To try and slam any Wall Street analyst at this time is obviously to come to the party while the tables are being cleared. My only hope would be that Wall Street technical analysts would by now have had some decency to be more humble and less hubristic about forecasts of whatever nature. And yet it appears that they have continued to give aggressive forecasts and made calls that gullible investors take seriously, or not.
This article from the NYT reports about Richard Greenfield a celebrated analyst has had to eat humble pie after making a forecast on the movie Up. To my mind, the admission is still qualified by the statement that the single movie's success does not mean that Disney will do well all around. That in my view is a more reasonable statement than the crunching of numbers and technical analysis stating how much a movie will gross. With respect to the training and professional capability of Mr. Greenfield and other analysts, they do not always understand businesses that they pontificate about as well as the managers of those businesses do. And the moral of this story is that it should be fine for a professional to say, "I do not know" as opposed to presenting dubious forecasts. Leave that to witchdoctors.
Still, I am curious about what the revenue forecasts from Epagogix would be for this movie.
Thursday, July 09, 2009
Wednesday, July 08, 2009
Doubt and Certainty
" If a man will begin with certainties, he shall end in doubts but if he will be content to begin with doubts, he shall end in certainties". Francis Bacon
Tuesday, July 07, 2009
How Should Movies be Ranked?
Its summer in the northern hemisphere and the blockbuster movies are now showing in theatres throughout the world. There are a number of guesses about what movies will do well in the theatres (perhaps with pirates too) and the rest. However, an important feature of these is the extent to which sensible economics is usually put aside in the comparison of which movies are most successful. Zachary Pincus-Roth writes in the Slate Magazine about the inappropriate comparisons on the gross revenues from movies without accounting for inflation.
So many people continue to believe that the highest grossing movie of all time is the Titanic when this is not at all true. As argued there, to compare the nominal revenue figures for movies made over six decades apart is hugely problematic. Depending on the chosen metric, such as nominal or real revenues, the overall number of tickets sold or the population base for the sales, the ranking of the pictures considered varies quite a bit.
However, this merely shows that journalists should be more cautious in taking up the best parameters to suit the point being made. In spite of this, it altogether incorrect to rank movies made years apart on the basis of nominal revenues. As the story concludes, a number of reasonable algorithms can be drawn to provide plausible ranking of movies. In my reckoning though, it would be helpful to consider what proportion of the entertainment budget of households is spent on movies and weight that accordingly.
Finally, it is also worth considering to what Epagogix, a company that uses sophisticated models to predictive the box office takings of a movie, consider inflation.
So many people continue to believe that the highest grossing movie of all time is the Titanic when this is not at all true. As argued there, to compare the nominal revenue figures for movies made over six decades apart is hugely problematic. Depending on the chosen metric, such as nominal or real revenues, the overall number of tickets sold or the population base for the sales, the ranking of the pictures considered varies quite a bit.
However, this merely shows that journalists should be more cautious in taking up the best parameters to suit the point being made. In spite of this, it altogether incorrect to rank movies made years apart on the basis of nominal revenues. As the story concludes, a number of reasonable algorithms can be drawn to provide plausible ranking of movies. In my reckoning though, it would be helpful to consider what proportion of the entertainment budget of households is spent on movies and weight that accordingly.
Finally, it is also worth considering to what Epagogix, a company that uses sophisticated models to predictive the box office takings of a movie, consider inflation.
Thursday, July 02, 2009
Professional Tennis Makes Drug Testing a Joke
Institutions that manage professional sports are still overwhelmingly opposed to the use of steroids and performance enhancing substances. The idea behind this is that the use of such substances results in unsportsmanlike behaviour or outright cheating. But it is essential to note that the incentives to cheat in professional sports today exists primarily because of the financial and reputational rewards that attach to athletic excellence.
With this fairly commong background, it appears that some sports management bodies are far more thorough in vetting for drug use than others are. Similar to the claim by Bill Gilford in the Slate Magazine, it is clear that the organizations that more throughly vet and test athletes are at a disadvantage because a larger proportion of the athletes there are bound to fail the tests. It is therefore very curious that a disproportionate number of professional tennis players are caught for use of these prohibited drugs.
As Gilford explains, while it is possible that professional tennis players are probably more honest than others, the advantages that are conferred by the substances would be relevant for this sport too. While I am wont to give the professional players the benefit of doubt, the very poorly designed testing regime for tennis is one that raises the possibility that a number of cheats are getting away. A better regime would obviosuly step up the number of tests and include a testing regime that is timed to ensure that the substances that are being tested for can be reliably detected.
With this fairly commong background, it appears that some sports management bodies are far more thorough in vetting for drug use than others are. Similar to the claim by Bill Gilford in the Slate Magazine, it is clear that the organizations that more throughly vet and test athletes are at a disadvantage because a larger proportion of the athletes there are bound to fail the tests. It is therefore very curious that a disproportionate number of professional tennis players are caught for use of these prohibited drugs.
As Gilford explains, while it is possible that professional tennis players are probably more honest than others, the advantages that are conferred by the substances would be relevant for this sport too. While I am wont to give the professional players the benefit of doubt, the very poorly designed testing regime for tennis is one that raises the possibility that a number of cheats are getting away. A better regime would obviosuly step up the number of tests and include a testing regime that is timed to ensure that the substances that are being tested for can be reliably detected.
Tuesday, June 30, 2009
Afghanistan Opium Policy Turnaround
On innumerable occasions, I have mentioned that the US and its allies in Afghanistan have picked the wrong fight by concentrating on opium poppy eradication. This story in slate Magazine states that Richard Holbrooke has clarified that the policy from now will be the quest for an alternative. In truth, that some distance away from the futility of trying to fight Opium and not the Taliban. The same story proves why the economics of growing opium poppy in the region makes it a very attractive activity compared to alternatives. It demonstrably has higher returns for the effort. That should not have taken five years, and more, to figure out.
Monday, June 29, 2009
Netflix Prize is Taken
I have stated on this blog that I am fascinated with the use of competition and prizes to find solutions to technical problems. The one real example that i have observed is the Netflix prize on which I last wrote about here. To recap, the prize of US$ 1 million was offered by a Netflix corporation in 2006 to any team or individuals that would provide a model to improve the predictions of Cinematch by at least 10%. I entered the contest sometime last year not because there was a chance that I could win but merely to get access to that data.
It is now vertain that the prize will be claimed within 30 days because the Netflix Prize Leader Board shows that the Bellkor's Pragmatic Chaos team presented an algorithm that has managed to improve the predictive ability of Cinematch by 10.05%. While I understand that there's a probability that another team could present an alternative that is better, I think that the probability is too low that Netflix should just write the cheque.
That aside, the lesson from this to me is that innovations cares not for recessions but through competition, the learning takes place and real solutions are developed. Secondly, it is important to note that the prize was announced in October 2006 and the teams have worked hard to deliver the prize in less than three years. The third conclusion that I draw is that the similarity of names for a good number of the leading teams suggests that they may be the same teams using different techniques. Since the prize requires that the winning team will not only claim the prize but also explain how this was done, this last point will be proved one way or another.
From Bookish Posts, congratulations to the Bellkor's Pragmatic Chaos team for delivering a lesson in the use of prizes. If only the public sector would follow suit and pay for results and not effort.
It is now vertain that the prize will be claimed within 30 days because the Netflix Prize Leader Board shows that the Bellkor's Pragmatic Chaos team presented an algorithm that has managed to improve the predictive ability of Cinematch by 10.05%. While I understand that there's a probability that another team could present an alternative that is better, I think that the probability is too low that Netflix should just write the cheque.
That aside, the lesson from this to me is that innovations cares not for recessions but through competition, the learning takes place and real solutions are developed. Secondly, it is important to note that the prize was announced in October 2006 and the teams have worked hard to deliver the prize in less than three years. The third conclusion that I draw is that the similarity of names for a good number of the leading teams suggests that they may be the same teams using different techniques. Since the prize requires that the winning team will not only claim the prize but also explain how this was done, this last point will be proved one way or another.
From Bookish Posts, congratulations to the Bellkor's Pragmatic Chaos team for delivering a lesson in the use of prizes. If only the public sector would follow suit and pay for results and not effort.
Thursday, June 25, 2009
Broadway Leaving Money on the Table
Since I read this research paper by Justin Wolfers and Joseph price, I have had a keen interest in the use of formal academic tools to provide irrefutable evidence of biases that are difficult to observe. That paper used the calls by basketball umpires to provide evidence that black players are penalized by umpires more frequently than would be expected if calls were to be distributed randomly.
Now, a new story in the NYT here shows the advancement of this idea into the investigation of the existence or not of gender bias in the theatre industry. Emily Sands, a student at Princeton undertook three interrelated studies to answer the question by reviewing whether there is this bias in the industry. Specifically, she examined the number of scripts submitted by men and women, the returns on plays performed by each sex and the reaction of directors (male or female) to scripts produced b people bearing names that are characteristic of males or females.
Emily's findings are interesting to the extent that they confirm the existence of gender bias but also because they reveal the nature of that bias as expressed by directors of either sex. To start with, using data covering 20,000 playwrights obtained from Doollee.com, the study reveals that i spite of the production of scripts at the same rate, there are twice as many men as women. This proportional difference in the membership yields a higher number of scripts produced by male script writers.
Secondly, the study then conducted an experiment in which the same scripts were sent to artistic directors. The difference was that these scripts were marked with names that would betray the sex of the writers. This experiment revealed that men rated scripts presented by either sex the same way.
Thirdly, Emily turned to the Broadway stage to consider the relative number of plays performed on this stage considered the numbers of plays written by women and men in addition to how these performed. Considering 329 plays performed over a decade, the study finds clear evidence of bias. This bias in the sense that plays by women sold 16% higher tickets per week and delivered 18% greater profitability. To my mind, the curious fact is that while they constituted only one eighth of the total, plays by women earned more money but were not kept on stage for much longer.
Apart from the concerns about data quality, this study shows that biases can not only be demonstrated but that they actually occur in ways that are more complex than is conventionally spoken of. My enduring question though is that perhaps it is possible for rival theatre corporations to choose and screen plays written by women and earn the large profits being left on the floor due to the bias against women in Broadway.
Now, a new story in the NYT here shows the advancement of this idea into the investigation of the existence or not of gender bias in the theatre industry. Emily Sands, a student at Princeton undertook three interrelated studies to answer the question by reviewing whether there is this bias in the industry. Specifically, she examined the number of scripts submitted by men and women, the returns on plays performed by each sex and the reaction of directors (male or female) to scripts produced b people bearing names that are characteristic of males or females.
Emily's findings are interesting to the extent that they confirm the existence of gender bias but also because they reveal the nature of that bias as expressed by directors of either sex. To start with, using data covering 20,000 playwrights obtained from Doollee.com, the study reveals that i spite of the production of scripts at the same rate, there are twice as many men as women. This proportional difference in the membership yields a higher number of scripts produced by male script writers.
Secondly, the study then conducted an experiment in which the same scripts were sent to artistic directors. The difference was that these scripts were marked with names that would betray the sex of the writers. This experiment revealed that men rated scripts presented by either sex the same way.
Thirdly, Emily turned to the Broadway stage to consider the relative number of plays performed on this stage considered the numbers of plays written by women and men in addition to how these performed. Considering 329 plays performed over a decade, the study finds clear evidence of bias. This bias in the sense that plays by women sold 16% higher tickets per week and delivered 18% greater profitability. To my mind, the curious fact is that while they constituted only one eighth of the total, plays by women earned more money but were not kept on stage for much longer.
Apart from the concerns about data quality, this study shows that biases can not only be demonstrated but that they actually occur in ways that are more complex than is conventionally spoken of. My enduring question though is that perhaps it is possible for rival theatre corporations to choose and screen plays written by women and earn the large profits being left on the floor due to the bias against women in Broadway.
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