Halo Alert

5 November 2008 at 2:41 pm 5 comments

| Peter Klein |

Phil Rosenzweig’s excellent Halo Effect takes to task the typical “guru” book in business, one that picks a few successful companies, describes their business practices, and attributes success to those practies, without any attempt to design a “controlled experiment.” As I wrote last year:

The most common problems are sampling on the dependent variable (i.e., choosing a sample of high-performing companies and explaining what their managers did, ignoring selection bias) and using independent variables based purely on respondents’ ex post subjective assessments of strategy, corporate culture, leadership, and other “soft” characteristics. The latter is the “Halo Effect” of the book’s title. When a company’s financial or operating performance is strong, managers, consultants, journalists, and management professors tend to rate strategy, culture, and leadership highly, while rating the same strategies, cultures, and leadership poorly when a company’s performance is weak. It’s as if the authors of “guru” books have never taken a first-year graduate course on empirical research design. Or, as Rosenzweig puts it (p. 128): “None of these studies is likely to win a blue ribbon at your local high school science fair.” Ouch.

Look for a series of Halo-style analyses of the Presidential contest. Today’s NY Times, for example, contains a lengthy profile of the Obama campaign, “Near-Flawless Run Is Credited in Victory,” which recapitulates the Obama campaign’s hodge-podge of tactics, some good and some bad, without trying to isolate and identify the effects of particular tactics. The writers note that Obama’s chief strategists, David Axelrod and David Plouffe, have never before been involved with a successful campaign, which right away makes you wonder how “flawless” their strategy could have been. Still, the Times describes almost everything the campaign did as exactly right. Had Obama lost, no doubt the same pundits would be calling the same hodge-podge of tactics an obvious failure, placing the blaime on Alexrod and Plouffe and praising the McCain campaign’s own strategy and tactics. Post hoc, ergo propter hoc!

Entry filed under: - Klein -, Methods/Methodology/Theory of Science, Public Policy / Political Economy.

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5 Comments Add your own

  • 1. Rafe  |  5 November 2008 at 10:59 pm

    Was it Napoleon who asked of prospective generals “Is he lucky?”.

    How lucky could you be to get involved in pushing bad loans a few years ago and then win the presidency on the back of the ensuing debacle?

  • 2. Cliff Grammich  |  6 November 2008 at 8:06 am

    Rafe, I agree Obama is lucky (and add he is very good at politicking). But if you want examples that might actually affect ultimate voter choice (not saying yours shouldn’t!) then I’d go back to Obama’s luck in running against Alan Keyes to get to the Senate or even to Hillary Clinton’s decision not to seek office (or, more to the point, a presidential campaign launching pad) in her native (and Obama’s home) state. I’d then carry that through with many other examples to an Election Night gathering in Chicago, in early November, under clear skies, with temps in the 60s. (We don’t get early November weather like that here very often.) Who was it that first said that those who don’t need any luck get all the luck? Regardless, I’ve told my wife many times that I don’t understand why Obama, who reportedly is a good poker player, doesn’t spend all his time in Vegas.

    Peter, I think you have a slight misstatement above. Axelrod and Plouffe have been involved in many successful campaigns. They hadn’t been involved in any successful presidential campaigns, but they also haven’t been involved in many such campaigns. I don’t think either of them risked becoming any time soon the next Bob Shrum (“the most sought-after consultant in the Democratic Party,” according to the Atlantic–even if he is zero-for-eight in presidential elections).

    But, Peter, I agree with your larger point, and add that perhaps campaign analyses lend themselves more than most other popular analyses to post hoc, ergo propter hoc reasoning. Some of the analyses I saw on fivethirtyeight.com (which I still recommend for those who, as I do, follow this stuff far more than they should) throughout the campaign reminded me of the old gibe that an economist is somebody who can tell you tomorrow why the theories he had yesterday about what would happen today were wrong. Then there are the claims about how “narrow” presidential elections are in “modern” times (i.e., post-1984, the year I had my first [legal] beer, making me feel like a dinosaur, but I digress). In fact, I even started writing a comment yesterday wondering if “modern” presidential elections, which have all been decided by 8.5 percent of the vote or less, paralleled markets with two dominant competitors and firms and consumers having nearly perfect information about each other thanks to the Internet and constant polling. Alas, I then remembered presidential elections from 1876 through 1896 were all decided by similarly small margins and had another great theory destroyed by reality. Unless there was more exchange of information between candidates and voters over pickel or beer barrels of a century and a quarter ago than I realize . . .

  • 3. Peter Klein  |  6 November 2008 at 9:00 am

    Cliff, thanks for the correction. The Times writes that Axelrod and Plouffe “had never been on a team that had won a presidential nomination, much less a general election.” I should have been more precise.

    As for the duopoly model, let me quote from our greatest wrestler-politician, Jesse Ventura, on the two-party system:

    “In pro wrestling, out in front of the people, we make it look like we all hate each other and want to beat the crap out of each other, and that’s how we get your money, [and get you to] come down and buy tickets. They’re the same thing. Out in front of the public and the cameras, they hate each other, are going to beat the crap out of each other, but behind the scenes they’re all going to dinner, cutting deals. And [they’re] doing what we did, too — laughing all the way to the bank. And that to me is what you have today, in today’s political world, with these two parties.”

  • 4. Dick Langlois  |  6 November 2008 at 10:16 am

    But McCain evidently understands the halo effect:

    “Finger-pointing at the end of a losing campaign is traditional and to a large degree predictable, as Mr. McCain himself acknowledged in a prescient interview in July.

    “’Every book I’ve read about a campaign is that the one that won, it was a perfect and beautifully run campaign with geniuses running it and incredible messaging, etcetera,’ Mr. McCain said then. ‘And always the one that lost, “Oh, completely screwed up, too much infighting, bad people, etcetera.” So if I win, I believe that historians will say, ‘Way to go, he fine-tuned that campaign, and he got the right people in the right place and as the campaign grew, he gave them more responsibility.” If I lose, people will say, “‘That campaign, always in disarray.”’ ”

  • 5. Cliff Grammich  |  6 November 2008 at 11:39 am

    Peter–that’s why he’s earned the name Jesse The Mind Ventura!

    Dick–winners write the hsitories, no?

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