a rock, you know that Stonewall Emmer floated a proposal to decrease the minimum wage for waitstaff in the hospitality industry. The idea was met with hoots of derision, and by some fact checking at the restaurant where he floated the idea and said that some of the waitstaff there made over a hundred grand a year. Jon Tevlin reports it isn’t so:

At first, Kasel [one of the owners who was the apparent source for Emmer’s facts] said Emmer's quote was "manipulated" by the media, then changed that to "misquoted."

"He didn't say anything wrong," said Kasel.

(Star Tribune reporter Jackie Crosby stands by the quote, which was recorded.)

"I don't want people thinking we have people making $100,000 a year here, because we don't," said Kasel, who had to call his 29 employees that morning to prevent a mutiny. "No way, shape or form did I [tell Emmer] anyone made $100,000."

Here’s where King Banaian comes into the picture. In rushing to Stonewall’s side, Banaian comes up with an article by a couple of other economists (Bodvarsson and Anderson) who had a model showing that reducing the minimum wages of waiters, waitresses and bartenders did not decrease their income! Blogging sidekick Aaron has already discussed the model in some depth, so I won’t repeat it.

Save to say that the model assumes perfect labor mobility among waitstaff across the country. Assume a ladder, Professor Banaian; now use it to help Stonewall climb out of the hole he dug for himself.

The airports are, naturally, brimming with highly-mobile waitresses moving from state to state in search of higher tips.

Okay, that’s one. Work with me here.

Number two was the professor rushing into the breach to testify about how it was statistically highly improbable — according to the professor’s Excel spreadsheet, at least — for Al Franken to have won the election against Norm Coleman. Impossible!

The professor wasn’t called, after he gave this deposition in the case.

All right; that’s two.

Now, nearly four hundred words into the post, we arrive at what I really want to talk about. This has been bothering me for a quite a while, but the professor hasn’t been in the news.

Some of Spot’s older readers will remember when the 35W bridge fell into the Mississippi River, way back in 2007. And at the time, some people wanted to point fingers as MNDOT, Carol Molnau, and even Tim Pawlenty, our Governor Gutshot, himself. For Professor Banaian, this would never do.

So King Banaian mounted the “black swan” defense:

As the blame game continues, I got to thinking about time to build. Roughly how long would it take to have rebuilt the bridge that fell, assuming that Governor Pawlenty had somehow been able to gaze into a crystal ball and foreseen the black swan?

I use black swan in the Taleb-ian sense. Unlike Matt's otherwise very sensible post [MNPublius], I don't think trying to figure out why the bridge fell is going to somehow improve policy. I make this point repeatedly to students -- you can sometimes do everything right and get a bad outcome due to randomness. Black swans are simply outliers -- they are things that just happen that cannot be expected within the realm of our experience. I think that until investigation concludes, you should reserve the possibility that the bridge collapse is a black swan event. (Or perhaps a gray swan, for those who've read Taleb.)

The “black swan” is a term coined by Nassim Nicholas Taleb and it’s the title of a book that Taleb wrote about low probability and unexpected events that are of great significance when they do occur.

It was pretty new at the time Professor Banaian wrote the quote above (August 2007), and I hadn’t read the book at the time, but I have since. The professor implies a familiarity with Taleb’s writing in the words quoted above. But (also) Professor Taleb poses variants of the “black swans;” those that are genuinely out of the blue (and which Professor Banaian suggests that the bridge falling was), and “black swans” that arise merely from a lack of, or an asymmetry of, information.

As an illustration of the second type, Professor Taleb offers a story involving a turkey. (And you all thought that Tom Emmer was the turkey!) In Taleb’s story, there was a turkey who lived for a thousand days, being fed every day by an apparently benevolent owner. The turkey woke up on the 1,001st day, expecting to be fed, as it had been every day of its life. (Of course, a commercially-raised turkey who makes it a 1,000 days is a rare bird, indeed.)

We all know what happened to the turkey. That 1,001st day was a black swan for the turkey, but not for its owner. This is the kind of black swan involved in the failure of the 35W bridge.

Applying the analogy to the bridge collapse, the public was the turkey, and the Pawlenty administration was the owner. The knowledge that bridges could (would) fail if not property inspected and maintained was certainly within the knowledge of the Pawlenty administration. And, without rehashing it all, there was ample evidence that this particular bridge was substandard.

Professor Banaian ignores the turkey.

The black swan defense: “Who could have predicted that . . .  “ is a refrain that you do hear from political leaders in defending themselves, often when they were asleep at the switch. Condoleeza Rice offered the black swan defense in the 911 hearings, even though many people had predicted that terrorists might, in fact, fly airplanes into buildings.

In each of these three cases, Professor Banaian the academic is really just King Banaian the political operative, and not a very effective one at that.

I recommend Professor Taleb’s book, by the way. A lot of his arguments are, well, ornamented, but it is an entertaining and thoughtful read. He reminds me a little of John Ralson Saul, the author of another of my favorite books, Voltaire’s Bastards; they make similar arguments about the failure of rationality, data, and modeling to have any useful predictive value.

And incidentally, you might be interested to know what Professor Taleb calls economic modelers like Bodvarsson and Anderson: fortune tellers.

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