purple motes

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Google recently made website optimization freely available to everyone. Perhaps this truly is a key element in Google's plan for world domination. But in any case, it's good news for those times when you want to choose data analysis over whimsy and hope.

A danger of free, fast, and easy testing might be that its users will become complacent about the background structure of testing and optimization. Statistical tests always depend on background assumptions about data-generating processes. For example, when the number of users of a website increases by orders of magnitude, the attributes of its users (age, sex, internet experience, etc.) may change. What had been an optimal content design may no longer be optimal.

Economists have long pondered problems of behavioral estimates. To get a sense of the issues, suppose that you observe that over the past ten years both the price of widgets and aggregate sales of widgets rose strongly. That doesn't mean that raising the widget price will increase widget sales. More likely the opposite is true. Increasing demand for widgets may account for the correlation between higher prices and greater sales.

The problems for human behavioral estimates are far worse than those of omitted variable biases in other physical systems. Humans are good at collecting and sharing information, and humans often change their behavior in response to new information, new rules, and new incentives. In economics, the Lucas critique is a famous recognition of this reality for parameter estimation.

Among empirical economists, a commonly expressed goal is to estimate "structural parameters." Structural parameters are interpretable parameters relatively insensitive to plausible changes in the environment and rules of the game.[1] When you optimize with respect to such parameters, your optimization is more likely to be valid over time. Moreover, since you can interpret the parameters, you can anticipate changes in the environment that are likely to invalidate your optimization.

Economists have produced a huge, complex literature on structural estimation. But probably all you really need to know from it for website optimization are a few points:

• Website optimization is not forever. Changes in circumstances (New Year's Day promotions won't work year-round), changes in user characteristics, changes in the experience of users with other websites, and changes in your business reputation may change the optimal configuration of your website.
• Seek some understanding of what works for you. Testing can help you discover what works. But sound interpretation and knowledge remain valuable. Understanding why a particular configuration works can give you insights into when it might need to be changed (or re-tested). In addition, understanding what works might provide you with more general insights into your users.
• Expect your users to learn and respond to what you do. If an aspect of your optimization involves baiting and screwing your users, they will learn about it and adapt to it. Your optimal screw of your users can turn to screw you.

Note:

[1] To economists, parameters describing preference functions (demand) and cost functions (supply) are structural parameters. That economists consider parameters describing preferences and technology to be relatively stable may seem laughable to persons engaged in viral marketing and rapid web service development.

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Living in Tokyo in 1956 with her husband, a general in the U.S. Army, Ellen Allen Gordon founded Ikebana International to promote "friendship through flowers." When Gordon returned to her home in Washington, D.C. she established the organization's first chapter outside of Tokyo -- Ikebana International, Washington D.C. Chapter No. 1. Ikebana International now has 165 chapters in 60 countries, including Chile, South Africa, Jordan, Germany, Russia, India, Australia, Indonesia, and the Philippines. May friendship and flowers always occupy lives around the world!

Members of the D.C. Chapter No. 1 displayed their creative flower power at their annual exhibition this month at the the U.S. National Arboretum. Full appreciation of ikebana, like life, occurs only in person. Moreover, the video below shows less than a third of the arrangements in the exhibition. Even this partial, poor sense of the exhibition I hope you will enjoy.

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In an article entitled "C'mon and Be a Bureaucrat," a U.S. national weekly magazine discussed the importance of recruiting new U.S. government bureaucrats. The article noted:

When an interest group wants to torpedo a government initiative, it simply invokes the "bureaucrat" as an emblem of ineptitude. "We saw a slight change during the 'West Wing' era," says Pat McGinnis, president of the Washington-based nonprofit Council for Excellence in Government. "But otherwise it's just been nonstop portrayals of the bungling bureaucrat. It takes a toll."

Bureaucrats need to develop a thick skin and the ability to focus on doing their jobs. They also need to develop confidence in their own importance. Max Stier, president of the nonprofit Partnership for Public Service, observed:

"It's not about what you can do for government. We need to convey what government can do for you."

The Carnival of the Bureaucrats aspires to convey what bureaucrats can do for you, not just in government, but also in the many different organizations in which they work.

Occasionally critics acknowledge their mistakes. Steve Thurston at The Buckingham Herald Tribblog called a woodpecker stupid for banging his head on a metal electrical tower. But as Louis Quay explained, the woodpecker was not attempting to peck wood, but was making noise to mark territory. Pecking on a metal pole does that effectively. Readers should think about this example next time they feel inclined to use the phrase "stupid bureaucrat." Thurston appropriately acknowledged his mistake.

Last month the Carnival of the Bureaucrats discussed sacrificing people for the organization and cited the superb example of Duke's actions in the Lacrosse Rape Hoax. Subsequently, the law firm representing the plaintiff in the civil suit against Duke filed an amended complaint. One point of many from the amended complaint directly addressed this issue:

454. In response to a plea for Duke to show some measure of support for the students who were being framed in plain view of the University’s leadership, the Chairman explained, “sometimes individuals have to be sacrificed for the good of the Organization.”

Bureaucrats regularly sacrifice themselves for the good of the organization. Note, however, that such sacrifice does not include being sent to prison for decades on false charges.

M. B. Herrera discusses leadership. He states:

Albeit leaders are oriented to their work (and not to their self-exaltation), they are a symbol of the group, which may easily mean that they are a symbol of your company.

We believe that this statement applies generally to bureaucrats.

David at DirtFromTexas submitted a post entitled, "Texas Gestapo To Perform DNA Test on FLDS Kids." He remarked in his submission, "Why is the State on Texas hell bent on ripping this kids from their Parents all the while violating their Constitutional rights?" Answering that questions is not our responsibility at the Carnival of the Bureaucrats. David should contact the Texas state government office in charge of providing reasons.

Edith Yeung documents and compares the Obama and Clinton campaigns' Web 2.0 functionality. How these metrics relate to the candidates' bureaucratic credentials are not clear. As innovative technology, Web 2.0 is a bureaucratic negative. But as a symbol used mainly for discussion and creating documents, Web 2.0 is a bureaucratic positive. Perhaps the Obama and Clinton campaigns could form a joint committee to explore standard metrics for evaluating the bureaucratic merits of Web 2.0.

That's all for this month's Carnival of the Bureaucrats. Submit your blog article to the next edition using our carnival submission form. Submissions should conform to the Carnival's regulations. Past editions of the Carnival of the Bureaucrats can be found on the Carnival's category page.

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Good government must respond effectively to administrative problems. In China, claims of wrongful government action are addressed through petitions to complaint offices (the Xinfang system) and through court cases (administrative litigation). From 1996 to 2004, Xinfang petitions were perhaps forty times as numerous as court cases.[1] How these two processes shape communication with persons not formally parties to the dispute may help to explain this outcome.

In an interesting recent paper, Taisu Zhang argues that the relatively large number of petitions doesn't indicate Chinese reluctance to pursue court cases. About the year 2000, the Xinfang system handled about five million petitions concerning civil matters. The number of civil cases in the court systems was about four million.[2] Thus the ratio of petitions to court cases is much lower for civil disputes than for administrative disputes. Persons are not relatively reluctant to bring court cases; they are relatively reluctant to bring administrative disputes to courts.

Zhang also argues that the relatively large number of petitions occurs even though petitioning is a much less propitious action. In administrative cases in China, plaintiffs' claims prevail in about 30% of cases. In contrast, only 0.2% of Xinfang petitions lead to "successful resolution of the dispute."[3] For a person seeking to prevail in a dispute, the Chinese court system offers better opportunities than the Xinfang system.

Zhang proposes that the adversarial nature of administrative litigation explains the relatively low number of administrative disputes brought to courts. Chinese administrative litigation law prohibits mediation in administrative cases. According to Zhang, the Chinese public prefers "more paternalistic and less confrontational methods": "the judge should appear as a benevolent 'Fu Mu Guan' ('father figure') who is seeking to solve problems through the least intrusive way possible."[4] Officials in the Xinfang system appear to be much closer to such a role.

Forms of communication about the dispute to non-disputants may also favor the Xinfang system. Chinese administrative litigation law requires that all cases receive a public trial. Zhang's paper says little about this requirement. A public trial does not necessarily make for a more adversarial proceeding. It can, however, expose the interests of the plaintiff to competitors outside of the dispute. Public, authoritative accounts of disputes and decisions fosters the rule of law. In circumstances of intense socio-economic competition not well-structured by an effective legal system, serving as a public example through administrative litigation can have considerable private costs along with the public benefits. The Xinfang system, in contrast, requires no particular written statements and no public account.[5]

The Xinfang system also gives disputants better opportunities to frame the dispute in a way that appeals to others. Litigation involves highly structured forms and patterns of communication. Petitioning, in contrast, allows the petitioner much more freedom in communicating the dispute to others. While class-action litigation requires considerable conceptual and organizational support, mass petitions naturally occur and in fact tend to be associated with mass incidents. Transforming specific administrative problems into more general problems of social unrest makes those problems less informative.[6]

Requiring Xinfang petitions to be submitted according to a specific written form and requiring responses to Xinfang petitions to be described publicly might encourage the development of law-oriented procedures for resolving administrative disputes. More generally, how to get better formed communication about administrative problems is a key challenge for good government.

Notes:

[1] Zhang (2008) p. 4.
[2] Id. p. 24.
[3] Id. p. 13.
[4] Id. p. 5.
[5] Minzer (2006) pp. 161-2 notes that petitions made as in-person visits rose from 59% of petitions in 1990 to 78% of petitions in 2001. In an in-person visit, the petitioner need not commit any information to writing.
[6] Minzer (2006) argues that Xinfang regulations encourage the politicization of grievances.

References:

Minzner, Carl F. (2006), "Xinfang: An Alternative to Formal Chinese Legal Institutions," 42 Stanford Journal of International Law, v. 42, pp. 103-79.

Zhang, Taisu, "The Xinfang Phenomenon: Why the Chinese Prefer Administrative Petitioning Over Litigation" (February 27, 2008). Available at SSRN: http://ssrn.com/abstract=1098417

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On an uncertain quest,
caught in the back eddies of
time and place, like a
Christmas poinsettia dropping
a brown leaf in June, like
black mould sketching a
fresco on the bathroom ceiling,
there’s a soreness in the
soul of my foot.

“A half million people have gone
by this booth,” the Mississippian said.
People in Washington think we’re
ignorant. And half of them come up
and ask, “What’s that?”
“A turkey call,” I say.
“What’s it do?”
“Call turkeys.”

Circling high, where
ends of hot dogs and
kernels of popcorn
look like pebbles,
an incomprehensible
message bound to
its leg, a homing
pigeon flaps off
to a knurled wooden roost.

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The city of Burlington, Vermont is providing communication services for its residents over a new, advanced municipal fiber optic network. Burlington is a city of about 40,000 persons. The city department that builds the network, operates it, and sells communications services is called Burlington Telecom (BT). BT had been designed and operated to be self-sufficient. BT receives no city budget or special tax revenue.

BT has been much more successful than other new communications services providers. Construction of BT's fiber network began in 2005. BT provides wholesale services on an open access basis to other communications service providers, and it provides telephone, cable television, and broadband Internet services to retail customers. BT signed up its first customer in 2006, went cash-flow positive for operations in 2007, and is projected to cover its debt and be profitable about 2009.[1] The network is intended to offer long-term, advanced communications services to every resident, business, and institution in the city. By the end of 2008, the network will be sufficiently extensive to do that.

One important factor in BT's success has been the expertise and leadership of Tim Nulty. After an impressive career working for the United Auto Workers, the U.S. government, the World Bank, and a private capital fund addressing telecom start-ups in Central and Eastern Europe, Nulty came out of retirement to provide key direction for the Burlington project. Unfortunately there's only one Tim Nulty. But other cities have good leaders, and they can learn from what Nulty has done.

Nulty emphasized a "build the barn you can afford" approach to building BT's network. BT first built a network for Burlington city government organizations, which served as anchor tenants. The network was then extended to selected large businesses. Subsequently it was expanded to serve residential customers.

BT benefited from relatively low cost of capital. Koch Financial Corp., an organization of private investors, provided $20 million dollars for the project at 5.17% interest.[2] The physical network itself, rather than municipal guarantees, provides the backing for the loan. However, as municipal finance, the interest is tax-exempt. Tax-exempt municipal bond financing provides capital much more cheaply than private equity finance.

A factor less widely understood is that providing retail services has been critical to making BT financially sustainable. BT's retail services include differently priced bundles of telephone, Internet, and cable services similar to what commercial service providers offer. Since BT offers wholesale services on an open access basis, commercial services providers could out-compete BT at the retail level and confine it to wholesale service provision. Given that city departments typically do not excel in complex, competitive retail services, that probably would be a desirable long-term outcome.

However, beginning a municipal network with retail services makes good financial sense. Establishing a municipal network necessarily requires mobilizing the population to support it. Commercial service providers, in contrast, need to make huge expenditures on advertising and marketing to gain popular recognition and to attract customers. Moreover, pre-established popular support for a municipal network makes customer uptake relatively predictable and scalable. BT has had a take rate of about 30% of houses passed.[3] At the recent Freedom to Connect conference, Nulty emphasized that not allowing a municipal network to provide retail services is a sure way to kill it.

Update: See also the East Central Vermont Community Fiber Network.

Update 2: Burlington Free Press article on Burlington Telecom. Tim Nulty's response. More on the Vermont E-State and the East Central Vermont Community Fiber Network clash with the Vermont Telecom Authority. Summary: technology is easy compared to the interaction of human egos.

Notes:

[1] From Tim Nulty's presentation at Freedom to Connect, 2008.

[2] This was for Phase 3 and 4 of the project. A $2.6 million loan for the initial phases was at 5.63%. See p. 3. of Christopher Mitchell, Burlington Telecom Case Study.

[3] Ibid.

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