A New Trend in Job Hiring? Hiring Absent Resumes (Blind Hiring)

Some companies have been experimenting on hiring or acquiring employees by doing away with credentials (social signaling) to focus instead on testing for talent through actual work. 

From the Wall Street Journal’s The Boss Doesn’t Want Your Résumé (hat tip Econolog) 

Compose Inc. asks a lot of job applicants. Anyone who wants to be hired at the San Mateo, Calif., cloud-storage firm must write a short story about data, spend a day working on a mock project and complete an assignment. 

There is one thing the company doesn't ask for: a résumé. 

Compose is among a handful of companies trying to judge potential hires by their abilities, not their résumés. So-called "blind hiring" redacts information like a person's name or alma mater, so that hiring managers form opinions based only on that person's work. In other cases, companies invite job candidates to perform a challenge--writing a software program, say--and bring the top performers in for interviews or, eventually, job offers. 

Bosses say blind hiring reveals true talents and results in more diverse hires. And the notion that career success could stem from what you know, and not who you know, is a tantalizing one. But it can be tough to conceal a person's identity for long. 

Kurt Mackey, Compose's chief executive, realized his managers tended to pick hires based on whom they connected with personally, or those with name-brand employers like Google Inc. on their résumés--factors that had little bearing on job performance, he says. 

Will this innovative human resource management become a trend?

Video: Humor: If I Don't Post about It Online, Did It Really Happen? (Why People Overshare on Social Media)

This video is a spoof on why people tend to overshare in social media.  

Hat Tip Austrian Economist Bob Murphy, who contributed to the story.

Quote of the Day: Standing Up Against Prevailing Beliefs

Would you rather be an honorable person perceived to be a fraudster, or a fraudster mistaken for an honorable person? The answer can help you understand why otherwise good people do devious things to avoid standing up against prevailing beliefs.

This is from Black Swan author Nassim Nicolas Taleb at Facebook

Quote of the Day: The Illusions of Pundits

People who spend their time, earn their living, studying a particular topic produce poorer predictions than dart-throwing monkeys who would have distributed their choices evenly over the options. Even in the region they knew best, experts were not significantly better than non-specialists.

Those who know more forecast very slightly better than those who know less. But those with the most knowledge are often less reliable. The reason is that the person who acquires more knowledge develops an enhanced illusion of her skill and becomes unrealistically overconfident. “We reach the point of diminishing marginal predictive returns for knowledge disconcertingly quick,” Tetlock writes. (Philip E. Tetlock, University of Pennsylvania in 2005 book Expert Political Judgment: How Good is It? How Can We Know?—Prudent Investor) “In this age of academic hyperspecialization, there is no reason for supposing that contributors to top journals—distinguished political scientists, area study specialists, economists, and so on—are better than journalists or attentive readers of the The New York Times in ‘reading’ emerging situations”. The more famous of the forecaster, Tetlock discovered, the more flamboyant the forecasts. “Experts in demand,” he writes, “were more confident than their colleagues who eked out existences far from the limelight.”

The above quote is from 2002 Nobel laureate psychologist and professor Daniel Kahneman in his insightful book Thinking, Fast and Slow p.219

There are many reasons not to trust pundits, aside from overconfidence, which essentially oversimplifies human action.

I believe that the substantial chunk of “expert errors” emerge from the influences of conflict-of-interest relations, particularly the principal-agent problem, where “experts” tend to promote the interests of employers, sponsors, donors, grant providers and or even political agents (perhaps through implicit ambition to be part of the political institution) whom are sources of the self-interests of such pundits.

Forecasting inaccuracies may also be linked to the rigid application of ideology and or on the overreliance on math models (scientism).

Add to this the desperate desire by “experts” to attain social acceptance via social signaling.  Such would include making extreme (media attracting) projections or providing the veneer of expertise on what truly is about populism—forecasting based on what is popular, or as I previously wrote 

For many, thus, expertise signify more as social signaling (posturing or seeking social acceptance) and or “telling people what they want to hear” but predicated on certain technically based paradigms which produces an aura of supposed superiority rather than representative of the true domain knowledge.

Dr. Kahneman suggests that to determine “true expertise” from merely displays of the “illusions of validity”, one should identify conditions where pundits have excelled in “an environment that is sufficiently regular to be predictable” and from their having “to learn these regularities through prolonged practice” (p 240). In short, in an unpredictable world, expert opinion should be less trusted.

However by simply associating expertise with “regularity” and “prolonged practice” seems to contradict logically his earlier critique of pattern seeking behavior (which is about the human psychological propensity to seek regularity or constancy through patterns while at the same time underestimating the role of randomness). The nuance will be on the marginal efforts applied by practitioners via  “prolonged practice” in dealing with such regularities. 

The point is despite being able to minimize the influences of “expert or non-expert” intuition on decision making that may result to lesser degree of judgmental errors, behavioral economics/finance will not lead to omniscience or come close to solving the knowledge problem: a complex society will always be subject to irregularities and unpredictability from the dynamic and intricate feedback mechanism of human action and of environmental changes. Dr. Kahneman acknowledges this: "Errors of prediction are inevitable, because the world is unpredictable" (p. 220)

Nevertheless the best way to acquire “expertise” is primarily through investing in oneself

Mark Twain on Public Opinion: As a Rule We Do Not Think, We Only Imitate

Samuel Langhorne Clemens, a novelist popularly known with his pen name Mark Twain (1835-1910), sees public opinion to be mostly social signaling or about attaining social conformity or "corn-pone opinions", rather than independent thinking.

A longish excerpt from Mr. Twain (at the LewRockwell.com) [bold mine]

Our table manners, and company manners, and street manners change from time to time, but the changes are not reasoned out; we merely notice and conform. We are creatures of outside influences; as a rule we do not think, we only imitate. We cannot invent standards that will stick; what we mistake for standards are only fashions, and perishable. We may continue to admire them, but we drop the use of them. We notice this in literature. Shakespeare is a standard, and fifty years ago we used to write tragedies which we couldn't tell from – from somebody else's; but we don't do it any more, now. Our prose standard, three quarters of a century ago, was ornate and diffuse; some authority or other changed it in the direction of compactness and simplicity, and conformity followed, without argument. The historical novel starts up suddenly, and sweeps the land. Everybody writes one, and the nation is glad. We had historical novels before; but nobody read them, and the rest of us conformed – without reasoning it out. We are conforming in the other way, now, because it is another case of everybody.

The outside influences are always pouring in upon us, and we are always obeying their orders and accepting their verdicts. The Smiths like the new play; the Joneses go to see it, and they copy the Smith verdict. Morals, religions, politics, get their following from surrounding influences and atmospheres, almost entirely; not from study, not from thinking. A man must and will have his own approval first of all, in each and every moment and circumstance of his life – even if he must repent of a self-approved act the moment after its commission, in order to get his self-approval again: but, speaking in general terms, a man's self-approval in the large concerns of life has its source in the approval of the peoples about him, and not in a searching personal examination of the matter. Mohammedans are Mohammedans because they are born and reared among that sect, not because they have thought it out and can furnish sound reasons for being Mohammedans; we know why Catholics are Catholics; why Presbyterians are Presbyterians; why Baptists are Baptists; why Mormons are Mormons; why thieves are thieves; why monarchists are monarchists; why Republicans are Republicans and Democrats, Democrats. We know it is a matter of association and sympathy, not reasoning and examination; that hardly a man in the world has an opinion upon morals, politics, or religion which he got otherwise than through his associations and sympathies. Broadly speaking, there are none but corn-pone opinions. And broadly speaking, corn-pone stands for self-approval. Self-approval is acquired mainly from the approval of other people. The result is conformity. Sometimes conformity has a sordid business interest – the bread-and-butter interest – but not in most cases, I think. I think that in the majority of cases it is unconscious and not calculated; that it is born of the human being's natural yearning to stand well with his fellows and have their inspiring approval and praise – a yearning which is commonly so strong and so insistent that it cannot be effectually resisted, and must have its way.

Read the rest here 

Bottom line: Without independent-critical thinking, we become subject to the mind manipulation-control ruse or easily succumb to indoctrination (brainwashing) schemes employed by various vested interest groups via populism. Think collectivism, statism, nationalism, demand based economic policies, climate change, and more...

Tattoos and Promiscuity

Sporting tattoos and or body piercing has mostly been about social signaling.

Yet many people fail to realize that tattoos increases the odds of not finding work.

A study further says that having tattoos may be about signaling “promiscuity”.

People with tattoos and body piercings have sex at younger ages, have sex more often, have more oral sex, and are far less likely to be religious.

Read the excerpt of the study here from the Businessinsider.

It isn’t my predilection to do stereotyping, as I believe that individuals act differently for different goals. Instead of promiscuity, I think that many have been impelled by either curiosity or peer pressure or both (which also signifies social signaling). But that’s just a guess.

The reason for this post is to remind people, especially the youth, of the social risks of having tattoos. What may seem as fun (or even aesthetics) today could be a curse tomorrow.

Placebo Effects of Earnings Drives Stock Prices

Here is an excerpt to my note to a special client

Corporate "Fundamentals" serve as placebo to most of the momentum chasers. People look for psychological refuge mostly on what is popular rather than what really works.

A sample of my previous argument in this link.

It is very important to understand that since half of every transactions made by everyone in the marketplace have been based on money or credit—money financed by a financial intermediary that will be paid for with future money or income of the debtor—then policies that tampers with money and interest rates (price of time) affects practically ALL economic and financial activities.

But the impact will not be the same for everyone. Inflationist policies eventually work through a spillover or a trickle down effect.

The first beneficiaries are the wards of the state, the state itself, and the industries or sectors connected to or targeted by the state.

Those affiliated to the first beneficiaries represents as the secondary layer of the inflation multiplier and so on. This is the Cantillon Effect on Money as earlier discussed here

This also extrapolates that people’s incentives, through value scales and time preferences channels, will change in response to these policies. Again the changes will differ from individual to individual.

For instance, today’s negative real rates regime have been prompting many banks to call on me (weekly) to offer credit, which is evidently an offshoot to the current policies which encourages banks to profit from the yield curve through maturity transformation (loans or spread arbitrages) activities.

Those who don’t understand the nature of business cycles may be tempted to add leverage which may induce them to engage in extravagant spending.

If many respond to such policies by taking up loads of debt, then the growth in credit may become systemic in that it reaches levels that may not be adequately financed by aggregate debtor’s income, (perhaps to be pricked by higher interest rates) then the balance sheets of creditor institutions have reached bubble conditions that is bound to burst.

Yet in order to delay the day of reckoning requires sustained credit growth which will likely be facilitated through central banking policies. And this is why central banks exists--to provide backstop to the banking system and to provide finance to the state.

In effect, a financial system that thrives on bubble policies will require sustained credit injections. So many of the company’s business models may transition towards a Hyman Minsky’s Ponzi finance paradigm that only worsens or exacerbate the unsustainable bubble conditions. Remember major US investment banks vanished in 2008.

And there is the social signaling effect. Policies that promote consumption fosters the Keeping up with the Jones’ mentality that tries to lift one’s relative social standings through accumulation of positional material goods. These behavioral changes are partly conditioned, but mainly fueled by monetary policies, promotes what is known as 'consumerism'.

Thus, the subsequent effect of inflationist policies has been to reconfigure social and economic activities through people's incentives.

Consumption, savings and investment patterns, or the effective allocations of resources, has substantially been altered as compared to the non-existence of such policies. The policy induced distortion of the economic coordination process eventually leads to malinvestments and to an eventual discoordination.

Therefore sales, earnings, operating costs, investments, or leverage (gearing) or what in finance nomenclature known as ‘corporate fundamentals’ will be substantially affected, but again on varying degrees.

Of course every markets have individual characteristics too. They are shaped by idiosyncratic culture, unique legal framework, distinct political institutions, individual tax and regulatory regimes, varying depth of the market economy and many many many other variables.

This also means that the earnings principle is NOT a one-size-fits all dynamic. The earnings of the corporations in the US can’t be seen in the same lens as the from earnings of the companies listed on the Philippine Stock Exchange, where many of the latter’s companies have been shielded from competitions or are de facto political concessions. It is important to note that the business environment in the Philippines has been vastly more unfriendly and significantly less competitive than the US, principally due to politically related factors.

The bottom line is that the mainstream’s mathematical or financial construct of earnings DOES NOT accurately describe how policies shape or affect them. That said, earnings hardly will function as a reliable metric for the ascertainment of stock values.

So like the Heisenberg uncertainty principle, the entrenched orthodox belief in earnings is like trying to pin down an elusive target that never really is, or signifies as vain attempts to get hold of the Holy Grail--especially when markets have been vastly distorted or artificially boosted by rampant interventionism and inflationism. This is based more on faith or groupthink than of functionality.

Effects must not be read as the cause.

Quote of the Day: Why Intellectuals are Predisposed to Socialism

Intellectuals who consider inequalities in wealth evidence of injustice often seek political remedies. These take the form of legislation and, more often, regulation. In the process, of course, they are able to portray themselves as heroic opponents of injustice. If they have sufficient support, they are also able to acquire significant power, wealth and status. We know from experience, however, that these intellectuals rarely consider their own wealth evidence of injustice.

That’s from Patrick Cox at the Daily Reckoning. In the above passage, substitute intellectuals with politicians, we get the same outcome.

Cartoon (s) of the Day: What Tattoos Say About You

Tattoos represent a form of social signaling.

The graphics below from cracked.com attempt to explain them (hat tip Prof Bryan Caplan)

Mega-Success, Downfall and Sentimentalism

Libertarian columnist Robert Ringer writes,

Seems like we’ve been here before … many, many times. Whitney Houston’s tragic death is the latest in a long string of drug- and alcohol-related celebrity deaths, going back to Jimi Hendrix and Janis Joplin in 1970, Jim Morrison in 1971, Elvis in 1977, Andy Gibb and John Belushi in the eighties, and, of course, Michael Jackson in 2009. And these are just a few of the names that come quickly to mind.

When a show-business icon dies prematurely, we tend to focus on his/her death rather than the life that led to that death. In the case of Whitney Houston, her travails were in the news so much over the years that even I — not a frequent showbiz reader — was aware of them. Anyone who watched the evening news couldn’t help but know about her bouts with drugs and alcohol, and, perhaps even worse, her fifteen-year marriage to a man who physically abused her.

Mr. Ringer says that immaturity (from youth) compounded by loneliness, rather than mega-success brings about the typical downfall of many celebrities.

In my view, mega-success and too much expectations of one’s value to the world can exacerbate ‘immaturity’, aside from inability to adjust to realities. In the average person, wisdom usually supersedes immaturity as people age. So if age doesn’t usher in maturity, then there must be something else wrong.

And possibly intractable egotism bloated by mega-success can be a factor in one’s downfall (not necessarily limited to celebrities). Again the inability to adjust with changing times could bring about loneliness and frustrations.

Of course, all the above depends on the individual’s value scales. This means that while some celebrities fall for the above traps, many others don’t.

But there is another factor I would like to point out. While I lament the loss of many artists of my generation, I usually get miffed at the excessive sentimentality expressed by many to recently deceased celebrities.

For me, this represents an action inconsistent compared to when the celebrity lived. Then, nobody seems to given a whit to what the celebrity did (most especially when they were down). Somewhat like schadenfraude, death becomes an opportunity for credit grabbing, promotion of shows and for social signaling.

Yet this seems part of how public opinion gets molded.

Video: The Economics of Valentine's Day

In the following video, Professor Chris Coyne explains (via Learnliberty.org) the importance of Valentine's Day as a product of free markets, as well as, highlights on the essence of Valentine's Day celebration--mostly as social signaling or the expression of emotions. (hat tip Mark Perry)

Happy Valentines Day!

Quote of the Day: Is Expertise Posture or Knowledge?

Another thought provoking article from my favorite marketing guru Seth Godin [bold emphasis mine]

What I discovered, though, was that domain knowledge, edge to edge knowledge of a field, was incredibly valuable. It helped me understand where the edges were, and it gave me the confidence to be selective, to develop a taxonomy, to see what was going on.

As the deluge of information grows and choices continue to widen (there's no way I could even attempt to cover science fiction from scratch today, for example), it's easy to forget the benefits of acquiring this sort of (mostly) complete understanding in a field. I'm not even sure it matters which field you pick.

Expertise is a posture as much as it is a volume of knowledge.

Reading every single trade journal, for example, or understanding the marketing, engineering and sales of your field--there are countless ways to go deep instead of merely paying lip service to the current flavor of the moment.

To me, the importance of domain knowledge (specialized) is especially relevant for those in the financial markets (or in stock markets).

Instead of acquiring the necessary ‘signals’ that could deliver the ‘edge to edge knowledge’, most get lost in the din or cacophony of ‘noises’, which Mr. Godin describes as the “current flavor of the moment”.

The latter can be characterized by the pervasive use or application of cognitive biases and logical fallacies, except that they are masqueraded in numerical or technical methodologies which are completely dependent on past or historical activities or on some presupposed constants which operates on aggregated formulas.

Popular or consensus wisdom usually represents what Black Swan theorist and author Nassim Taleb calls as the negative knowledge (wrong and doesn't work).

For many, thus, expertise signify more as social signaling (posturing or seeking social acceptance) and or “telling people what they want to hear” but predicated on certain technically based paradigms which produces an aura of supposed superiority rather than representative of the true domain knowledge.

We should learn how to separate the proverbial “wheat from the chaff”

Graphic On Social Signaling

Here is an awesome graphic representation of social signaling from the ever insightful Jessica Hagy. (published on her website Indexed as “So Who’s Winning”)