Economists clueless on macreconimic issues?

I recently read a post here that stated basically that economists start talking about the psychology of the people but don't understand psychology and that at the macro level economists are pretty much clueless. Take a look at the article. It is a good read as well as many of the comments.

One of the major problems with economics is that it is really difficult to test macro level theories. How do you run a randomized experiment on some theory at the national or global level? You don't. No politician will let you use his/her people as guinea pigs. We don't want to be guinea pigs. Yet we have learned that good data is much more reliable than intuition and gut feel (see these slides and this book).

The only way to understand macroeconomics reliably is with experimentation (like all other good sciences) and that is near impossible at the macro level.

Virtual CloneDrive

If anyone has to install some software from ISO files they downloaded may I recommend Virtual CloneDrive. I had to install SAS to my computer for a class which required at least 11 ISO files to be burned to disk. Luckily with the Virtual CloneDrive I could install from my hard drive without burning one disk and the CD images were read faster than if they were in a real CD drive. Smooth and painless!

Educational TV can be educational

I am of the belief that just because something says that it is healthy does not mean it is. For example, "low fat" to me means "less bad" rather than actually being "good". I originally was of the same opinion on educational TV. TV is brain rot for children (which is sometimes worth the quiet it brings). However, there have been two cartoons on PBS that have changed my view: Super Why and Sid the Science Kid.

Our daughter rarely seemed to be that interested in learning letters from mother and father, but once she started to watch Super Why she really started to pick up on all of the letter understanding the show brought. She had the alphabet down after just a couple weeks of watching the show once in a day. Entertaining education really worked for her.

Sid the Science Kid is the latest show that actually teaches our daughter something. She has learned about washing your hands to remove germs, what "melting" means, and what seeds are good for. I am a real fan of this show.

Google's Ranking Algorithm In Review

Google started on the basis of a ranking algorithm called PageRank (discussed in previous posts here and here). Of course there is so much more to the secret sauce for these search engines now. We just don't know what they are using.

Anyway, there was a recent paper published that collected traffic going into and out of the servers at Indiana U. Using this traffic they were able to disprove 3 major assumptions underlying PageRank. PageRank assumes

• a user is equally likely to follow any link on a page.

Actually, links are very unevenly followed. Some links carry huge amounts of traffic and others rarely see a click. (Think of how you browse a web page. Aren't there links that never look interesting like "Report A Bug" on espn.go.com?)

• the probability of "teleporting" (or going directly) to any web page is equal to any other web page.

Actually the chance of starting to surf from any page is very skewed. Some pages are very popular destinations without following links. How many of us have favorite sites that we visit through bookmarks or typing the URL every day. We do not randomly type in URLs.

• the probability of "teleporting" from any web page is equal across all web pages.

This was more difficult to disprove from their data. However, some sites are more likely to be stopping points in browsing and others are a bridge to more information.

The bottom line is that the links of the web are not that good at determining what actual paths people follow while browsing. However, this is the basis of major search engines that link structure determines popularity. The redeeming quality of search engines from this paper though is that they lead people to less popular sites, or sites we would not otherwise find out about and thus spread the wealth of clicks around (which is in conflict with what I had previously said in my first post on Google bias).

The Machine is Us/ing Us

Insightful video about Web 2.0 and how you fit in to the current model of information sharing. This video was published by Michael Wesch, an assistant professor in Anthropology at Kansas State University.

Google Bias Take 2

I earlier posted that Google's ranking of search results caused a rich-get-richer problem. In other words sites linked to most often will be ranked first leading to more links.

Here is a paper that uses traffic information from Alexa to disprove this theory. It turns out that queries on search engines are very diverse. This leads to sites appearing towards the top that more specifically target the keywords given. For example Google's Udi Manber said "20 to 25% of the queries we see today, we have never seen before".

Current traffic from Alexa more closely follows the random surfer model, or discovering of web pages by viewing non-search web pages and clicking on links. It is good to see that worrisome theories are being put to the test.

Pandora.com

For a time I had no hope that recommender systems like Amazon.com's "Recommended for You" section would be useful to me specifically. The predictions were often predictable. Buy a CD from artist A and get a list of the most popular CD's from that artist. Not useful.

Some time ago I came across Pandora.com, which is an adapting radio station, which chooses songs to play based on what songs you have added to a station and what songs you rate positively. I actually learned of several songs and artists I was unfamiliar with that I now like (such as "Question Everything" by 8Stops7). However, it does not play all songs that are similar to the songs I tell it. And some days I find myself disagreeing with all songs played.

I think that as time goes on recommender systems will improve and we will give some credibility to recommenders. Perhaps the Netflix prize will help in that regard.