Solving the fund manager dilema

Nassim Taleb pointed out a problem with assessing fund managers in The Black Swan: The Impact of the Highly Improbable. A certain number of fund manager's are going to do better than the market through dumb luck. Telling whether your fund manager is an exception or not is made more difficult by the fact that under performing managers are fired and new fund managers are added to the pool.

The math for static pool is straight forward: Start out with 1000 fund managers. Assess them at the end of the year. Fire the half that didn't beat the market. After the first year you have 500 survivors. After 2 years 250. After 3 years 125. And so on. If we let S be the number of survivors and P be the size of the initial pool of managers and t be the number of years, the equation would look something like this:

S = P(2)^-t

And of course you can easily generalize this to allow for different drop criteria by adding a factor ρ for the ratio being kept:

S = P(ρ)^-t

So what do you do when the size of the pool is changing? While I'm not directly solving the fund manager problem, I am solving an analogous one with books. Here is the scenario:

• A pool of electronic books is made available to library patrons
• When a library patron accesses a book the library pays a rental fee for a short term loan
• After a set number of loans the library purchases the book outright and the book remains as part of the library's collection
• Books are added to the pool as they become available
• Books are removed from the pool, for example a later edition is published and replaces the existing edition
• No purchased books are removed from the pool

How much money do you need to set aside to cover the costs of the rental fees and the purchase fees?
Which is really a bunch of related problems:

• How many books will I purchase? At what cost (% of list price)?
• How many books will I rent? How many times? At what cost?
• How many books will be removed from the pool before being purchased?

In each of these cases I can use the same equation except I need to measure the size of the initial pool, P, the number of survivors, S, at time, t, to calculate my rate, ρ. Measuring the number of survivors is easy - count the number of items that meet the selected criteria at time t. For example the number of books rented at least once after 100 days. I've been grappling with how to measure the size of the initial pool. What is the correct size for the initial pool? I think I have an answer:
count the number of items that have been in the pool at least that long and were not removed from the pool before reaching that age. So what do you think? Is that the right way to do this?

By the Book

By the Book is a delightful short story by Michael J. Farrell. I'm not going to review it - go read it yourself. It's in a collection called Life in the Universe from Stinging Fly Press.

The story dovetails nicely with the questions I've been asking professionally:

• What should we be weeding from a collection? 
• Why do patrons select the books they do? Why do researchers? 
• When is there enough? When is there too much?

My great grandmother liked reading Sienkiewicz. My father decided to reread some of the things she had read to him as a child. They were gone - weeded from the public library's collection because no one still reads Sienkeiwicz - Polish novels no longer are interesting. And no one's heard of them. And if they have, they can't find them because Polish spellings are so different from the way an English speaker would transliterate them. Should I at least try to find a copy and give it whirl for nostalgia's sake?

Finding and using seem to be tightly connected. Advertising, word of mouth, display, wandering the stacks. I read Red Moon Rising: Sputnik and the Hidden Rivalries that Ignited the Space Age, because I saw it on a prominent display at the public library. I read Britain's war machine : weapons, resources, and experts in the Second World War because I found it in the stacks while looking for something else. Should we take old uncirculated books and display them prominently, rather than send them to storage or off to the discard pile?

Obituary

My great great grand father, Louis Edwin Granger, died a hundred and fifteen years ago this coming April. I found his obituary from the New York times. It is an interesting piece of myth making. Some of  it is verifiably true, some of it is patently false and some of it may simply be wishful thinking. Col. Louis Granger the head line reads. The US army never made Louis E. Granger a Colonel. As far as I can tell, he started using Col. in his professional life in the 1880's. I always figured this use was a marketing scheme like Colonel Sanders. Apparently, his last wife wasn't aware. His official record lists two brevets - one to First Lieutenant for his actions at Antietam, and Captain for his actions at Port Hudson. Lieutenant, Lieutenant Colonel perhaps someone misheard.

Otherwise the Obituary's description of his military career is accurate. The general story arc matches the official record. Boston Guard to Massachusetts Infantry, serving with the Army of the Potomac. A transfer to be an officer with the US colored troops in Louisiana. A stint in North Carolina serving with the Judge Advocate General during Reconstruction. A return to Louisiana to sell off the Army's equipment in Louisiana and east Texas. Discharge, reenlist. While it mentions the end of his service in the army, it does omit he ended his Army career in 1869 under less than voluntary circumstances. The Evening Star reported

Capt. Louis E. Granger, 25th United States Infantry, of Massachusetts, has been dismissed [sic] the service and sentenced to imprisonment at the Dry Tortugas for conduct unbecoming an officer and a gentleman, and for misappropriation of public money.₁

His obituary then summarizes the next thirty years in two sentences:

He retired from this position and army life in 1869, and went in the brokerage business.  In 1889 Col. Granger erected a monument in Hardwick, Mass., to the natives of that town who were killed in the civil war.₂

The "brokerage" business landed him in court at least three more times. Once for forgery - possibly related to his discharge in 1869. Once for bad debts while he was living in Utah. And finally in 1898, when he declared bankruptcy. There was also a civil suite in Salt Lake and at least one divorce in Chicago. The monument in Hardwick still stands - it's a bit out of the way but it is still there.

The final paragraph lists his widow in Manhattan, her two daughters and her two stepsons from Utah. It omits his third (?) wife in Boston who had claimed to be his widow from at least 1880 until her death seven year later in 1906. There is also the possibility his first (ex?)wife was still alive as was his eldest daughter. According to our family stories - both had died prior to 1870, but the daughter magically appeared in a couple of articles in Salt Lake Newspapers in 1885. Leaving the issue entirely open. If she was alive in 1885 it is entirely plausible she was still alive when her father died.

The man had successfully created a myth that made a checkered past a bit more palatable. He highlighted the good things, omitted the bad, and exaggerated when it suited his sense of self. Perhaps this is something we would all like to do.

¹The Evening Star, Volume 34, Number 5181, Washington DC, October 18, 1869, pg 1, http://chroniclingamerica.loc.gov, accessed February 24, 2014

²New York Times (1857-1922); May 1, 1899; ProQuest Historical Newspapers: The New York Times (1851-2009) pg. 7

Aunt Gladys

My grandmother was named for her father's younger sister, Aunt Gladys. In 1972, my grandparents visited my family and a plan was hatched to visit Aunt Gladys. We piled into my grandfather's Lincoln and were off to visit Aunt Gladys in Florida. I remember visiting a very old woman who was too sick to get out of bed. The mosquitoes in the everglades, the rides at Disney World, and the Spanish fort at Saint Augustine.

Recently, I decided to see what I could find out about Aunt Gladys. First, I found out she was married to a cover artist for magazines  - she was his model for some covers. Paintings of her are kept in art galleries. And she was a pin up girl during the teens and twenties. I discovered she was an actress - she appeared in plays on Broadway, and Silent films. Her mother was also on Broadway. Who knew?

She has connected me socially to the late nineteenth and early twentieth century. For example, I am separated from the Civil War by two degrees because I met her - her father was a Civil War veteran. There are only two degrees to Rudyard Kipling - she appeared in a play he wrote. What else will I find looking at old newspapers from New York?

Cheers!

The Data Driven Librarian

I am a spreadsheet junkie. I like data. I also subscribe to the paradigm that data isn't information until it has context. Information isn't knowledge until it can be used for something. In that light all the data cleaning, analysis, and charting is really an attempt to make information out of data. Once the data is information, it can be used to make decisions and take actions.

Using data in this way sits well with my constituents - mostly Engineers and Scientists. I want to know what people are using, what is costs. I want to know what people want. I want to know what is being taught and what is being research and what is interesting. Ultimately, I'm trying to make the best decisions I can.

Payola, Anyone?

I have been attending a lot about "Open Access" lately. Between attending Open Science: Driving Forces and Practical Realities and Eileen Joy's Freedom, Responsibility, E-Publishing, and Building New Cultural-Intellectual Publics, my brain in still processing Green Open Access, Gold Open Access, Open Science, Open Data, Self Archiving, et al.

Open Science forum two things stood out to me. Dr. John King, from the University of Michigan, made the observation that tenure would end. He didn't know when. He didn't favor it. He was seeing signs that it was ending, a increasing percentage of professors and teachers were holding non tenure track positions. In the afternoon session, The Future of Open Science, one of the state roadblocks is no one wants to pay for Open Science. Everyone likes the idea of freely available peer reviewed papers, but no one is willing to pay for it. Each organization looks to someone else to provide the infrastructure. Publishers don't want to reduce profits for Open Science. Schools see Open Science as an added cost. Agencies don't think they can sell the costs to the public.

The marginal cost of information is extremely low.₁ Many would insist information should be free. It is not. It is like a free lunch. Even if you're not paying for it someone is. Usually they expect something in return. People who create and disseminate information need to have access to broadcast information. That costs something. They like to eat. That costs something. There needs to be freedom to broadcast information and appropriate limits to vet information that could be harmful to others. Enforcement and protection cost money. Sometimes these costs are born by a publisher. Sometimes they are born by the author, sometimes they are born by someone else, usually a government, or an advertiser.

I see a potentially bad scenario: a young researcher is trying to get tenure. The requirements are publication and citation. A paper is accepted at a high impact open access journal. The researcher can choose to pay to have the article open and more likely to be cited, or behind a pay wall. The University does not pay publishing fees for non-tenure researchers. We have a classic catch-22 - if you're tenured you are printed in open journals and cited. In order to be tenured you need to be cited. In order to be cited you need to be in an open access journal. In order to be open in an open access journal you need to pay, but the University doesn't pay publication costs for non-tenured researchers. The problem has an eerie resemblance to payola schemes.

There are a host of things to keep this from happening, not the least of which is funding agencies may allow portions of a grant to go to publication costs. Right now, most publishers wave the price for open access if the researcher can't pay. It will be interesting to see where this all goes.

¹ I would like to see someone actually sit down and figure out the cost of a page of internet information. Not how much does it cost me the user, but how much did it cost. You know, it takes three hours to type and edit one page of 500 words on a computer, assuming a wage of $X per hour, prorated cost of computer equipement/cell phone/tablet, cost of internet connection, server costs to host for a year, etc. what does information actually cost?

Deer in the Headlights at Postdam

Thirty years ago, I woke up early, got into my little red truck and started down US 30 to get to a job. I needed to be there at 5:30 to be ready for the day's round of testing and would be traveling rural roads. Somewhere, in Norwin, I spotted a doe running across the freeway. I didn't spot the buck following her. He saw me and froze.

Jenica Rogers gave the opening remarks at yesterday's session of the Charleston Conference. She likened librarians to the deer in the headlight, unable to move out of the way of the oncoming danger. In her analogy the danger is the ever increasing abusive nature of publisher "deals" for electronic subscriptions and price increases that exceed inflation.

I collided with the deer. The front end of my truck was pushed into the engine. The buck died. The truck died. I didn't work that day. I didn't get paid, and I spent time and a lot of money getting the truck moving again. 

My concern is academic publishing could be like music publishing with the advent of the xerox copier. Musicians upset with the price of sheet music circumvented copyright. Publishers increase prices in an attempt to regain lost revenue. A vicious cycle of price increases and copying ensued leaving fewer music publishers and less available sheet music. Academic publishers are consolidating into relatively large for profit corporations. Technology and changes in laws and regulations are potentially creating environments that are hostile to some business models.

I believe the on-coming lights are a rapidly moving train. The train is the changing information environment. To avoid the on-coming train, libraries and publishers will need to work together to get out of the way. The current apparent hostilities between academic libraries and some publishers could be analogous to labor relations that exacerbated situations like the decline of the steel industry and the collapse of the American automotive industry. Generally, labor and owners lost. Replicating this experience in academic publishing could result in a situation where we all lose.

I would propose a detente of sorts. Both sides would need to make concessions. Publishers need to avoid killing the goose that laid the golden egg. Libraries have budgets, increasing prices, especially subscription prices make this a zero sum game. Solving for this quarter's profits will ultimately end with subscription cuts as libraries look for other ways to provide access to information sources. Librarians will, as Jenica Rogers did, say no when terms become too onerous. Discontinuing packages, requiring long term contracts, and tiered pricing all put pressure on budgets that may result in the hard decision coming sooner rather than later.

Publishers need to look long and hard at the services they provide. It is important to do those services well and to highlight subscriptions are for those services. As long as academic institutions provide the content for free, it is important to make sure the editorial, archiving, and indexing services are truly top notch and justify the cost. High impact factor is not a justification for price. High editorial standards with rapid publication and good findability are.

Librarians need to lose the hostility. Remembering past transgressions doesn't improve the situation today. If you don't like a publisher, don't do business with them. For some academic uses journals are fungible. Often, a researcher needs an article not the article. Librarians should recognize the publishers are providing services. Publishers should be paid for providing those services. Information is not free, it takes  human effort to create and distribute.

I believe publishers and libraries need each other. We need good relations. We need fair pricing. We need a long view to stay ahead of changes. If we don't we may all be looking for a new profession.