Blogging is a tiring activity. Each time I write on a topic, it often takes me about seven hours. It is forming an opinion that sucks all the time away--the actual writing (as I do not polish them) once I formed an opinion, is quick and brisk. I always need to read extensively on the topic, trying to get a more comprehensive understanding of all relevant details so as to come to a judgement. Most often, under scrutiny, most issues defy an easy judgement, at least not one that is simple to state. Consequently, I blog quite seldom.
However, I form opinions all the time about things I hear and see. Most likely, I fail to do the kind of research that I do for my blogs. It is often that when writing a blog that I changed my opinions, sometimes even reversed them.
Then how do I form an opinion in daily life? I guess prejudice, bias, and sloppy thinking all creep in. This problem of sloppy thinking, I fear, haunts most people. Probably, we should be a little bit more cautious when voicing our "opinions", at least I do not wish to be embarrassed by them later in my life.
Tuesday, August 21, 2012
Thursday, August 9, 2012
How relevant is Current Account Balance?
The general perception to how relevant is Current Account (CA) balance is "very relevant", when it comes to exchange rate. Professional economists and politicians alike (and those whose status is somewhat in between) point to China's stunning CA surplus as a convincing evidence that China's RMB is significantly undervalued. While it is for us to judge how convincing each piece of evidence is, the consensus seems to suggest that it is beyond reasonable doubt. This view is so popular that when I questioned the validity of this view on facebook, during casual conversations, or on other occasions, hardly anyone would take it seriously.
Unfortunately, consensus hardly mean convincing. Before the current financial crisis, there was a consensus of "Great Moderation", an optimism that assures us that financial crisis is in history, at least for developed nations, like US, which is soon to be shattered by the hard reality. This view, in the case of China, is equally problematic.
What is Current Account? Current Account is the sum of Balance of Payments (BoP) and capital account. Capital account usually is left out of consideration and the game is on BoP. BoP is defined to be earnings on exports minus payments for imports, and it is intuitive that is captures the trade position of an economy. However, to appreciate what BoP does not capture, let us consider a simple example. There is a country B(ritian) which set up a colony A(merica). I will tell the story where gold is the only currency. B sends some people to A, to extract the natural resources in A. Since A is so resourceful, every year trillions of tons of gold worth of natural resources are exported from A to B, resulting in a huge deficit for B. In other words, BoP for B is stunning. Surprisingly, governors of B are not worried at all, because they know that after ten years, all people in A will return, and A will return to uninhabited (or disappear). This story, while artificial does point to one weakness of BoP--years of BoP surplus (or deficit) can suddenly be reversed by capital account, a normally out-of-picture channel, via emigration.
How relevant is this example for Sino-US exchange rate debate? More relevant than CA at least. The Economist calls attention to facts listed in the latest edition of "Hurun Report":
The above discussion points to one aspect of CA that is often over-looked. Unfortunately, (perhaps fortunately for aspiring researchers), inferring currency overvaluation/undervaluation from BoP or CA is generally problematic. Micheal Spence, a Nobel laureate in economics, pointed on one apparent difficulty:
While I would not short RMB--the market can stay irrational longer than I can stay solvent; but at least, I would not contribute to the hot money. I am actively converting my RMB assets into USD-denominated, though I do not intent to emigrate any time soon.
Reference:
1. Spence, Micheal. "The Exchange-Rate Delusion." Project Syndicate. N.p., 19 Dec. 2011. Web. 09 Aug. 2012. <http://www.project-syndicate.org/commentary/the-exchange-rate-delusion>.
Unfortunately, consensus hardly mean convincing. Before the current financial crisis, there was a consensus of "Great Moderation", an optimism that assures us that financial crisis is in history, at least for developed nations, like US, which is soon to be shattered by the hard reality. This view, in the case of China, is equally problematic.
What is Current Account? Current Account is the sum of Balance of Payments (BoP) and capital account. Capital account usually is left out of consideration and the game is on BoP. BoP is defined to be earnings on exports minus payments for imports, and it is intuitive that is captures the trade position of an economy. However, to appreciate what BoP does not capture, let us consider a simple example. There is a country B(ritian) which set up a colony A(merica). I will tell the story where gold is the only currency. B sends some people to A, to extract the natural resources in A. Since A is so resourceful, every year trillions of tons of gold worth of natural resources are exported from A to B, resulting in a huge deficit for B. In other words, BoP for B is stunning. Surprisingly, governors of B are not worried at all, because they know that after ten years, all people in A will return, and A will return to uninhabited (or disappear). This story, while artificial does point to one weakness of BoP--years of BoP surplus (or deficit) can suddenly be reversed by capital account, a normally out-of-picture channel, via emigration.
How relevant is this example for Sino-US exchange rate debate? More relevant than CA at least. The Economist calls attention to facts listed in the latest edition of "Hurun Report":
Mainland China can now boast over 1m wealthy citizens (qianwan fuweng) each with over 10 m yuan ($1.6 m), says the latest edition of the "Hurun Report"...more than 16% of China's rish have already emigrated, or handed in immigration papers for another country, while 44% intend to do so soon. Over 85% are planning to send their children abroad for their education, and one-third own assets overseas.To put this in perspective, China boasts of about 3 trillion USD in foreign reserves, while "the richest 1% of Chinese households own $2 trillion-5 trillion of property and liquid assets" according to Victor Shih of Northwestern University. The emigration wave, not just confined to the richest 1%, could easily deplete China's foreign reserve, which will then force China to depreciate its currency, an event unthinkable for many.
The above discussion points to one aspect of CA that is often over-looked. Unfortunately, (perhaps fortunately for aspiring researchers), inferring currency overvaluation/undervaluation from BoP or CA is generally problematic. Micheal Spence, a Nobel laureate in economics, pointed on one apparent difficulty:
But, in order to explain performance relative to Japan and Germany, one would have to argue that the euro and the yen have been undervalued, which makes no sense.As for the case of China, there are even more reasons to be cautious before subscribing to the majority view. Given a general expectation that RMB will appreciate (partly fueled by the dirty politics), many investors, hoping to reap the benefit from the appreciation, disguised their hot money as trade flows to avoid the capital control imposed by China. With this, when we look at the BoP, the prospect of an appreciation seems more rosy--after all, the exports are so huge compared to imports, while a potentially big chunk (nobody knows how much) of the difference is explained by the disguised hot money. This might in turn, fuel unrealistic expectation, which in the short turn pushes RMB to appreciate. Another danger is the weak or defunct banking sector. Hot money is notoriously myopic--considerable amount flowed into Korea, Thailand, Indonesia and other Asian economies when the banking sector in those economies were already extremely problematic, and only reversed themselves (suddenly) when the crisis breaks out, creating one of the traumatic experience for those Asian economies. Even with the absence of emigration concern, the failure of Chinese banking sector, might trigger a large capital reversal, which would deplete the seemingly inexhaustible foreign reserve of China. An exchange rate collapse, is all but unthinkable.
While I would not short RMB--the market can stay irrational longer than I can stay solvent; but at least, I would not contribute to the hot money. I am actively converting my RMB assets into USD-denominated, though I do not intent to emigrate any time soon.
Reference:
1. Spence, Micheal. "The Exchange-Rate Delusion." Project Syndicate. N.p., 19 Dec. 2011. Web. 09 Aug. 2012. <http://www.project-syndicate.org/commentary/the-exchange-rate-delusion>.
This is a wonderfully and brilliantly piece written by one of my favorite economist--Micheal Spence.
2. "BoP until You Drop; the Balance of Payments." The Economist (US) 4 Aug. 2012: 40. Print.
Sunday, August 5, 2012
An apology
I have taken up some controversial topics recently. It is a dangerous thing for me---as these things often lead to heated heads and distorted reasoning. As they are of enough interest for me to write about them, I am especially exposed to the danger of hot heads. It is nevertheless my hope to analyze these from my perspective. The pulse behind my writing is simple--my distrust of popular media. A reasoning similar to that of Efficient Market Hypothesis (EMH) would convince one that because of free speech, truth will be out, and lies will be exposed. Unfortunately, it is little more than wishful thinking, and any political theory based on that line of logic, just as EMH, will be a terrible reflection of reality, despite its irresistible theoretical beauty and attraction.
It puzzles me when the mass media coverage are systematically biased, just as when individuals' expectation are systematically biased in economic setting. We do not have any convincing models for them in economics or political science, but to deny their existence, and build arguments, and recommendations upon them is only the favourite sport of those living in Ivory Tower. As for me, I will continue to explore their origin, and at the same time will speak up against those biases, popular and deep-rooted as those biases might be.
As I have commented many times people are haunted by confirmation bias---instead of reviewing relevant evidence and updating their belief, they cling to them for too long. They choose to disregard relevant information challenging their belief. As a result, media coverage that confirms their bias will be popular, while those telling uncomfortable truth will not be. The more nuances truth is, most information is ambiguous, and people like to read information interpreted their way (just see how many conservatives like to read NYT?) Media, by catering to public taste, reinforce their bias and prejudice. Government campaign, of course, plays a role as well. The true picture of course is more complicated, but these are some elements that I conjecture are present.
As a human being, I am not immune to irrationality and confirmation bias. As I get dragged into those controversial topics, I can expect that I will lose my head sometimes. Hence, I do not wish to persuade, but rather, I would rather explain my angle, and wish to see some intelligent and logical replies regardless of their angles. There is one thing I do not wish to see though---the logic representing that of EMH, or unreasonable assumptions that treat people as "noble in reasons" and "infinite in faculty".
There was once a friend dismissed my arguments on Tiber as a result of "brainwash by Chinese government". I wish to point out some facts: I was anti-government in my attitudes and felts that US was the role model until 2007 (as evidenced by my continuous sarcastic remarks in class about the government, online blogs). In the summer of 2007, I went to US as an exchange student. I learned American history (and got a 5 on AP US history), and changed my attitudes toward government in general. I get more disillusioned with an idealist thinking that is in line with EMH, and started to approach the problem from a more realist point of view. I became cynical and more reluctant to trust what politicians say. At the same time, I began to understand what Chinese government did. While I continue to lament the rampant corruption and collusion, I appreciated the difficulty they are confronted with in eliminating corruption, and the dilemma. I continued to dismiss my once firmly-held belief, introduction of democracy will do the job. While I continue to be critical of Chinese government on some policies, I became more critical of those criticisms from US politicians, as I began to suspect they are hypocritical in nature.
You are welcome to point out my systematic bias, but please take the above history into account.
It puzzles me when the mass media coverage are systematically biased, just as when individuals' expectation are systematically biased in economic setting. We do not have any convincing models for them in economics or political science, but to deny their existence, and build arguments, and recommendations upon them is only the favourite sport of those living in Ivory Tower. As for me, I will continue to explore their origin, and at the same time will speak up against those biases, popular and deep-rooted as those biases might be.
As I have commented many times people are haunted by confirmation bias---instead of reviewing relevant evidence and updating their belief, they cling to them for too long. They choose to disregard relevant information challenging their belief. As a result, media coverage that confirms their bias will be popular, while those telling uncomfortable truth will not be. The more nuances truth is, most information is ambiguous, and people like to read information interpreted their way (just see how many conservatives like to read NYT?) Media, by catering to public taste, reinforce their bias and prejudice. Government campaign, of course, plays a role as well. The true picture of course is more complicated, but these are some elements that I conjecture are present.
As a human being, I am not immune to irrationality and confirmation bias. As I get dragged into those controversial topics, I can expect that I will lose my head sometimes. Hence, I do not wish to persuade, but rather, I would rather explain my angle, and wish to see some intelligent and logical replies regardless of their angles. There is one thing I do not wish to see though---the logic representing that of EMH, or unreasonable assumptions that treat people as "noble in reasons" and "infinite in faculty".
There was once a friend dismissed my arguments on Tiber as a result of "brainwash by Chinese government". I wish to point out some facts: I was anti-government in my attitudes and felts that US was the role model until 2007 (as evidenced by my continuous sarcastic remarks in class about the government, online blogs). In the summer of 2007, I went to US as an exchange student. I learned American history (and got a 5 on AP US history), and changed my attitudes toward government in general. I get more disillusioned with an idealist thinking that is in line with EMH, and started to approach the problem from a more realist point of view. I became cynical and more reluctant to trust what politicians say. At the same time, I began to understand what Chinese government did. While I continue to lament the rampant corruption and collusion, I appreciated the difficulty they are confronted with in eliminating corruption, and the dilemma. I continued to dismiss my once firmly-held belief, introduction of democracy will do the job. While I continue to be critical of Chinese government on some policies, I became more critical of those criticisms from US politicians, as I began to suspect they are hypocritical in nature.
You are welcome to point out my systematic bias, but please take the above history into account.
Does China has a reason to distrust Dalai Lama?
Ethnic unrest has been a common theme in China recently (mysteriously for many, but not for me). One source of that comes from Tibet. I was once asked why Chinese government treats Dalai Lama with such hostility and distrust? Why would China distrust such a peace-loving, caring, charismatic and perfect Nobel Peace prize winner? Digging a little bit into history, with basic information from wikipedia, I find the distrust makes perfect sense.
So a brief history is in order (from wiki): On 17 November 1950, at the age of 15, the 14th Dalai Lama (the one you know) was enthroned formally as the temporal ruler of Tibet. He sent a delegation to Beijing, which ratified the Seventeen Point Agreement for the Peaceful Liberation of Tibet. (which allowed a high degree of autonomy) He worked with the Chinese government: in September 1954, together with the 10th Panchen Lama he went to the Chinese capital to meet Mao Zedong and attend the first session of the National People's Congress as a delegate, primarily discussing China's constitution. On 27 September 1954, the Dalai Lama was selected as a deputy chairman of the Standing Committee of the National People's Congress, a post he officially held until 1964.
However, Dalai Lama was planning something else. He accepted assistance from CIA. In 1956, a large rebellion broke out in eastern Kham, an ethnically Tibetan region in Sichuan province. To support the rebels, the CIA launched a covert action campaign against the Communist Chinese. A secret military training camp for the Khampa guerrillas was established at Camp Hale near Leadville, Colorado, in the U.S. The guerrillas attacked Communist forces in Amdo and Kham but were gradually pushed into Central Tibet.
At the outset of the 1959 Tibetan uprising, fearing for his life, the Dalai Lama and his retinue fled Tibet with the help of the CIA's Special Activities Division, crossing into India on 30 March 1959, reaching Tezpur in Assam on 18 April.
This excerpt from wikipedia should have explained the origin of the distrust. Oran's Dictionary of the Law (1983) defines treason as "...[a]...citizen's actions to help a foreign government overthrow, make war against, or seriously injure the [parent nation]."(from wiki). I think what Dalai Lama did fit the definition of treason. Then it is not all that surprising that China treats a traitor with suspicion, distrust, and hostility, especially after that traitor has publicly embarrassed China many times afterwards. To build trust is a lengthy process, and once destroyed, it is hard to rebuild, isn't it?
While Dalai Lama likes to instill some Tibetan teaching, I wish to quote Conscious: I used to judge a person by what he says, now I have learned to judge a person by what he does.
So a brief history is in order (from wiki): On 17 November 1950, at the age of 15, the 14th Dalai Lama (the one you know) was enthroned formally as the temporal ruler of Tibet. He sent a delegation to Beijing, which ratified the Seventeen Point Agreement for the Peaceful Liberation of Tibet. (which allowed a high degree of autonomy) He worked with the Chinese government: in September 1954, together with the 10th Panchen Lama he went to the Chinese capital to meet Mao Zedong and attend the first session of the National People's Congress as a delegate, primarily discussing China's constitution. On 27 September 1954, the Dalai Lama was selected as a deputy chairman of the Standing Committee of the National People's Congress, a post he officially held until 1964.
However, Dalai Lama was planning something else. He accepted assistance from CIA. In 1956, a large rebellion broke out in eastern Kham, an ethnically Tibetan region in Sichuan province. To support the rebels, the CIA launched a covert action campaign against the Communist Chinese. A secret military training camp for the Khampa guerrillas was established at Camp Hale near Leadville, Colorado, in the U.S. The guerrillas attacked Communist forces in Amdo and Kham but were gradually pushed into Central Tibet.
At the outset of the 1959 Tibetan uprising, fearing for his life, the Dalai Lama and his retinue fled Tibet with the help of the CIA's Special Activities Division, crossing into India on 30 March 1959, reaching Tezpur in Assam on 18 April.
This excerpt from wikipedia should have explained the origin of the distrust. Oran's Dictionary of the Law (1983) defines treason as "...[a]...citizen's actions to help a foreign government overthrow, make war against, or seriously injure the [parent nation]."(from wiki). I think what Dalai Lama did fit the definition of treason. Then it is not all that surprising that China treats a traitor with suspicion, distrust, and hostility, especially after that traitor has publicly embarrassed China many times afterwards. To build trust is a lengthy process, and once destroyed, it is hard to rebuild, isn't it?
While Dalai Lama likes to instill some Tibetan teaching, I wish to quote Conscious: I used to judge a person by what he says, now I have learned to judge a person by what he does.
Should race be a factor in statistical inference?
This is a question I have long been thinking about. Ye's incident brought this question back to my attention. While I despise and lament the racist comments concerning Ye's performance, I should give a qualified "yes" to the question posed in the title. While apparently paradoxical, this response does not contradict my attitudes on Ye's matter, as I pointed out in the previous post that race should be accounted for properly in a scientific manner.
Conditioning is the soul of statistics. Whenever possible, we should condition on relevant information to aid in our inference. Race, in some cases, could be a relevant information. When that is the case, we should not simply discard the information for political correctness. Being fair-minded does not mean we should turn our head away from any information concerning gender and race. We are seeking truth, uncomfortable it might be, and when those information contains information about the truth, we choose to extract the information from it. (The book Intelligence Paradox contains a good discussion relating to academic political correctness in its Introduction, which I wish to quote in my incoming blogs, and which I agree whole-heartedly.) The hallmark of a racist is not reading information from race, but rather read non-existent information from race and refuse to consider other information.
However, what is lamentable is that many people do not do it properly. We might have different priors based on race, but those priors cannot be dogmatic. They should contain information about race, but they should recognize the limited scope of the information, and allow enough flexibility in the prior so as to readily accept any new relevant information. Put in another way, even if we allow the priors to be different, this difference will be dominated once new relevant information becomes available. Thus, incorporating race, in most circumstances, will only be pertinent in theory, and non-significant in practice, unless one has very strong evidence that the racial information is extremely relevant and reliable, a case for which I am having an extremely difficult time to construct an example.
The problem with most racial information people wish to incorporate is that they are not "structural"--- The relation between race and certain behavior are not constant or fundamental. Given that most of the information is historical data, and that the possibility of a structural change, the past observations contains little relevant information for today, and it will be detrimental to make decisions based on past non-structural observations (similar to the Lucas Critique in economics). For example, African Americans might have lower literacy historically, but this association is non-structural, and it will (and did) change as time passes by. In general, blindly incorporating historical information as if they are historical is a sign of sloppy thinking and crappy reasoning, both of which might bring severe consequences. The current financial crisis, as some economists would argue, results from people's extrapolating from historical data on real estate (believing future performance will mirror past performance). Those traders who were stupid enough to commit such fallacy, brought tremendous loss to their companies. In the case of Ye, the Chinese swimming team had a dishonorable history in the 1990's, and that was the past. To blindly project 1990's to 2010's is similar to what those garbage traders did, except in this case, the consequences is born by the potentially innocent Chinese swimmer Ye.
A less innocuous phenomenon is confirmation bias. When the information of race is entered, the person directly forms a (racist) belief, and he looks for information that only confirms his belief, and interpret ambiguous information so as to confirm his belief. In the case of Ye, the history is just information he digs up to rationalize his belief, he discard relevant information (other swimmers could improve more significantly from personal best and drug test), and he biasedly interprets ambiguous information (interpreting Ye's second not-as-startling performance as evidence of backing-off, rather than symptom of fatigue after staying up late for drug tests nights in a row till right before the contest and extreme psychological pressure resulting from media defamatory coverage).
To conclude, while incorporating racial information per se is scientific and non-racist, many tend to err on the side of over-incorporating racial information. The real racist behavior is not just to incorporate such information, but to do it improperly. The real danger results from forming a dogmatic prior and indulging in confirmation bias.
Conditioning is the soul of statistics. Whenever possible, we should condition on relevant information to aid in our inference. Race, in some cases, could be a relevant information. When that is the case, we should not simply discard the information for political correctness. Being fair-minded does not mean we should turn our head away from any information concerning gender and race. We are seeking truth, uncomfortable it might be, and when those information contains information about the truth, we choose to extract the information from it. (The book Intelligence Paradox contains a good discussion relating to academic political correctness in its Introduction, which I wish to quote in my incoming blogs, and which I agree whole-heartedly.) The hallmark of a racist is not reading information from race, but rather read non-existent information from race and refuse to consider other information.
However, what is lamentable is that many people do not do it properly. We might have different priors based on race, but those priors cannot be dogmatic. They should contain information about race, but they should recognize the limited scope of the information, and allow enough flexibility in the prior so as to readily accept any new relevant information. Put in another way, even if we allow the priors to be different, this difference will be dominated once new relevant information becomes available. Thus, incorporating race, in most circumstances, will only be pertinent in theory, and non-significant in practice, unless one has very strong evidence that the racial information is extremely relevant and reliable, a case for which I am having an extremely difficult time to construct an example.
The problem with most racial information people wish to incorporate is that they are not "structural"--- The relation between race and certain behavior are not constant or fundamental. Given that most of the information is historical data, and that the possibility of a structural change, the past observations contains little relevant information for today, and it will be detrimental to make decisions based on past non-structural observations (similar to the Lucas Critique in economics). For example, African Americans might have lower literacy historically, but this association is non-structural, and it will (and did) change as time passes by. In general, blindly incorporating historical information as if they are historical is a sign of sloppy thinking and crappy reasoning, both of which might bring severe consequences. The current financial crisis, as some economists would argue, results from people's extrapolating from historical data on real estate (believing future performance will mirror past performance). Those traders who were stupid enough to commit such fallacy, brought tremendous loss to their companies. In the case of Ye, the Chinese swimming team had a dishonorable history in the 1990's, and that was the past. To blindly project 1990's to 2010's is similar to what those garbage traders did, except in this case, the consequences is born by the potentially innocent Chinese swimmer Ye.
A less innocuous phenomenon is confirmation bias. When the information of race is entered, the person directly forms a (racist) belief, and he looks for information that only confirms his belief, and interpret ambiguous information so as to confirm his belief. In the case of Ye, the history is just information he digs up to rationalize his belief, he discard relevant information (other swimmers could improve more significantly from personal best and drug test), and he biasedly interprets ambiguous information (interpreting Ye's second not-as-startling performance as evidence of backing-off, rather than symptom of fatigue after staying up late for drug tests nights in a row till right before the contest and extreme psychological pressure resulting from media defamatory coverage).
To conclude, while incorporating racial information per se is scientific and non-racist, many tend to err on the side of over-incorporating racial information. The real racist behavior is not just to incorporate such information, but to do it improperly. The real danger results from forming a dogmatic prior and indulging in confirmation bias.
Saturday, August 4, 2012
Another on Ye
First, let me quote this article.
http://www.nature.com/news/why-great-olympic-feats-raise-suspicions-1.11109
This article, once again attempt to justify accusations of doping on Ye with two rationals:
1) such a fast swim is an anomaly. 2) Drug test cannot rule out the possibility of doping.
These two might sound convincing and reasonable justifications, and let one to conclude that after all, all the accusations are not racism in nature, but based on hard scientific reasoning. Unfortunately, this is only wishful thinking, and the facade of scientific objectivity cannot withstand close scrutiny. To justify these accusations from these two observations, requires committing some serious fallacies in statistical reasoning.
First, there is a difference between how likely one is able to swim that fast without doping and how likely has she not been involved in doping given that she swam so fast. The low likelihood of the former does not necessarily imply the low likelihood of the latter. This is called Prosecutor's Fallacy. (See http://en.wikipedia.org/wiki/Prosecutor%27s_fallacy) According to Wikipedia (I know), "deliberate use of the prosecutor's fallacy is prosecutorial misconduct and can subject the prosecutor to official reprimand, disbarment or criminal punishment". Hence it is not some arcane fallacy I dig up to defend Ye. It is disappointing to witness that a magazine like Nature would allow such floppy reasoning. What is of concern, is conditional on such performance, how likely has Ye been involved in doping. The article, and the mass media, fails to give hard data to justify their accusation.
Second, on a related note, one friend on facebook pointed out: "What's interesting is that Katie Ledecky, a 15 year old, won the 800 free today. She shaved 21 second off her best time from last year. Ye Shiwen shaved 5 seconds off her best from last year (in a 400 meter race). So perhaps what Ye Shiwen did isn't that surprising." If Katie can improve 21 seconds without invoking any suspicion, it is very hard to justify accusations on Ye without resorting to racial factor (which could be justified, and will be the topic of my next blog). I am OK with taking racial factors into account, as long as 1) it is done properly (not leading to dogmatic prior) 2) it is openly acknowledged instead of denied.
Finally, the argument that test is not conclusive is red herring. The article seems to hint that now that the drug test does not rule out the possibility of Ye's doping, we should not drop our suspicion in response to the drug test result. However, every statistical test is not conclusive, and only suggestive. The key is that conditional on the result of the test, we do change our belief! At least, the likelihood of Ye doping is significantly reduced given the test result. The power of the test might not be high (which I think the article correctly point out), and we, as a result, will not as dramatically update our belief as what we would do if the power of the test is high, but to not to update our belief at all given the test result is to choose to deliberately ignore relevant evidence and information, not the trademark of a rational being. Consider this, SAT is a test for intelligence, though the power of the test is low, that is people might get higher score even if they are of mediocre intelligence. However, when you first encounter someone, who might look stupid, but you learnt that he got a really high score on SAT, you will need to update your belief about his intelligence if you are a rational being. Indeed, if you have little prior information about his intelligence (say the appearance is not a good indicator of intelligence), you will have to update your belief dramatically, despite the low power of SAT. This might sound paradoxical, but it reflects sound reasoning---in the absence of relevant information, a noisy signal, when compared to other information (that is null, and is of infinite noise), the relative noise ratio is zero! Unsurprisingly, you put all weights on this information (this is the idea behind Fisher Weighting). Hence, unless you have a pretty dogmatic prior concerning Ye, when the drug test is the only available relevant information, one would need to update his belief significantly, regardless the alleged power of the test.
These two logical flaws might be unnoticeable under first reading, but jumps out for any reader with a sense of basic (but correct) intuition about probability. It is a pity that Nature calls it fair-minded, but what is really annoying is the absence of sound logic under the pretense of sound logic.
http://www.nature.com/news/
This article, once again attempt to justify accusations of doping on Ye with two rationals:
1) such a fast swim is an anomaly. 2) Drug test cannot rule out the possibility of doping.
These two might sound convincing and reasonable justifications, and let one to conclude that after all, all the accusations are not racism in nature, but based on hard scientific reasoning. Unfortunately, this is only wishful thinking, and the facade of scientific objectivity cannot withstand close scrutiny. To justify these accusations from these two observations, requires committing some serious fallacies in statistical reasoning.
First, there is a difference between how likely one is able to swim that fast without doping and how likely has she not been involved in doping given that she swam so fast. The low likelihood of the former does not necessarily imply the low likelihood of the latter. This is called Prosecutor's Fallacy. (See http://en.wikipedia.org/wiki/Prosecutor%27s_fallacy) According to Wikipedia (I know), "deliberate use of the prosecutor's fallacy is prosecutorial misconduct and can subject the prosecutor to official reprimand, disbarment or criminal punishment". Hence it is not some arcane fallacy I dig up to defend Ye. It is disappointing to witness that a magazine like Nature would allow such floppy reasoning. What is of concern, is conditional on such performance, how likely has Ye been involved in doping. The article, and the mass media, fails to give hard data to justify their accusation.
Second, on a related note, one friend on facebook pointed out: "What's interesting is that Katie Ledecky, a 15 year old, won the 800 free today. She shaved 21 second off her best time from last year. Ye Shiwen shaved 5 seconds off her best from last year (in a 400 meter race). So perhaps what Ye Shiwen did isn't that surprising." If Katie can improve 21 seconds without invoking any suspicion, it is very hard to justify accusations on Ye without resorting to racial factor (which could be justified, and will be the topic of my next blog). I am OK with taking racial factors into account, as long as 1) it is done properly (not leading to dogmatic prior) 2) it is openly acknowledged instead of denied.
Finally, the argument that test is not conclusive is red herring. The article seems to hint that now that the drug test does not rule out the possibility of Ye's doping, we should not drop our suspicion in response to the drug test result. However, every statistical test is not conclusive, and only suggestive. The key is that conditional on the result of the test, we do change our belief! At least, the likelihood of Ye doping is significantly reduced given the test result. The power of the test might not be high (which I think the article correctly point out), and we, as a result, will not as dramatically update our belief as what we would do if the power of the test is high, but to not to update our belief at all given the test result is to choose to deliberately ignore relevant evidence and information, not the trademark of a rational being. Consider this, SAT is a test for intelligence, though the power of the test is low, that is people might get higher score even if they are of mediocre intelligence. However, when you first encounter someone, who might look stupid, but you learnt that he got a really high score on SAT, you will need to update your belief about his intelligence if you are a rational being. Indeed, if you have little prior information about his intelligence (say the appearance is not a good indicator of intelligence), you will have to update your belief dramatically, despite the low power of SAT. This might sound paradoxical, but it reflects sound reasoning---in the absence of relevant information, a noisy signal, when compared to other information (that is null, and is of infinite noise), the relative noise ratio is zero! Unsurprisingly, you put all weights on this information (this is the idea behind Fisher Weighting). Hence, unless you have a pretty dogmatic prior concerning Ye, when the drug test is the only available relevant information, one would need to update his belief significantly, regardless the alleged power of the test.
These two logical flaws might be unnoticeable under first reading, but jumps out for any reader with a sense of basic (but correct) intuition about probability. It is a pity that Nature calls it fair-minded, but what is really annoying is the absence of sound logic under the pretense of sound logic.
Wednesday, August 1, 2012
More fundamental
When I go to places like Subway or convenience store in US, I am more than shocked by how inefficient the employees are. If they worked than in a private company in China, they will be laid off almost immediately or inundated by the shouts of furious customers (I admit, the Chinese customers are not polite). This is a just anecdotal evidence, but I have other reasons to believe that the US labor productivity is very low (I think partly due to the social welfare). In contrast, the labor productivity in China is much higher:
http://itechnow.com/why-apple-chose-china-to-produce-its-products/
what is described is almost unthinkable (no punch for some sports "scientist's" comments on Ye) in US. That is the difference between the US labor productivity and that of China. Not surprisingly, lots of factories decided to outsource. What is America's solution to this? For politicians, it is easy--exchange rate is the culprit. While moving exchange rate might have help balance the trade (there is no conclusive theoretical models or empirical evidence), the more fundamental solution is to improve labor productivity via enhancing education and building better incentive system (like welfare system or the power to layoff). That US never does. It likes to take superficial measures like "buy American" mandate, or appreciate RMB threat. Unless they keep "buy American" mandate forever binding, and keep depreciating USD against RMB, they will find the same imbalance coming back to haunt them. I think amid all the talks about exchange rate, this more fundamental concern on productivity is missing.
Thoughts go back to Ye again. The western response to Ye's success is just a reflection of their unhealthy psychology--passively cursing others' rise without getting their a** off and catch up. They heyday for Great Britain was long gone. America is still the top giant, but its edge has shrunk. While China still has a long long way to go (and it is not at all obvious whether it will get close to today's US), it has risen significantly. This is not taken amicably. Despite rhetoric, we dislike changes. We like things to stay where they are, what we are used to. When the balance breaks, we get uneasy. When someone who had been so frail, so weak and so despicable is catching up, there is a tinge of discomfort. Maybe it is jealousy--why am I not going up as fast? Maybe it is insecurity, will that guy threaten my place? Whatever the motive, we want to suppress that change, instead of changing with it, and improving with it. However, there will always be people who catches up, if we only think of suppressing that change, and one day, we will inevitably find we are no longer able to suppress it--then we lose our place for good, and by the way, the dignity is long lost.
http://itechnow.com/why-apple-chose-china-to-produce-its-products/
what is described is almost unthinkable (no punch for some sports "scientist's" comments on Ye) in US. That is the difference between the US labor productivity and that of China. Not surprisingly, lots of factories decided to outsource. What is America's solution to this? For politicians, it is easy--exchange rate is the culprit. While moving exchange rate might have help balance the trade (there is no conclusive theoretical models or empirical evidence), the more fundamental solution is to improve labor productivity via enhancing education and building better incentive system (like welfare system or the power to layoff). That US never does. It likes to take superficial measures like "buy American" mandate, or appreciate RMB threat. Unless they keep "buy American" mandate forever binding, and keep depreciating USD against RMB, they will find the same imbalance coming back to haunt them. I think amid all the talks about exchange rate, this more fundamental concern on productivity is missing.
Thoughts go back to Ye again. The western response to Ye's success is just a reflection of their unhealthy psychology--passively cursing others' rise without getting their a** off and catch up. They heyday for Great Britain was long gone. America is still the top giant, but its edge has shrunk. While China still has a long long way to go (and it is not at all obvious whether it will get close to today's US), it has risen significantly. This is not taken amicably. Despite rhetoric, we dislike changes. We like things to stay where they are, what we are used to. When the balance breaks, we get uneasy. When someone who had been so frail, so weak and so despicable is catching up, there is a tinge of discomfort. Maybe it is jealousy--why am I not going up as fast? Maybe it is insecurity, will that guy threaten my place? Whatever the motive, we want to suppress that change, instead of changing with it, and improving with it. However, there will always be people who catches up, if we only think of suppressing that change, and one day, we will inevitably find we are no longer able to suppress it--then we lose our place for good, and by the way, the dignity is long lost.
Thoughts on Ye Shiwen
Yeah, she won. She broke the world record. For most athletes, this would be more than fabulous, but for this 16-year old Chinese girl, this is not much short of disaster--American swimming coach called this result "disturbing" while more western media insinuate that Ye is not "clean".
Quite frankly, when I first read the news, I found the game result shocking as well. However, I was absolutely furious at people's casting suspicion that she is involved in doping. Innocent until proven guilty, easier said than done. I could not be sure if innocence holds, but before there is any evidence suggesting otherwise, I am willing and will give the benefit of doubt.
What I found more disturbing is what happened afterwards. The drug test shows no evidence of drug use while the suspicion does not there. There are talks of type II error, or somehow the Chinese developed some new drugs that evade the test (http://news.discovery.com/adventure/ye-shiwen-doping-scandal-olympic-swimming-120801.html). If one talks like this, then there is no point in employing any test--all results are non-conclusive, and whatever the test results, he can hold onto his original belief, unsupported as it might be. This is confirmation bias at play. People choose to accept evidence only if they confirm their belief; when faced with ambiguous evidence, they interpret it so that it confirms their belief. While disturbing (no punch) and obnoxious in events like this, it is dangerous in many other situations---some economists have argued that it is this fatal conceit that prepared many financial institutions for their death and damage.
The almost uniformly negative attitudes of western media towards Ye reflects a deep-rooted (and dogmatic) distrust and suspicion towards anything Chinese. It might well extend beyond sports. In politics, when things are more ambiguous, and open to more interpretations, I am wary how impartial they would be in their interpretations. As for China, I think the state is overly obsessed with its "international image". Personally, I think it is futile to worry about it and try to bolster it when the observers are (dogmatically) biased. The state's mandate is simply to improve the welfare of its people, and should not compromise this goal simply because of some "international image" concern.
Quite frankly, when I first read the news, I found the game result shocking as well. However, I was absolutely furious at people's casting suspicion that she is involved in doping. Innocent until proven guilty, easier said than done. I could not be sure if innocence holds, but before there is any evidence suggesting otherwise, I am willing and will give the benefit of doubt.
What I found more disturbing is what happened afterwards. The drug test shows no evidence of drug use while the suspicion does not there. There are talks of type II error, or somehow the Chinese developed some new drugs that evade the test (http://news.discovery.com/adventure/ye-shiwen-doping-scandal-olympic-swimming-120801.html). If one talks like this, then there is no point in employing any test--all results are non-conclusive, and whatever the test results, he can hold onto his original belief, unsupported as it might be. This is confirmation bias at play. People choose to accept evidence only if they confirm their belief; when faced with ambiguous evidence, they interpret it so that it confirms their belief. While disturbing (no punch) and obnoxious in events like this, it is dangerous in many other situations---some economists have argued that it is this fatal conceit that prepared many financial institutions for their death and damage.
The almost uniformly negative attitudes of western media towards Ye reflects a deep-rooted (and dogmatic) distrust and suspicion towards anything Chinese. It might well extend beyond sports. In politics, when things are more ambiguous, and open to more interpretations, I am wary how impartial they would be in their interpretations. As for China, I think the state is overly obsessed with its "international image". Personally, I think it is futile to worry about it and try to bolster it when the observers are (dogmatically) biased. The state's mandate is simply to improve the welfare of its people, and should not compromise this goal simply because of some "international image" concern.
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