The Net Neutrality Repeal Relies on a $3 billion Assumption

The views expressed below are my own, and are in no way associated with the Federal Communications Commission.  I did not contribute any work to this proceeding. 

Tomorrow morning, the Federal Communications Commission will vote to roll back a commission rule that reclassified Broadband Providers under Title II of the Telecommunications Act to protect Net Neutrality.  Order

Aside from the argument that dubious argument that the Commission need not worry about Net Neutrality because there are few documented examples so far, the Order leans heavily on the argument that Title II reclassification reduced broadband investment in the industry.  

I’m not going to get into the merits of Net Neutrality or Title II classification here (short answer – I think it’s good), and as the rules will certainly pass tomorrow, it’s clear that I’m not trying to influence the proceeding. But I looked into the analyses cited by the order, and I noticed a common thread.

The $3 billion Assumption:

I noticed a common thread in almost every study cited by the Commission to justify the case that Title II reclassification had scared broadband providers into reducing their broadband investment – the seemed to rely almost entirely on one assumption (two of the studies cited, Kovacs and Ford, don’t rely on this assumption, I’ll discuss those at the bottom).

Aside from Ford and Kovacs, EVERY analysis mentioned in the order that alleges a decrease in wireline investment makes this assumption or cites to an analysis that makes this assumption.

On face, it might make sense. AT&T acquired DirecTV midway through 2015.  Their investment figures pre-2015 did not include DirecTV’s investment, and their investments post 2015 did include DirecTV’s investment, so sensibly that investment needs to be deducted from the later time periods. The problem is that all of these analyses assume that because DirecTV’s capital investment was roughly $3 billion in years prior to the merger, it must have necessarily continued at that level.

BUT WE DONT KNOW.  Most of the studies conclude that the industry drop in investment since 2014 was in the area of $3-$4 billion, so this assumption makes up a huge portion of the eventual findings. It’s entirely possible that after the acquisition, AT&T decided to scale back investment in DirecTV’s satellite operations, but we have no way of knowing.

Capital Investment is a Signal

For their part, AT&T was happy to announce to shareholders in their annual filings that they’ve increased their investment in infrastructure every year since 2014. By not disclosing their capital investments in their DirecTV operations, AT&T has found a way to simultaneously tell the FCC that the sky is falling while signaling to their shareholders that business is booming.

This is the issue when a few enormous companies dominate industry trends. We’re left to infer investment outlook for a multi-billion dollar industry based on strategic decisions of a few men in a couple boardrooms who are fully aware that their decisions will influence regulators. 

FWIW, AT&T themselves indicated in pre-Title II annual filings that they planned to reduce marginal broadband investment after they finished a huge broadband buildout. Still,  it’s entirely possible that AT&T and other industry players actually did reduce their broadband investment because they were afraid of regulatory burden. But that’s not certain, and in light of the outpouring of concern from content creators and edge providers across the web, as well as the unheard concerns of innovators who have yet to innovate, a decision this big shouldn’t hinge on an assumption.

 


Cited studies that didn’t rely on the DirecTV assumption:

Dr. Anna-Marie Kovacs’s analysis argues that wireless investment in broadband has dropped precipitously in response to the Title II regulation.  She doesn’t provide a detailed methodology or raw data, so its hard to audit what she did, but it seems above board. I would add however, that while these companies may not have been investing in hard infrastructure, they invested heavily in spectrum during this time period, and I can’t imagine why they would do that if their future revenue outlook was so poor.

Dr. George S. Ford’s analysis was very different from the others cited in the Order, as it uses post-2010 as the treatment period because he asserts that after the 2010 Order, the industry knew that Title II was in play. He uses a diff-in-diff model which mimics an experiment by creating an artificial control group. Basically, he argues that rather than comparing broadband investment year over year, we should compare it to an estimate of what it would have been if the rules hadn’t been implemented.  To do this, he constructed an artificial control group by choosing industries unrelated to telecom that closely followed broadband investment trends prior to 2010, and compares these industries post-2010 to actual broadband investment post-2010.

It’s a pretty cool experimental design, but it’s worth looking at the industries that he chose. His four “artificial control group” industries were:

  1. Machinery Manufacturing
  2. Computer and Electronic Product Manufacturing
  3. Plastic and Rubber Product Manufacturing
  4. Transportation and warehousing

Choices 2 and 4 jump out at me. I’m completely guessing here, and I don’t know how the BEA calculates their industry estimates for these so I may be completely off… but for #2 – this time period saw smartphones grow from niche high-end accessories to near ubiquity, as well as the explosion of electronic accessories surrounding them. For #4, this time-period also coincided with Amazon’s rise to prominence, which I’m sure has had a pretty significant impact on the transportation and warehousing industry.

Not surprisingly, controls 2 and 4 also happened to massively outperform controls 1 and 3, seem to be the driving factor behind his conclusions. His findings show that 2 and 4 both grew by more than 50%, meaning his conclusion that telecom investment decreased is just an argument that telecom didn’t experience the same gigantic surge in investment that 2 other specific industries did.

To Ford’s credit, his analysis showed that telecom underperformed all four of the control group industries, not just 2 and 4. Also, he includes several robustness checks that I have not yet reviewed closely (but plan to). But if I’m right about 2 and 4, his comparison to the remaining control groups, though still statistically significant, doesn’t seem to hold strong economic significance.

 

DC Housing

This post explores housing and land use data available through the Washington, D.C. open data platform.

Are new condo’s actually affordable

I wanted to test my (possibly mundane) hypothesis that newly constructed housing units were almost exclusively high-end, so I downloaded the Computer Assisted Mass Appraisal Dataset for condominiums.

I originally tried to look at all residencies, but there was a ton of variation based on housing characteristics, and since I’m on a time crunch for a graduate school app (if you’re a reviewer reading this, hi!) I opted to look at the much more uniform condo market.

Originally, I had hoped I could construct a time series with this data, but number of observations per year built varies tremendously, and doesn’t seem to correlate with actual new housing construction over time. As a last resort, I opted to just look at new 1BR unit construction since 2011.  I picked 2011 in part because this was the year that the first Inclusionary Zoning units went on the market.

The distribution of appraised prices for 1Br units built 2011-2017 isn’t too surprising:

Close to normal but with a very long upper tail seems about right for housing prices.  But I was struck by the clustering around the median.

Summary stats:

Only $65k separates the 1st Quartile from the median, and half all new units fell in the range between $350k and $500k.  Now, to answer the subjective question of, “is that affordable?”

The D.C. government publishes maximum rental and sale rates for Inclusionary Zoned units set aside as affordable.  Though in practice, Inclusionary units are only available to households with income less than 80% of the D.C. MSA’s median income (if rented before 2016) or 60% of the median income (if rented after that), D.C. publishes affordable rental and sale rates for up to 120% of the MSA median income.

As we can see here, the 25th percentile for a 1BR unit still exceeds the maximum affordable purchase price for 1BR apartments sold to households earning 120% of the Median Family Income for the D.C. Area.  And the actual median price is almost $100k more expensive. Further, my estimate is probably slightly on the low end because my quick code didn’t filter out studios. So is new-unit construction of mostly unaffordable units? I think it’s safe to say ‘yes’, though I’ll admit it’s not as bad as I had thought. The assumption that rent prices are ridiculous underscores life in this city, to the point where data showing that new units are priced “high”, but not “are you f*cking kidding me?” high actually seems underwhelming. That said, the 2017 portion of this data had fewer than 30 observations, so I wouldn’t be surprised if some of those new waterfront units with drive up the median and first quartile.

 

 

Democrats need to go all-in on term limits

The outlook for the Democratic Party looks bleak. They failed to take control of the senate in this year’s election, and with 25 Democratic caucus seats and only 8 Republican seats up for reelection in 2018, their odds of gaining any seats in the midterm are very low. Due to gerrymandering, the process of manipulating congressional district boundaries for one party’s advantage, the House is very likely to remain in Republican control in the midterms as well (note that gerrymandering is not a uniquely Republican thing, Maryland, for example, is heavily gerrymandered in favor of Democrats).

 

Given their current predicament, the Democrats need to act decisively to gain any sort of a foothold, and their best path forward may be to emphatically embrace a cornerstone of President-Elect Donald Trump’s successful presidential campaign.

 

Drain the Swamp

 

Trump’s anti-establishment campaign included a call to “drain the swamp” that he claims our government in Washington, D.C. has become. In his “first 100 day” promise, Trump has stated that he will propose a constitutional amendment to impose term limits on congress on his very first day in office. I believe that, strategically, the best move for the democrats would be to propose exactly such an amendment in the very first session of congress, and whip the votes in advance to make sure that every single democrat in both chambers comes out in favor of it.

 

On face, term limits may seem like a great idea. Institutional inertia is very real, and fresh faces in congress may make the legislature more receptive to new and bold ideas. There are drawbacks, however. Lawmaking requires a great deal of institutional knowledge, and if politicians are limited in their ability to take their time and build such knowledge, they may rely on unelected lobbyists and experts to bridge the gaps. This may be part of why Senate Majority leader Mitch McConnell has already shot down the possibility of backing such a proposal.

 

Putting aside the merits of term limits, lets ponder what would happen if the Democrats seized upon this proposal and forced the issue.

 

The Amendment Process

 

Trump has unambiguously stated his support for a term-limit amendment, and his election can presumably be read as popular support for the idea as well. The first major hurdle for putting it in place would be to secure a 2/3rds majority in favor of the amendment in both chambers. A Supreme Court ruling confirmed that an amendment is necessary to impose term limits, and a majority Republican House tried to pass one in 1995.  The amendment would have limited representatives to six two-year terms, and senators to two six-year terms (12 years in either body).  If such an amendment somehow did get through congress, 3/4ths of states would still need to ratify it, but lets focus on the congressional battle for now.

The Republican Options

For fun, lets assume that every Democrat in both the House and Senate came out in vociferous support for the amendment.  First, looking at the House, Democrats are projected to hold 192 of the House’s 435 seats (assuming the two Louisiana seats go red).  288 house votes would be required to move the amendment along, which means it would pass if 96 Republicans also voted for it.

Speaker Paul Ryan has stated in the past that he’s in favor of term limits, but a united Democratic front would put his words to the test. The Republicans would have two options here.  First, they could narrowly defeat the amendment.  To vote it down would put a lot of Representatives at risk, so Republican leadership would likely choose their 95 most vulnerable members to vote for the amendment, and the remaining 145 would risk appearing corrupt in the eyes of their constituents who just elected a man that wanted to drain the swamp.  It’s true that most congressional districts in general are safe, but as Former Majority Leader Eric Cantor’s surprise primary defeat shows, you’re never really safe from anti-establishment populist voters.

As a second option, the House could also come out in unanimous support of the amendment. By my rough estimate, if the next congress were to successfully pass a term-limit amendment, 84 Democratic and 116 Republican Representatives would be subject to term limits.  Beyond congressional district makeup, incumbency is a huge advantage, so such a shakeup could put enough seats in play to give Democrats a narrow path to control of the house.

Of course, even if the House unanimously passed the amendment, it could still be defeated in the Senate. If all 48 Democratic senators (again assuming the Louisiana senate seat goes red) came out in unwavering support for the Amendment, only 18 Republican senators could support it without it passing.  The remaining 34 would also risk the ire of populist voters who chose Trump out of mistrust of Washington.

Worth it?

It’s dangerous to speculate on why exactly Trump won without better data, but it seems a safe bet to say that many voters didn’t feel that the party was willing to hear their concerns and take them seriously. This gambit would send a message to those voters and signal willingness to work with the new President to improve the political system.  After ignoring the populist surges that occurred in both primaries, the Democratic party now needs to acknowledge them or risk perishing.  Day-one emphatic support of term limits could help the party shed the image of arrogant coastal elites who look down on the struggles of everyday Americans.

Even if a Republican congress successfully insulated its members themselves from the risk, this early action would drive a wedge between the traditional conservative and populist/anti-establishment wings of the party.  It would set the tone for future interactions between the President and Congress as one of animosity, and slightly undermine the blank-check that the GOP is currently playing with.  The battle itself (assuming the Democrats adequately promoted it in the media) may bring to light the inherent contradiction in either party, both of which rely on a deeply-entrenched establishment, waving the populist anti-corruption banner.  It may cause causal voters to think more deeply about the ramifications of procedural changes that sound good on face.

The risks are enormously high.  If the amendment made it through congress and passed the state legislatures, the entire leadership of both parties would be gone. Democratic whip Stenny Hoyer would be working to put himself out of a job.  But the Democrats are playing with their last few chips, and the poker player in me says this is the hand to go all-in.

 

Reflections on the 2016 Presidential Election

“When they go low, we go high.”

 

The next four years are going to be a massive test of character for the people who see the world as I do. After some reflection, I ask one thing of those on my side of the political spectrum: we must not treat President Trump the way they treated President Obama.

 

I should emphasize here that I speak from the perspective of a straight, cis-gendered male with a stable job in a supposedly recession-proof city and with a secure family structure to fall back on. My day-to-day life probably won’t change much as a result of last night’s election.

 

I had less riding on this election than the same-sex couple I met last night, half of which is waiting to naturalize. They are concerned changes to marriage laws may hold up her citizenship process and threaten their custody of their adopted child. I had far less riding on this election than low-wage workers hoping for an increased minimum wage, undocumented immigrants working to make a better life for their families, the millions who the ACA saved from medical bankruptcy, and the millions at risk in the middle east if an unhinged state department “rips up the Iran deal on day one” and destabilizes the region.

 

I’m pretty privileged to be safe, and I think that safety gives me the luxury to react with a little more measure than those directly in the firing line, and I definitely don’t begrudge those who are reacting with far more anger. So with that out of the way, I do believe we must follow Michelle Obama’s advice and “go high.”

 

Taking the high road means being gracious in defeat. I don’t want four years of pure obstructionism. I do not want to hear that Chuck Schumer’s “number-one priority” is to make Trump a one-term president. I don’t want senate democrats to bastardize bills in the hopes that they lead to poor results and can later be repealed.   I will not presume that President Trump’s every action is wrong just because he’s the one doing it.

 

Anti-Intellectualism got us into this position, and to treat Trump that way would only continue that. I recently watched some town-hall debates from previous elections, and now believe this was the most dumb-downed election at least in recent American history. Don’t get me wrong, I’m extremely disturbed by the deeply xenophobic and misogynistic views that the President Elect seems to hold, the alleged sexual assaults, and his shady business practices. But I think that the media’s fixation with those issues (and with constantly moving on to the next one) did him a favor.

 

The focus on scandals and shock-value statements was great for clicks and ratings, because people who already didn’t like Trump clicked on those articles (and people who did like him shared them as examples of media manipulation), but they served to marginalize the many people who are afraid of a changing world. A lot of people are terrified that the world today is viewed and discussed in very different terms than the world they grew up in, that careers that fed their families for generations are waning in the modern global economy, and Trump appeared as a safe-harbor for their concerns. Dismissing these people as racist, however apt the term may be when discussing some of their views, only pushed them further into the protest-vote camp.

 

At the same time, the obsession with shock-value statements and scandals crowded-out any real policy discussion. Baiting Trump into racism and sexism apparently didn’t expose him, and it looks like no one was really turned off by his unwillingness to make good on his debts. But maybe voters would have viewed him differently if he was pressed on specifics about how he would approach conflict in Yemen, or when it would be appropriate to raise interest rates, or when if ever the world needs to transition away from fossil fuels. Maybe voters would also have thought differently of Clinton if her answers to real policy questions came to mind instead of out-of-context banter in stolen emails. We grew numb to the scandals and ill-advised hyperboles, and in the end both candidates were so thoroughly covered in mud that we couldn’t see the huge gulf in policy-knowledge lying beneath.

 

So however abhorrent Trump’s general worldview and personality may appear to be, it’s time for us to accept that discussing it is completely unproductive. From now on, if I ever speak ill of the President Elect, it will be because I disagree with a specific policy proposal for objective reasons. If hateful words leave his mouth, I will denounce his words and stand up for those targeted, but I won’t waste time trying to use those words as ammunition against him. However appropriately an “-ism” word may describe his words or actions, I will withhold it and instead articulate exactly what I don’t like about them. If this means that we can no longer simply assume that racism is bad and must now explain why it is bad every time, so be it.

 

While I believe we should treat the President Elect with respect and fairness, I am not for a second suggesting total capitulation. Climate models are not up for referendum, and as the fate of the planet is at stake, we must continue to speak up in the name of basic science. I believe that regressive economic policies that will negatively affect minority communities will be unavoidable under 4 years of republican control, but we must refuse to accept any policies that directly compromise the basic civil rights that generations of Americans have fought for. If those rights are at stake, we must take to the streets alongside those affected.

 

So to the future President, even though you’ve implicitly questioned the right of millions of kind-hearted patriots to call themselves a part of “your America,” I will not question the goodness of your basic personhood any further. If you murder someone on 5th avenue, I will leave that to the courts and you won’t hear from me. But if you threaten the basic values of inclusiveness that define the “new America” that you’re so afraid of, know that we will fight you through every peaceful channel at our disposal.

 

Martinez and Olsen: A tale of two managers

Tactically, they’re worlds apart. But two managers on either side of the Atlantic share something deeper: a dressing room that runs on pure defiance and an unrelenting quest to rewrite the script.

With Roberto Martinez at the helm, English Premier League side Everton F.C. employ a fluid style with an emphasis on crisp passing and composure in possession.  Across the pond, Ben Olsen’s DC United of Major League Soccer rely on gritty defensive effort and direct attacks to grind out results.  An English football club founded by a Methodist Sunday school in 1878, an American soccer team conceived in a board room in 1995, with managers who differ in their fundamental approach to the game… the similarities may seem tenuous.  But, Everton F.C. and DC United share similar roles within their respective situations, and more importantly their managers share a deep insistence upon rejecting the narratives that many see as absolute in the modern game.

The Decline of Champions

“Plucky little Everton”… “Punching above there weight”… the English press is never hesitant to lavish Everton with backhanded praise.   Founding members of the first professional football league in England, Everton have spent more time in the top flight of English football than any other club and have won 9 league titles and 15 major trophies overall.  Everton have exemplified the motto Nil Satis Nisi Optimum – “Nothing is enough but the best” – across most of the club’s storied history, but are currently experiencing a 20 year trophy drought brought on by the financial realities of modern football.  The beautiful game is now a multi-billion dollar industry, and with an aging stadium and a smaller global brand than their local rivals, Everton do not have the revenue streams and financial might to register as a club of any stature in the modern game.

Where Everton’s fall from glory took place as a slow trickle, DC United have experienced similar highs and lows in the club’s short lifespan of 20 years.  They were the inaugural Major League Soccer cup champions in 1996, and have won a total of 4 league championships and a nice assortment of other top honors.  United’s last league championship however was back in 2004, and as the league has expanded to include more teams, the team has struggled to remain relevant.

The importance of financial strength in achieving success is palpable in English football, but it exists by design in the US brand of the game.  MLS maintains a strict salary cap, but allows clubs to spend beyond the cap for a limited amount of “designated players.”  Wealthier owners (or those more concerned with on the pitch success) can spend an unlimited amount on designated player salaries, which often results in clubs like DC United with shrewd ownership groups getting left behind.  DC United’s stadium woes – the horribly aging and completely commercially non-viable RFK stadium  – dwarf those of Everton, as it’s clear that the club’s venture capitalist owners are not interested in investing beyond the bare minimum until a new stadium is built.

Tactical Foils

Roberto Martinez took over for 10-year Everton manager David Moyes, who was rewarded for consistently leading Everton to top half finishes on a shoe-string budget with a move to Manchester United.  Moyes’ sides were known for their defensive organization and work ethic.  In 2004, Moyes’ Everton achieved their highest Premier League finish and earned a chance to qualify for the holy grail of European football – The Champions League – in large part by grinding out 1-0 victories through disciplined defensive performances.

When Martinez took over, he immediately set to work changing the mindset of the players on the pitch.  Martinez put in place an expansive style of play with a heavy emphasis on rhythmic passing, a style that relied on patient buildup and intelligent movement to unlock defensively minded teams.  In training drills, Martinez has the starting goalkeeper first go through passing exercises with the outfield players before joining the other goalkeepers, because he insists that every player be comfortable playing with the ball at his feet. Where a Moyes team would have defenders boot the ball up to their attackers, Martinez has his back four pass the ball out from the back.

Ben Olsen’s approach to the game on the other hand is much more similar to Martinez’s predecessor.  Endearingly referred to as “BennyBall”, Olsen requires his striker to be a first defender.  At times it seems he’ll prioritize a striker who can win the long balls hoofed up by defenders over one who actually scores goals.  Olsen’s DC relies on gritty and aggressive defenders, not unlike Olsen’s style as a player for the black and red.

Both managers have had up and down seasons in their tenures.  When Everton bled goals last season, the team faced criticism for overplaying and attempting to play “beautiful” style that exceeded the ability of the players.  Olsen has faced the opposite criticism this year, as many a tweet bemoaned his conservative and pragmatic approach even as DC sat in first place earlier this season.

Restoration through Defiance

Facing the same challenge to achieve success in the face of financial limitations, both managers rely on different strategies.  But there’s a deeper connection at work here, as both managers parlay these pragmatic limitations into a driving force to inspire the best from their teams.

When Martinez was first confirmed as Everton manager, he told Everton Chairman Bill Kenwright “I will get you into the Champions League.”  Rather than fixate on the club’s lack of financial clout, he emphasized it’s illustrious history, and had pictures of legendary Everton players hung around the club’s training facilities to reinforce that standard of achievement amongst the squad.

This defiant insistence upon greatness didn’t always translate to results on the pitch, but it was perfectly captured in this summer’s transfer window.

Russian-oligarch-owned defending Premier League Champions Chelsea F.C. submitted a bid for John Stones, a highly promising 21 year old central defender who took over as a starter for Everton last season.  The initial bid was promptly turned down, triggering a media maelstrom as ex-players and pundits all felt the need to weigh in.

One of the theguardian’s many attempts to convince Stones to quit Everton

Like most mid-table sides, for the past decade Everton have resigned themselves to losing their top players whenever a rich club came calling.  In the modern game, such is the natural order of things, so much so that Everton drew criticism for insisting Stones, a player on a four-year contract, is better off staying with his current club.  To many pundits, choosing to force a transfer to a Champions League club, rather than staying put and working to get your current club there, is a sign of ambition.

Eventually the media campaign did its job, and young John Stones submitted a formal request for a transfer.  It looked certain that Stones would leave, but the next day Stones was in the starting lineup against his former club Barnsley in the League Cup.  In his post match comments, Martinez explained that Stones’ transfer request will be rejected the next day, stating “sometimes can’t buy everything.”

In the first game after the window closed, Everton and Chelsea met at Goodison Park, with Stones in the starting lineup.  The entire Everton team played lights out, taking the game to Chelsea like they were any other team.  It was fitting that Steven Naismith, a close friend of Stones and the first Everton player to tell the media that Stones should stay put scored a perfect hat-trick off the bench to give Everton a 3-1 victory.

Young John Stones celebrates the first goal against Chelsea with hat-trick hero Steven Naismith

The post-match words of Brendan Galloway, another promising young defender who assisted the opening goal, perfectly sum up the sense of confidence and defiance of the supposed order of things:

“We know what we can do and we don’t fear anyone, especially when they come to Goodison,” declared Galloway.

They may have been the champions but we didn’t give them that respect.

“We shouldn’t give anyone any respect, especially in games at Goodison.

“We always know what we are capable of, we do it everyday in training, and we’ve started the season well.

As the Goodison faithful sang “Money can’t buy you Stones”, Everton translated their defiant attitude into an emphatic win.  I doubt Everton will reach that level again all season, but if only for a game they invoked a spirit more mighty than the rhinestone glitz of the modern game.

While Martinez showed reverence for Everton’s historic glory, at DC United Ben Olsen lived it.  As a player he won two of the clubs four MLS cups, and was named MVP in the 1999 cup final.  His tenacity on the pitch earned him folk-hero status, and the Cult of Olsen has only grown since he took over as a manager.  Win or lose, after every game the supporters bellow his name, and Olsen dutifully walks over to return their reverence with applause – a ritual that now feels as much a part of club tradition as half-time drum-circles and beer-shower goal celebrations.

Olsen lifts the cup after scoring the winner in the 1999 MLS cup final

Since Olsen’s player days and in the post-Beckham era, DC United have waned in prominence as the fledgling league bends over backwards to accommodate teams who spend big on marquee players.

So it was when DC met the rival NY Red Bulls in the 2012 MLS cup playoffs.  As the (at the time) sole team in the NYC media market, and lead by one of the all-time European greats Thierry Henry, the Red Bulls often appeared to be the league darlings. DC United, as the higher seed, were supposed to host the second leg of their two-match playoff, this would allow the higher seeded team to host overtime if they tie on aggregate.  After hurricane sandy hit, N.Y. were unable to host the first leg.  Rather than delay the playoff, D.C. were simply reassigned to play the first leg at home instead and lost their home field advantage in the process.

After the first leg in DC ended in a draw, the situation worsened.  Hundred’s of the DC faithful traveled up to New Jersey for the crucial away leg as a snow storm struck.  With the traveling fans bouncing and the team ready, DC were so insistent upon playing the game that Ben Olsen picked up a shovel to help the ground crew clear the field, but it was to no avail.  The league postponed the game to the following day, meaning most of the fans who made the trip would leave without seeing a ball kicked.

The following night’s match was a cagey affair that boiled over when United’s star goalkeeper conceded a penalty and was shown a red card for bringing down Red Bull striker Kenny Cooper in the box.  When the club seemed at it’s lowest, backup keeper Joe Willis came up with an all-important save to keep the score level, and shortly thereafter rookie Nick DeLeon scored the match-winner.  And where else would DeLeon go, with visible tears in his eyes, but to right in front of the traveling supporters to celebrate.

Chris Pontius and Nick DeLeon celebrate the play-off winner in New Jersey

It may not have been a fair attitude, but after the series of unfortunate events, the narrative was set.  The league, the weather, fate, whatever – it was all out to get us but we weren’t going to take.  Maybe it was reasonable to shift the schedule around, and Hamid’s dismissal was almost certainly warranted, but none of that mattered at the time.  In 15 seconds, Hamid’s post-match outburst perfectly captures the pathos surrounding the club:

“They can’t hold us back.”

DC have faced some ups and downs since, but the attitude remains the same even this season.  Ahead of our first match against expansion team New York City F.C., United striker Chris Rolfe commented on NYC’s star-power driven approach to development :

“It’s disappointing when you have owners that are willing to forego a culture and try to buy the fanciest commodities and try to make a team out of it. I don’t respect that”

In a league where money reigns supreme and buying aging stars to put asses in seats is the fastest way to “most favored club” status, DC players and fans alike are begrudgingly proud to do things differently.

Reality Catches Up

This isn’t a fairy tale, and it’s not a coming-of-age tale about a rag-tag gang of pre-teen misfits.

That game against NYC FC? DC United lost, and we’ve lost 4 of our next 5 games since.

Things look decidedly rosier for Everton, who currently sit 5th in the Premier League despite a string difficult early fixtures. But the average Everton supporter is properly conditioned to expect the worst, even when things are going well we can’t shake the feeling that the regression to the mean is coming.

For the time being, Everton continue to surpass the summer’s low expectations, while United have thrown away the chance to win the Supporters Shield (team with best regular season record) and are set to barely back into the playoffs.

Yet despite their divergent recent paths, both clubs face similar precipices.  Tonight, DC United play their second match against NYCFC, and will clinch a playoff berth with a win.  Fresh off a new contract, Chris Rolfe has a chance to back up his strong words to get DC’s season back on track, and show NYC superstars David Villa, Andrea Pirlo, and Frank Lampard that there’s more to this league than fat paychecks and cringey photo shoots.  On Sunday, Everton face local their local rivals in the merseyside derby, a fixture so nerve-wracking I won’t even entertain the scenario of a win until after the final whistle, but one that I will say could be season defining.

Two managers, both facing imminent tests.  Over the last year, both Martinez and Olsen have been forced to bear their vulnerabilities to the world in their respective periodic struggles.  Now as before, each looks to double down on his own brand of philosophical intransigence, and infuse it with a healthy dose of defiant passion to will his club against the prevailing winds of modern football.

Again, this isn’t a fairy-tale, and years of supporting both clubs have taught me not to expect much. I’m fully prepared for reality to catch up, for la résistance to breakdown without fanfare, and for both clubs to resume their mid-table roles in the status quo order of football.   But looking inward, I don’t think the manic masochistic whirlwind of supporting either team has ever really been about the result.  I’m in it for the fight, and no matter how things turn out I’ll know we tried.

 

In defense of Jill Ellis (and Abby Wambach)

On Monday night, the U.S. Women’s National Soccer Team registered it’s 3rd successive clean sheet en route to defeating Colombia 2-0 in the first knock-out round of the 2015 Women’s World Cup.  Despite the relatively comfortable victory against a Colombian side who were reduced to 10 players following a red card shortly after the half-time restart, manager Jill Ellis has come under intense criticism for a performance that many an arm-chair analyst and beat-blogger  have deemed “not convincing”.  Former USWNT star Michelle Akers may have delivered the most scathing criticism:

“If she [Ellis] is pleased with the way we played tonight then what the hell is she doing coaching our U.S. team.”

Ouch.  I’ve heard various points of criticism from all around, among them that our 4-4-2 formation is outdated and stale, that we are over-reliant on playing long-balls up to our forwards, that we lack creativity in attacking, and that Ellis needs to drop aging star Abby Wambach.  I will readily concede that the team hasn’t exactly been dominant thus far in the tournament, but to me the negativity seems horribly misplaced.

Playing Style

The supposed “lack-of-diversity” in our attacking approach is as good a place to start as any.  I keep hearing that our attack is one-dimensional, that all we do boot long balls up to our forwards – a hit-and-hope mentality.

First of all, when you have players like break-out star Julie Johnston who can drop the ball right on a player’s forehead from across the field, hoofing it forward isn’t the worst thing in the world:

Second, the way Colombia set up encouraged us to play it long.  When our defenders were in possession of the ball, Colombian players surrounded the center circle to clog up midfield.  This didn’t stop us from trying to play it out from the back anyways, we actually tried it quite often. Usually something like this happened:

or this

 

Notice the number of yellow shirts in that area of the pitch.  A lot of our attempts to pass it out from the back worked out better than these two examples, they often lead to throw-ins that gave us a good platform to build an attack.  But the last two gifs demonstrate the danger in our defenders losing possession there.  Plus, Colombia’s approach left holes between their midfield and back 4, so why wouldn’t we send some balls over-the-top to take advantage of it?

Third, we actually showed a ton of diversity in our approach and creativity once we had the ball in the final third.  Yes, I know more than a few diagonal balls were floated toward Morgan/Wambach without great effect, but that was far from our only threat. We worked the ball cleverly to set up Heath’s early shot that nearly put us ahead:

 

Here we tried to pass it through their defense in the final third, a failed effort but definitely the right intent:

The team showed ingenuity and precision to get players in behind the defense down the right flank:

and the left:

Check out the patient build-up, passing, and movement that takes place here before Meghan Klingenberg receives the ball on the overlap down the left:

and here’s Klingenberg’s subsequent shot that nearly put the US ahead:

By the way, those attacking examples were all from the first half, and no I didn’t gif every single one, nor did I gif any of the numerous corners we earned. The team took a very balanced approach to attacking, varied its cadence to catch Colombia out, and showed good coordination punctuated by moments of individual skill.

Do I believe that Jill Ellis’s plan was perfect? No, and truthfully I would have done a lot of things differently.  Maybe the 4-4-2 formation is a little bit stale, and maybe it is risky to start two attack-minded players in Carli Lloyd and Lauren Holiday in central midfield.  But would replacing one of them with a defense-minded sitting midfielder, or even adding one in as a 3rd central midfielder, really have made a difference against Colombia’s effectively 6-player midfield?

The team set out very differently from what I would have pictured.  After the first game against Australia I had started brainstorming with friends about how we could change personnel to shore up midfield.  But against Colombia, the team created numerous chances without leaving itself exposed in the back, and these efforts were eventually rewarded with goals.

Abby Wambach

Prior to the 2014 World Cup, USMNT manager Jurgen Klinsmann came under fire for leaving out the Talismanic Landon Donovan from the squad.  He compared the situation to Kobe Bryant’s contract:

“This always happens in America. Kobe Bryant, for example — why does he get a two-year contract extension for $50 million? Because of what he is going to do in the next two years for the Lakers? Of course not. Of course not. He gets it because of what he has done before. It makes no sense.”

Jill Ellis finds herself the subject of criticism for the opposite reason – her reluctance to drop underperforming veteran Abby Wambach.

Has Wambach lived up to her own standards?  Absolutely not, and I’m sure she’d be the first to admit as much.  But to focus only on her shortcomings is to ignore her crucial contributions to the team.

Technique wise, she’s still got it.  This half-volley effort was only denied by goalkeeping heroics:


Now, check out Rapinoe’s ball to play in Alex Morgan and draw the first penalty / red card:

It’s a bit hard to make out, but when Wambach drops deep to support Rapinoe, Colombia’s #14 follows her, creating a huge pocket of space for Morgan to burst into and…well… you know the rest.

Now have a look at Morgan’s goal:

 

Wambach wins the initial header to keep the play alive. Then, as Morgan receives the ball, #14 on Colombia, who is initially goal-side of Johnston, glances toward Wambach, and her hesitation allows Johnston to gain a half-step on her.  Granted, Morgan took the selfish route and scored by herself, but she also had the easy option to play in Johnston, thanks to the space that Wambach helped create for her.  Even when Wambach is underperforming, she is always a goal threat.

I don’t think Wambach should get an indefinite pass.  I agreed with Klinsmann’s decision to drop Donovan.  But unlike Wambach, Donovan was never in the conversation of being the best striker in the world.  Sure, Wambach’s penalty miss was poor, but the fact that she chose not to take the second penalty – sacrificing her easy chance to tie Brazilian legend Marta’s record – shows her commitment to the cause.  I want to see Abby start knocking them in as much as anyone, but her role in the team goes well beyond poaching headers.  I don’t know if I would drop Wambach on current form, but I can completely understand why Ellis chooses not to.

“Win Convincingly”

So far, the US Women’s national team hasn’t conceded a goal since the 27th minute against Australia – over 333 minutes without conceding.  The team is consistently creating chances, and we haven’t really looked like losing… at all… this tournament.  Yet I keep hearing people saying that the way we’re winning isn’t “convincing”, implying that we’ll easily lose to a better team.  I think Abby Wambach’s words in the team huddle just before the second half against Colombia respond to this criticism as well as anything I could write:

“We all know we have another level right? It’s just a matter of time before we get that goal, stay patient!

Not a rallying cry to give 110% and push for the win, just a calm but emphatic reminder to stick the plan.  With or without the red card, Colombia were never going to be able to keep up the energetic high press for another 45 minutes, and the U.S. rightly trusted that if they continued to go about their business, quality would win out in the end.

En route to winning the 2014 men’s World Cup, Germany needed extra time to beat Algeria in the first knock-out round, and only avoided a penalty shootout by minutes.  They then went on to beat Brazil 7-1 in the semi-finals.  Runners-up Argentina also needed 118 minutes to find a breakthrough against Switzerland, and only found it through a moment of Messi-anic magnificence.

I’ll fully accept the ridicule coming my way if we get upset by China or trounced by Germany/France, but I really don’t see it.  At the highest level, you don’t set out to make statements with your performances.  That sort of conversation keeps the pundits in business, but it’s not the point.  Team USA is not in Canada right now to “convince” us of anything, they’re there to lift a trophy.  Stay. Patient.

 

(bonus gif of Klingenberg’s through-ball to Rapinoe with the outside of her foot to set up the second penalty… because damn it’s thing of beauty)

 

 

The Art of Kissing

I recently came across a fantastic piece in the new Washington and Lee student journal, the Stone, entitled The Game of Kissing.  The essay, in equal parts subtle wit and academic tone, uses game theory to model the exciting and harrowing experience of deciding whether or not to try to kiss someone.

The author models the decision to go in for a kiss or not as a Stag Hunt game, where each player wants to kiss the other, but neither player knows if the other will accept or reject their advances.  Both players receive their highest payoff when the kiss happens, but each receives their lowest payoff by attempting the kiss and being rejected.  The article presents the following initial payoff matrix:

“C” Stands for cooperate (kiss), and “D” stands for defect (don’t kiss).  The essay shows that while the top left square is socially optimal, the bottom right square is also a stable equilibrium – neither player can improve their payoff by moving unilaterally.  In other words, not kissing is “safe”, and neither player believes they can improve their payoff unless the other player changes decision too.

The essay progresses to add assumptions that make the prospect of going for the kiss better: romance, familiarity, seclusion – but no matter what the bottom right square always remains the “safe” option, a stable equilibrium.

Reading this essay, I was reminded of a passage I recently read in Milan Kundera’s The Art of the Novel, in which he describes the interaction between a man and woman in novelist Hermann Broch’s Sleepwalkers.

On Levin’s estate, a man and a woman meet-two melancholy, lonely people.  They like one another and secretly hope to join their lives together.  All they need is the chance to be alone for a moment and say so.  Finally one day they find themselves unobserved in a wood where they have come to gather mushrooms.  Ill at ease, they are silent, knowing that the moment is upon them and they must not let it slip by.  The silence has already lasted rather a long while when the woman suddenly, “involuntarily, reflexively,” starts to talk about mushrooms.  Then silence again, and the man casts about for a way to declare himself, but instead of speaking of love, “on some unexpected impulse” he too talks about mushrooms, powerless and desperate, for never, they know it, never will they speak of love.

Back at the house, the man tells himself that he did not declare his love because of the memory of his dead mistress, which he cannot betray.  But we know perfectly well: It is a false excuse he invokes to console himself.  Console himself? Yes. Because we can resign ourselves to losing a love for a reason.  We would never forgive ourselves for losing it for no reason at all. 

The stakes are a bit higher in Kundera’s description (talking about true love, not just a kiss) but the interaction itself is certainly reminiscent of the The Kissing Game.

I’ve dabbled in game theory in my academic career, at work, and in my free time.  I’m fascinated by it’s elegant simplifications of real life situations and its many practical applications.  I’m particularly intrigued by models that show why groups of people may make decisions that aren’t in the collective best interest such as the Stag Hunt and the Prisoner’s Dilemma.

Yet, human’s are not wholly rational beings – though we rely on rationality it doesn’t equip us to fully handle the nature of our being.  Our reason has limits.  Experiments with The Ultimatum Game show that people will often defy the predictions of our models.  We are hosts to numerous cognitive biases.  We are the product of a complex  and ill-understood interplay of thought and emotion.

As an economist and amateur game theorist myself it almost feels like sacrilege to admit this… But maybe our models and theories are just the product of a deep-seeded urge to systematize our own chaotic nature, to try to understand ourselves in terms that are simply incongruous with the reality of our existence.

Maybe it’s easier to accept the imperfect mathematical explanation for our perplexing moments, the tragedies of omission, than it is to admit that we simply spoke of mushrooms.

 

Unemployment: Playing with Numbers

A little while back, I came across this article published by Mark Perry, a contributor to the American Enterprise Institute.  The headline reads:  “Texas, the ‘great American job machine,’ is largely responsible for the +1.2M net US job increase since 2007“. 

The article doesn’t make any direct ideological claims, but was posted just three days after President Obama proudly touted figures illustrating America’s recovery from the great recession in the 2015 State of the Union Address.  I can’t know Perry’s intentions for certain, but a quick scan of the comments on the site gave a clear indication of what people (specifically, the sort of people who read AEI blogs) took away from it: Obama was claiming credit for the job-creating accomplishments of the conservative bastion of freedom that is the state of Texas. Some comments (including the Facebook post that made me aware of this article) credit Texas’ low taxes and lax regulatory environment for their job creation.

Digging a little deeper, I came across this response piece by Barry Ritholz in the Houston Chronicle, which argues that Perry stacked the deck by starting his analysis in December 2007, before the effects of the financial crisis. According to Ritholz, Texas was not hit as hard by financial crisis of 2008 as other states, and thus managed to lose fewer jobs during the recession.  Ritholz argues that Perry wrongfully attributes Texas’ huge share of 2007-2014 job growth to the oil and natural gas boom, and instead credits regulations in Texas that insulated the state from lending practices that contributed to widespread mortgage collapse.

This piqued my curiosity, so I decided to take a look at the data for myself. A quick note: I told myself I would try not to make any overtly ideological posts here, and I’m going to make an effort to adhere to that while discussing the data.

What AEI Claims: 

“It’s a pretty impressive story of how job creation in just one state – Texas – has made such a significant contribution to the 1.169 million net increase in total US employment (+1,444,290 Texas jobs minus the 275,290 non-Texas job loss) in the seven year period between the start of the Great Recession in December 2007 and December 2014. The other 49 states and the District of Columbia together employ about 275,000 fewer Americans than at the start of the recession seven years ago, while the Lone Star State has added more than 1.25 million payroll jobs and more than 190,000 non-payroll jobs (primarily self-employed and farm workers).”

So According to Perry, from December 2007 to December 2014, Texas gained 1.169 million jobs, and the rest of the nation lost 275k.  Perry used overall employment data that includes farm employment, but I used non-farm data from the Bureau of Labor statistics because I couldn’t find overall employment data going back to 2007.  Because we’re using different measures of employment, my numbers will look a little different, but I don’t think it changes the overall point.  (You can find the API calls I used to obtain the data, and SQL code I used to clean it in this Github Repository.

The first order of business was to recreate Perry’s findings using BLS data. From December 2007 to December 2014:

Texas: 1.23 million jobs added (12% increase)

Rest of nation: 493k jobs added (0.4% increase)

So using different measure of employment, the conclusion is still essentially the same: when you look at the data with 2007 as a baseline, Texas appears to dominate any job growth that occurred across that period.

But as Ritholtz points out, starting from December 2007 combines two different events: the financial crisis and the subsequent recovery.  The trough of the Great Recession, by most metrics, occurred around September of 2008.  In order to avoid capturing any seasonal effects, I start my analysis at December of 2008.  From December 2008-2014:

Texas: 1.18 million jobs added (11% increase)

Rest of the nation: 3.70 million jobs added (3% increase)

That’s quite a difference.  Texas still outpaces the rest of the nation, but the rest of the country created over 3 times as many jobs as Texas did.

Part of the reason is that in the additional year that Perry included, from December 2007 to December 2008, Texas actually created 52k jobs, while the rest of the nation lost 3.2 million jobs.  So Texas has done well to create jobs, but the employment picture after this initial loss of 3 million+ jobs doesn’t support Perry’s claim that Texas was almost entirely responsible for recent American job creation.

To Perry’s credit, he never explicitly claims to be looking at recovery and never directly states that he means to contradict Obama’s claims about recovery.  Still, and especially given the proximity of Perry’s article to the State of the Union address, it seems disingenuous to lump a period of heavy losses and a period of heavy gains all into one category, and call the overall effect “job creation.”  

It’s worth briefly discussing Ritholtz’ claim that Texas was spared the wrath of financial crisis by their strict regulations on mortgage lending, and not by their lax corporate regulatory and taxation policy.

The reason – surprisingly for a state that likes to think of itself as a model of free-market economics – are regulations enshrined in the Texas Constitution and other legislation. Texas is the only state that limits home-equity borrowing, capping total mortgage debt at 80 percent of a home’s fair market value. That helps prevent using one’s own house as a piggyback for engaging in reckless speculation, as we saw in the rest of the country in the mid-2000s.

This post article from 2010 explains the phenomenon in more detail.  Beyond the restriction on home-equity loans, homeowners in Texas were unable to use “cash-out” refinancing – increasing the total balance of their mortgage in exchange for short term cash – because of the constitutional cap on mortgage debt.  These restrictions, the author argues, prevented sub-prime borrowers from taking out exorbitant debt against the value of their homes, leaving them less vulnerable during the nationwide economic downturn.

On face, it may appear that Texas owes its resilience during the recession to these borrowing restrictions, but Texas also benefited from the fact that it never developed a large housing bubble in the first place.

On average, the home-resale prices of the 20 metro areas in the Case-Shiller Home Price Index peaked in 2006 after more than doubling since 2000. In Dallas, one of the 20 areas, they rose just 25 percent, gradually, and have barely declined.

Texas’ unique lending restrictions only applied to loans on existing mortgages, so it’s doubtful that they alone were enough to prevent a bubble from forming.

So it seems Perry and Ritholz each tell part of the real story. Ritholz is probably right that Texas home-owners have less unmanageable debt thanks to the state’s unique lending restrictions, which helped them weather the recession, but these alone can’t explain the lack of housing bubble in the first place.  Perry’s claim that Texas has outperformed the nation seems to hold up even when we look at post-recession numbers, though the difference is far smaller than he claims.

Let’s take a step back.  This map, based on the same BLS non-farm employment data, shows the percentage change in employment for each state between December 2008 and December 2014 – it cuts out the first year that AEI used.  Screen Shot 2015-02-03 at 11.38.37 PM

You may not see the point I want to make with this map, and that’s because I’m not really making one.  This patchwork map is a reflection of raw numbers, stripped of the narratives we may be tempted to weave around them.  I could mention the strength of Texas and North Dakota to talk about the Shale boom, while ignoring the counter-example of Wyoming.  I can take a slice of the country and show how in that region, blue states outperform red states or vice versa. I could single out the home states of presidential hopefuls and allege mismanagement or gubernatorial incompetence.

But the numbers don’t do any of that themselves, numbers don’t do anything.  There are many ways to manipulate statistics to tell your story, and I don’t mean to disparage anyone for doing it as it’s considered essential for both politicians and pundits.  Maybe it was wrong for Obama to claim credit for the strong jobs numbers and maybe it was equally wrong for the GOP to use weak job numbers as a stick to beat him for so many years.

Fortunately, as I don’t have a defined ideological readership to please, I don’t have to take a stance and boil a complex issue down to one and only one brand of policy.

Statistics don’t reveal truths, they only simplify portions of the truth. I personally believe we would all be better served if we made the effort to question numbers and dig deeper, even if those numbers align with narratives that we like.  Wait, that last sentence sounds a bit like an ideology… oops.

 

Github Repository

 

MLS’s Beautiful Game Theory

2014 was a huge year for US Soccer. We managed to escape the World Cup group-of-death at the expense of Portugal, with a squad of both veterans and bright young stars, a former World Cup winner in Jurgen Klinsmann at the helm, and without the talismanic if not a bit egomaniacal Landon Donovan anywhere near the USMNT setup.  The MLS playoffs featured some really high quality play, including, I’ll begrudgingly admit, that which ended the playoff run of my beloved DC United.

Then, on the last day of 2014, we learned the truth about Frank Lampard.

Long story short,the supposed marquee signing of a new MLS team, New York City FC turned out to actually be under contract by English Club Manchester City FC, owned by the same parent company. MLS, a league desperate to be taken seriously on the international stage, was treated as a plaything for a powerful European team.

Lampard was touted as the first signing of New York City Football Club, the new MLS that will begin playing in 2015.  NYCFC is owned by the same corporation as Premier League side Manchester City, and us fans were lead to believe that the 35 year old English veteran Lampard was loaned back to Manchester City by NYCFC for the start of the year. Well, a funny thing happened when Lampard started playing for City.  Beginning with a goal against the club Lampard had spent his entire career at, Chelsea FC, Lampard proved at his ripe old age that he still has plenty of ability and went on a run of scoring goals for fun.  Lampard proved to be an important player to City, so important that the Manchester club decided they would hang onto him for the remainder of the 2014-2015 season. We then learned that Lampard never really had a contract with the New York City expansion team, and was in fact signed to Manchester City on a permanent deal.  After NYCFC used Lampard’s image to promote the team and sell season tickets, it was revealed he was never their player at all.  Worse, since all MLS contracts are negotiated through the league and not the individual teams, MLS would likely have been aware of this situation, and may possibly have been content with an English Club treating their assets as a glorified farm system.

 

MLS commissioner Don Garber spoke on the issue on Sunday night in his typical uninformative fashion, claiming that NYCFC doesn’t operate as a farm team for Manchester City without providing any evidence to the contrary.

After this mess, US Soccer fans could use something to be positive about, and an empirical look at the state of the sport in the not-so-distant past gives us, in my opinion, plenty of reason to be positive.

In The Beautiful Game Theory, social scientist Ignacio Palacio-Huerta uses empirical data collected from soccer matches to discuss and test common social sciences and economic hypotheses.  One of his coolest insights relates to penalty shootouts, where he presents evidence showing that the best professional players in the world appear to use mixed-strategies in line with the “minimax theorem” when they decide where to kick the ball.

I’ll try to break it down in laymen’s terms: penalty shootouts work like what economists call a “zero-sum” game.  For each shot, either the shooter wins (by scoring) or the goalie wins (by stopping them from scoring).  Shooters usually have a strong side, where they can hit the ball with more power and accuracy, and a weaker side (the book discusses the possibility of shooting down the middle, but I’m not going to talk about it here for simplicity sake).

So say I’m a professional soccer player, and I’m right footed which means I can shoot better at the left side of the goal.  If I were to use a “pure strategy”, meaning I shoot at the left every time, the goalie would be able to guess which way I will shoot easily, and would therefore be able to save my shot pretty easily.  Instead, my optimal strategy would be to shoot left most of the time, but also shoot right pretty often, so that I play to my strengths without being predictable.  I also want each shot I take to be an “independent trial”, meaning I want to make the decision about where I shoot anew each time, without worrying about whether I shot to that side last time or not.

As a shooter, I want to pick a strategy where my probability of scoring is equal for both sides. An optimal strategy is one where I cannot improve on it by choosing to increase the frequency with which I shoot to one side. An optimal strategy – meaning the perfect breakdown of choosing left/right – is one where for the given strategy: p(R)=p(L) – the probability of scoring if I shoot left is the same as the probability of scoring if I shoot right. If this were not the case, if for instance, p(R)>p(L), this would not be an optimal mixed strategy, because it would make sense for me to shoot to the right more often.  This is called “equating payoffs.”

At least, that’s how economists would predict that a perfectly rational player would make this decision.  Economic models don’t always line up with the way living, breathing, human beings make these decisions in real life situations, but Palacios-Huerta used data from 9,017 penalty kicks taken from September 1995-June-2012 to test whether players actually act the way the perfectly rational hypothetical player would.  He found that the vast majority of players in the top leagues equated pay-offs, and that they passed the “runs test”, meaning they appeared to choose where to shoot independently each time.  In a rare victory for social scientists, theory matched up with real life behavior, because these top professionals chose optimal strategies when they stepped up to the spot.

More technical stuff

The study looked at whether the data could reject the null hypothesis that players would use a pure strategy. At the 95% confidence level, out of 40 players, they were able to reject the null hypothesis for only 2 players (interestingly, those 2 players were David Villa and Frank Lampard, the first two signings of New York City FC), meaning that the other 38 players chose strategies that were close enough to the theoretical predictions that, using the data, they could not conclude the other 38 players did not use pure strategies. I have some issues with the methodology, as Palacios-Huerta seems to treat the thing he’s trying to prove (that players use strategies in line with the minimax theorem) as his null hypothesis. The study also looked at the amount of “runs” that occurred for each player – where a player would shoot at the same spot multiple times in a row, and found that for almost all players, the amount of runs that occurred were consistent with the statistically likely outcome if players selected where to place their penalties independently.

 

What does this have to do with American soccer?  Well, researchers also did a similar test with 20 MLS players with data from the league.  Looking at the players in the top European Leagues, only 2 out of 40 players were shown not to use optimal mixed strategies when choosing where to shoot their penalty kicks (interestingly, one of these players was Lampard). With MLS, 10 out of 20 players,  half of the players that they looked at, used non-optimal strategies when they took penalties.  But that’s not even the worst of it, a 2009 survey asked MLS players where they like to place their PKs, and 44% of MLS players said that they would shoot the ball in the same spot EVERY TIME.  This is the equivalent of professional rock-paper-scissors players saying that their strategy is to “play scissors.”

The date of these studies isn’t specified, but they definitely date back to a bygone era in the history of MLS. This was before the arrival of former Premier League stars like Thierry Henry, Robbie Keane, Tim Cahill, and Obafemi Martins… before the return of Michael Bradley and Clint Dempsey to MLS… before players that graduated from MLS development programs like Perry Kitchen showed they can dominate experienced internationals like Rafa Marquez in midfield battle… before Deandre Yedlin shined against some of the best teams in the world and earned a dream move to Tottenham…before Jurgen Klinsmann instituted changes to the entire structure of youth soccer coaching in the US at all levels, similar to the reforms he pioneered years ago in Germany that may have been crucial to Die Mannschaft’s  2014 World Cup triumph.

Another study by Palacios-Huerta showed that players from the top leagues will pick optimal strategies even when playing a card game with the same payoffs as a penalty kick shootout (but with no direct resemblance to soccer), while players in lower leagues may not.  In other words, players in better leagues are better able to intuitively apply their understanding of the dynamics of penalty kicks, even in situations that look nothing like a penalty kick.

I would be willing to bet that if the preceding studies were conducted today, you’d find that players in MLS are much more competent at choosing where to place their penalty kicks, because the standard of play in the league, and consequently the “footballing brain” required to make it in MLS, has risen considerably.

The Lampard debacle has made it very difficult to take MLS seriously as a professional soccer league, but that shouldn’t overshadow the progress that the league has made.  The analysis of penalty kicks from the past shows that in some regards, the European elites were right to scoff at us.  In spite of setbacks like the Lampard situation and Garber’s tendency to kowtow to anyone with even a moderate amount of influence, things are getting better and its happening quickly.  The more prestigious leagues may be right to think of MLS as a joke for now, but I have a feeling that in a few years time when the gains of improved development structures have been realized, the European has-beens looking to MLS for a cushy retirement in a non-competitive league won’t find us so funny.

 

Glenn Beck’s case for regulation

The views expressed below are my own, and in no way reflect the views of the Federal Communications Commission or any other entity – nor do they reflect my actions or motivations when working in a professional capacity for the FCC.

I want to make it doubly clear that I’m not advocating for or against the Comcast-Time Warner Cable merger, nor am I criticizing any of the parties that commented or filed related to this proceeding.

At the end of October, representatives of The Blaze, a cable channel owned by conservative pundit Glenn Beck spoke with the FCC in an ex parte meeting about the proposed merger between Comcast and Time Warner Cable  (an ex parte meeting where not all relevant parties are present, and it requires the speaking party to file a notice of what was said in the meeting).

You can find TheBlaze’s comments at the meeting here.  TheBlaze is a pretty new channel, they mainly function through subscriptions to their online video content. They’ve also been picked up by some TV providers like Dish.  However they haven’t been picked up by big cable TV players like Comcast and Time Warner, and they claim this is because the big boys don’t want to play ball and allow them to keep selling subscriptions to TheBlazeTV.com.  In their ex parte, TheBlaze writes of their efforts get carried by the large cable TV providers:

However, the largest MVPDs, including the Applicants, have cited the availability of TheBlazeTV.com as an obstacle or adverse factor to gaining MVPD carriage and two of the applicants (Time Warner Cable and Charter Communications) have gone so far as to suggest TheBlaze discontinue TheBlazeTV.com nationwide in order to be considered for carriage.

Basically, they’re saying that Comcast and Time Warner are shutting down TheBlaze’s ability to reach their customers through other avenues (like the internet), using that as a condition of carrying their channel’s content.

TheBlaze continued on to claim that Comcast discriminates in favor of vertically-integrated channels – channels under the NBC umbrella that are tied to Comcast – against independent networks.  To solve this, TheBlaze recommends an “arbitration regime” to govern the way TV providers and content creators/channels negotiate programming agreements:

TheBlaze further explained that the Commission’s existing program carriage regime has been unsuccessful in eliminating discrimination from vertically integrated MVPDs. In response to questions asked by Commission staff, TheBlaze offered its suggestions about how the basic framework of an arbitration condition could be structured as a means to address carriage discrimination claims by unaffiliated independent networks. TheBlaze noted that arbitration would compel the Applicants to be transparent and even-handed in making programming decisions; and, with limited discovery, arbitration would showcase the less favorable treatment of independent networks compared to Comcast affiliated networks with respect to the ease with which they are permitted to rebrand, expectations with respect to program ratings, breadth and scope of MFNs and ADMs, and demands that Comcast must “make money” on the distribution of independent content.

So there’s lots of legalese in there, but essentially TheBlaze wants arbitrators – people hired by the government – to proceed over these negotiations and ensure that they’re fair. They want arbitration to make sure that MVPDs (TV providers) like Comcast treat independent networks the same way they treat the programmers that they own.

I’m not going to comment on whether or not arbitration is a good idea, but I do feel it worth noting that TheBlaze is owned by Glenn Beck.  That’s the same Glenn Beck of Fox News, the one who thinks pretty much all regulation including environmental, labor, and even telecommunications reform is wrong.  Yet here, Beck’s company puts forth what at least on face appears to be a very sensible case for why the government should intervene in the free market.

Generally, negotiations between networks and TV Providers are almost entirely unregulated – a nearly pure free-market.  That’s the kind of free market that pundits of Beck’s ilk tend to deify.  I don’t want to directly allege hypocrisy here, Beck has repeatedly argued that the Comcast – Time Warner Cable merger is a special case where the government should get involved, possibly because he feels things are just too out of hand.

Instead, I would ask Beck to consider if regulation is appropriate outside of this one narrow case.  Beck’s company does not feel it’s right for Comcast to strong-arm them into stopping their internet video subscription service, yet he has been an outspoken critic of net neutrality.  If it is wrong for Comcast to do that, wouldn’t it also be problematic if Comcast could just slow down traffic to TheBlaze for all of its subscribers?

We can venture beyond telecom too – so Beck claims the cozy financial relationship between the Obama Administration and proponents of the merger is a problem; how does he feel about the lobbying efforts of the oil, coal, gun, alcohol, tobacco, banking, and defense industries?

Again, without commenting on the specific arguments of TheBlaze, I at least can appreciate their general reasoning: that the government should step in when serious market failures occur.  Beck offers a nuanced approach, a stark departure from the “regulation=bad, private enterprise=good” formula that’s served as a blueprint for Beck and other conservative pundits.  I only wish I could see that sort of nuance in an area where Beck doesn’t hold financial interest.  And I would gladly buy a subscription to TheBlaze just to see how his viewers feel about it.