Selection bias and predictive metrics
Freddie DeBoer has a nice post up at the ANOVA where he discusses how an administrator at Harvard, trying to figure out the correlation between SAT scores and first-year grades, could be tripped up by the statistical issue of restriction of range. Freddie’s point is a good one, and analyzing the variance of covariates is an important diagnostic step, but there’s also a slightly more subtle reason that his example is flawed: selection bias. When people say things like “the SAT/GRE don’t predict success well, so we should stop using them”, they’re often falling victim to selection bias—and unfortunately, many of the stories discussing the standardized tests don’t properly deal with selection bias either.
Bitcoin and news-driven bubbles
It looks like Bitcoin is back in the news, so I thought it would be interesting to dig up my undergrad senior thesis, which analyzed Bitcoin using some of the tools of financial economics. The whole thing is available here; this post will focus on the link I uncovered between news coverage, investor inflow, and speculative bubbles which continues to apply to cryptocurrencies, and speculative assets more broadly.