Friday, October 21, 2011

Time Series, Causality and Renting a Congressman

This morning I was reading an article, in a national (US) news magazine, that discussed energy policy decisions. It mentioned executives of companies in various energy-related industries contributing to the coffers of various congressmen (from both parties), and it mentioned their votes on key policy issues. The implication was clear: the votes were being bought, or at least influenced, by interested parties.

I understand why writers do this: it spices up the articles (a hint of corruption) without making any explicit charges that cannot be backed up with hard evidence; and it appeals to voters looking for confirmation of their prior belief that congressmen are crooks. I tend to view our elected representatives as by and large venal to some extent myself. The last part of the title of this post is motivated by a quote from Simon Cameron (Abraham Lincoln's first Secretary of War): "An honest politician is one who, when he is bought, will stay bought." As you can tell from the title, I am not sanguine about finding honest politicians.

As an OR professional, though, I understand the flaw in the argument (if we can characterize what is really innuendo as an "argument"). It relates in part to confusing correlation with causation and in part with confusing the direction of causation. Let's say that our fearless reporter accurately reports that Representative A votes for subsidies for domestic production of buggy whips, and Ms. B, CEO of a large manufacturer of buggy whips, donates regularly and/or generously to Rep. A's election campaigns. With minimal effort choosing words, our reporter can make this sound as if A voted for subsidies because B (and perhaps others of a similar mind) paid him off. That is indeed one possibility.

Another possibility is that A voted for subsidies first and then B donated, recognizing A (from his vote) as a friend of the buggy whip industry. There's causation, but in the opposite direction from what the reporter implied, and nothing venal. The nature of political contributions is that you usually contribute to candidates with whom you agree. (I say usually because lobbyists sometimes contribute to both sides, hoping the winner will remember their contribution to her and not to her opponent.)

Yet another possibility is that B contributed to A first, either anticipating a pro-buggy whip platform or for reasons unrelated to industrial policy, and A favors subsidizing domestic production for sincerely held (if possibly misguided) reasons. This is a case of trying to infer causation from what may be mere correlation.

How can we tell whether A's vote is in fact being purchased? Anyone who has done much with statistics recognizes how hard it is to establish causality, especially in the absence of a designed experiment with an appropriate control group. We could try tracking A's votes over time, matching them with B's contributions (or the contributions of B and other pro-subsidy individuals or groups), and look for a positive cross-correlation with lag 1 or higher (so that swings in donations lead swings in votes). A positive cross-correlation would still not be solid proof of vote-buying, though, and might also lack "power" as a test of vote-buying:  if A fits Cameron's definition of an honest politician, and consistently votes pro-buggy whip because he is taking graft, there will be no variance in his votes and therefore no cross-correlation.

This leaves me in the unsatisfying position of not knowing whether or not A is a crook. There have been enough US congressmen convicted of malfeasance to convince me that the proportion of occupants of Capitol Hill who are crooks is not zero.  Still, there is also a well known aphorism (of uncertain provenance) that might apply: "Never ascribe to malice that which is adequately explained by incompetence." We have ample evidence that incompetence is not in short supply on the Hill.

6 comments:

  1. Great. If OR folks take lead when it comes to fact-driven decision making, (imho)then, we should be writing more of these. Especially in these times.


    "We have ample evidence that incompetence is not in short supply on the Hill."

    Looking at their 'prior': Competent enough to work their way into a fairly exclusive club - where so many other competent and smart people have tried and failed. Can they suddenly turn incompetent? Are the competencies for 'getting elected repeatedly' and 'fulfilling public duties' mutually exclusive?

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  2. @Shiva: Regarding competences, I think you are close on your last sentence. The skill set for getting elected and the skill set for making decisions may not be completely disjoint, but they may not overlap as much as one might hope.

    On the other hand, perhaps I'm off-base about competence. It's possible that this is simply the poster child for the agency dilemma (https://secure.wikimedia.org/wikipedia/en/wiki/Principal%E2%80%93agent_problem): we "hire" our leaders to do what's best for the country, they are capable of making good decisions, but they opt to do what's best for themselves.

    If somebody decided to write a sequel to Kennedy's "Portraits in Courage", I wonder if they would find any recent material for additional chapters?

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  3. There is also the issue of what people will pay for is what you concentrate on. Say you come to politics interested equally in helping the homeless and the trade unions. If the unions give you more money its natural that you will gradually spend less time on the homeless.

    "Legislators come to Washington passionate about several issues. Quickly, though, they come to depend on the economy of influence for help in advancing an agenda. They need the policy expertise, connections, public-relations machine, and all the rest that lobbyists can offer. Since this legislative subsidy is not uniformly available, the people’s representatives find themselves devoting more of their time to those aspects of their agenda that moneyed interests also support. No one is bribed, but the political process is corrupted" http://thinkprogress.org/yglesias/2011/10/07/339246/republic-lost/

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  4. @red dave: Excellent point. So we have a positive (though not necessarily desirable) feedback loop: concentrations of wealth draw congressional action, and those actions typically facilitate further gains in wealth for those people.

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  5. a comment related to this discussion from 'frekanomics'.

    http://www.freakonomics.com/2011/11/10/why-does-the-worldwide-financial-crisis-fester-so/

    "...much of the trouble lies in how politicians’ incentives are badly misaligned: they are rewarded for short-term, self-interested activities (raising money, getting re-elected, coming down on the right side of short-term public opinion) while the goals the public really wants accomplished are long-term, public-interest works (which have almost nothing to do with raising money, electing politicians, or getting a good headline).."

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  6. typo: first line should read "freakonomics" :) in the previous comment.

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