Nate Silver, Baseball and Political Statistician Extraordinaire; Umair Haque and Rethinking Economic Growth

This is too cool…in Umair Haque’s inspiring post “A Manifesto for the Next Industrial Revolution,” Umair Haque calls on us to create value in terms of increasing human welfare, to “organize” things like the world’s hunger, energy, and thirst. Well, as a start, Nate Silver has “organized” baseball forecasting, reinventing it and refining it to a degree using innovative algorithms drawing on databases of statistics…similar ideas and techniques will no doubt be used to tackle more worldly problem sets in the future…

From Umair Haque:

The next industrial revolution begins here. What happens when we think of using new DNA to reorganize structurally inefficient industries? A blueprint for the next industrial revolution emerges. Here’s what it looks like.

Organize the world’s hunger.
Organize the world’s energy.
Organize the world’s thirst.
Organize the world’s health.
Organize the world’s freedom.
Organize the world’s finance.
Organize the world’s education.

Newsweek: Making His Pitches

Silver, 30, is already celebrated among ball fans for inventing something called PECOTA. Developed while the University of Chicago econ alum slogged through a post-collegiate consulting gig—”I’m used to not sleeping,” he tells NEWSWEEK—PECOTA is now recognized as the most accurate system for forecasting how athletes and teams will perform in the future (down to the number of singles). In 2007, Silver’s algorithm enraged at least half of Chicago when it said the White Sox—2005 champs—would post a 72–90 record. Turned out PECOTA was exactly right. For laypeople, the leap from the national pastime to national politics might seem like a stretch. But not for Silver (who posted his first political item on Daily Kos in October). “Baseball and politics are data-driven,” he’s written. “But a lot of the time, that data might be used badly. In baseball, that may mean looking at a statistic like batting average when things like on-base percentage and slugging percentage are far more correlated with winning ballgames. In politics, that might mean cherry-picking a certain polling result.” In other words, different sport—same skill set.

Chicago Reader: The Algorithm Method

The father of PECOTA is Chicago’s Nate Silver. “The idea behind the system,” he explains by e-mail, “is really just to use baseball history to inform our projections in the form of comparable players. So for Mark Buehrle, we might look at other durable left-handed pitchers like Jim Kaat, and for Alfonso Soriano, we might look at speed/power outfielders who struck out a lot, like Joe Carter. By seeing how the comparable pitchers performed, we can have a way to predict future performance that is both intuitive and accurate.”

And it’s constantly being tweaked. “This year,” Silver says, “we started looking at things like platoon splits in more detail, and first/second half splits—if a guy performs better after the All-Star break, that’s a good sign for the next season. But there’s no such thing as a ‘perfect’ forecasting system.”

More from Umair Haque:

The invisible hand is crippled. What’s going on here? Wasn’t the invisible hand supposed to raise everyone into prosperity and well-being?

Yes – but it’s not. The world is getting phenomenally richer – but the costs of that wealth seem to be endemic poverty for vast swathes of the world’s population, the poisoning of the water we drink, the pollution of the air we breathe, and the fraying of the social and cultural fabric that binds us together.

We’re richer, but that wealth doesn’t reflect durable, authentic economic value – which is hitting fast diminishing returns. The growth that we’re pursuing is neither sustainable – nor is it, in many ways, real growth at all. Boardrooms from finance to autos to energy to pharma to fashion have learned that the hard way.

….

Organize something. Why does Google insist that it’s goal is to “organize the world’s information”? Because it’s figured out one of the deepest secrets hidden at the heart of 21st century economics: markets, networks, and communities can organize economic activities radically more efficiently than firms.

How do we begin reorganizing the industrial economy? By using markets, networks, and communities to alter the way resources are managed: to weave a fabric of incentives for sustainable growth and authentic value creation into the economy – a new economic fabric that’s meaningful to people.

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