As research translator for WashU Olin Business School, my job is to highlight professors’ research by “translating” their work into stories. Before coming to Olin, I was a communications specialist at WashU’s Brown School. My background is mostly in newspapers including as a journalist for Missouri Lawyers Media, the Atlanta Journal-Constitution, The Washington Post and the Sun-Sentinel in South Florida. Also, I am the reigning Olin Cornhole Champion.
Get gutsy! Live gutsy! That was the message from Vernice “FlyGirl” Armour during her high-energy talk Tuesday at WashU Olin.
A Marine, Armour made history as the nation’s
first black female combat pilot.
“If you don’t take action, it wasn’t a gutsy move, it was a gutsy thought. It isn’t, ‘Are you willing?’ but ‘Will you?’” Armour said in her talk before Olin students, alumni, faculty and staff.
After the September 11 terrorist
attacks, Armour completed two tours in Iraq.
“I never wanted to be ‘one of
the guys.’ What I wanted was to be part of the team: with one mission, one
goal, one team that impacts lives,” she said.
On Tuesday, she shared her
story of setbacks, challenges, adventure and success.
“Everyone has challenges and
obstacles. But the key is, acknowledge those obstacles, don’t give them power.”
She also stressed the importance
of diversity, inclusion and belonging.
“It’s all about access and
exposure, and that’s why diversity is so much more than a buzzword. We are the
gateway to how young people see and engage the world.”
We all have permission to engage, Armour emphasized. “You are your ground controller. If you don’t give yourself permission, who will?”
Diversity is one of Olin’s core values, Dean Mark Taylor noted when he introduced Armour. “We are gratified to have many different voices here at Olin,” he said. “And just as important is making sure those voices are included.”
Armour uses her voice. She now runs a consulting firm and gives motivational speeches. In addition, she’s the author of the book “Zero to Breakthrough: The 7-Step Battle-Tested Method for Accomplishing Goals that Matter.”
Can data science be used for good? The answer is
Can data science be used for bad? The answer is also
“And the difference between the best applications and the worst applications is us,” said keynote speaker Jaime Metzl at Olin’s conference November 1 on data responsibility and the ethics of analytics.
Speakers also included representatives from Maritz
Motivation Solutions Inc., Americas-Teradata, Bryan Cave LLP, Mastercard,
Express Scripts Inc., Edward Jones and Daugherty
“The challenge is that this future is coming at us
much faster than most of us understand or appreciate,” Metzl said. “And the
reason for that is that we are in an era of exponential change.”
Such rapid change is leading to a world where
science fiction and science fact are connected, he said.
“We have to get out of our day-to-day, conservative mindsets to really be able to imagine where we are going,” Metzl said. “Because it is an exciting, crazy, frightening, new and fast-approaching world.”
‘Massive data pools’ and our values
Metzl cited the future of medicine as a prime
example. The world of symptom-based medicine is shifting “to a new world of
predictive medicine,” aided by human genome sequencing.
“We’re very soon moving into a world where every kid
is going to have their whole genome sequenced,” Metzl said. “We’re going to
have in very short order these massive data pools.”
Which brings up a lot of questions: How will we use
the data? What are the applications that we think are OK? What are the
applications that worry us?
The most sensitive application of new technologies
will be for human reproduction, Metzl said.
“We humans are going to increasingly not conceive our children through sex, but we’re going to conceive our children through in vitro fertilization. We’re going to do it in the lab. And the reason is because taking conception outside of the human body will allow us to apply science to procreation.”
We must make sure that our best values guide the use
of technology, Metzl said.
“This is not a conversation about technology. It’s a conversation about ethics.”
Other speakers at the conference included the following:
Jesse Wolfersberger, chief data officer at Maritz Motivation
Solutions, on “Incorporating Guard Rails Around Transparency, Targeting and
Bonnie Holub, managing partner at Americas-Teradata, on “The
Road Ahead: Artificial Intelligence, Machine Learning, Data Analytics and
Sam Garner, associate at Bryan Cave, on “Privacy Risks of Using
23andMe and AncestryDNA Services.”
The morning also featured a panel discussion on “Creating
a Data Responsible Culture.” Panelists were Amit Bhagat of Amitech Solutions,
Shawn Hilleary of Matercard, Chris Lehmuth of Express Scripts, Emily Spriggs of
Edward Jones, and Andy Sweet of Daugherty Business Solutions.
Using an analysis of thousands of words spoken by corporate
executives, Olin’s Jared Jennings and three other researchers have
created a new way to help lenders make better loan decisions.
Their study uses qualitative information to assess a business’
credit risk. “It’s all based on language,” Jennings, an associate professor of
accounting, said in an interview. “Our measure captures unique attributes
of credit risk that are not readily identified by existing measures.”
As it turns out, the words company officials use in quarterly earnings calls with investors and analysts can be, well, telling.
“Our results suggest that our measure improves the ability to predict future bankruptcies, future interest spreads and future credit rating downgrades,” Jennings said.
Evidence also suggests their measure more consistently captures a borrower’s credit risk than other methods.
They call their measure the “text-based credit score,” or “TCR Score.” The TCR Score could be particularly useful when other market-based measures of a firm’s credit risk aren’t available, Jennings said. “Our analyses suggest that only about 22% of firms with long-term debt are assigned credit ratings by leading rating agencies.”
Their working paper, “Measuring credit risk using
qualitative disclosure,” is under revision for the Review of Accounting Studies.
‘A tighter link’
Traditional credit risk measures mostly use numerical, or
Jennings and coresearchers set out to measure the spoken word. They used three machine-learning methods to create a measure of credit risk based on information disclosed in 132,060 conference call transcripts from 2003-2016.
Jennings, John Donovan of the University of Notre Dame, Kevin Koharki of Purdue University and Joshua Lee of the University of Georgia grouped into categories hundreds of top words, phrases and topics that their machine-learning methods identified.
One method identified language associated with liquidity,
debt and performance. The other two identified phrases associated with
performance, industry and accounting.
“By connecting the language identified by the
machine-learning methods to economic intuition, we are able to draw a tighter
link between the construct of credit risk and our proxy,” the researchers
The study adds to the growing body of research using
machine-learning methods to gather information from conference calls and 10-Ks
to explain accruals, future cash flows, fraud and other outcomes.
It also adds to research that examines other useful signals
extracted from conference calls, such as vocal and video cues, and tone. (See “When Upbeat Language Belies Downbeat Results,”
about research by Olin’s Xiumin Martin and Guofu Zhou.)
“We expect that practitioners and academics could use our
measure to supplement existing credit risk models to obtain a more
comprehensive and independent estimate of credit risk,” Jennings and
Yulia Nevskaya’s first foray into the World of Warcraft started one evening at 7 p.m. She created an avatar to represent her in the online video game and set off to explore another land.
“It’s like another Earth. It looked like paradise,” Nevskaya said. “I was completely immersed.”
The next thing she
knew, it was 4 a.m.
Nevskaya is an assistant professor of marketing at WashU Olin who studies, among other things, how consumers form habits. Her recent research used data that a bot gleaned from World of Warcraft, a massively popular multiplayer role-playing computer game set in a fantasy universe.
Blizzard Entertainment launched the game in 2004, and by 2011, it had more than 10 million subscribers worldwide. A character in World of Warcraft spends, on average, 12.5 hours per week playing the game, and more than 53 million people in the US played online games at least once a month in 2016.
The study emerges against a backdrop of societal concern over the overuse of online products and screens, including games and beyond.
Nevskaya and co-author Paulo Albuquerque of INSEAD focused their investigation on three main actions that the game developer has at its disposal to manage consumers’ use of the game: redesigning content and in-game reward schedules, sending notifications to gamers and imposing time limits on gameplay. In all, they analyzed a random sample of 402 gamers and nearly 15,000 gaming sessions.
They discovered this: When a firm changes its game’s rewards schedule and also limits how long gamers can play in a sitting, the firm can actually make more money—and people devote a smaller share of their time on gaming.
‘A win-win outcome’
“It’s a win-win outcome for both the firm and consumers,” Nevskaya said. “Those actions led to higher revenues and a smaller share of people’s time devoted to gaming, curbing potentially excessive use of the product.”
The researchers found
gamers’ slower consumption of content led to an increase in their long-term
engagement with the product, which is based on subscriptions. At the time of
the research, subscription fees were about 50 cents a day on a weekly or
monthly automated payment plan.
“What’s good for the consumer is not necessarily bad for the company,” Nevskaya said in an interview.
Notifications might reinforce habit
Nevskaya and Albuquerque built an empirical model that mimics how consumers make choices so they could learn about gamers’ decisions—such as when to start and stop playing. Their approach allowed them to study consumers’ response to product design, notifications and rewards over time, as well as to identify people who display signs of habitual gaming. According to the study, more than two-thirds of gamers exhibit signs of habitual gaming with, on average, 100.8 minutes in every 24-hour period.
The data were collected by a software program that logged on to the game server every 5 to 10 minutes. It recorded gamers’ avatars present on the server at the moment, as well as their current experience level and the content area in which they were playing.
Yes, they found that
altering in-game reward schedules and imposing time limits leads to shorter
gaming sessions and longer subscriptions. But they also learned that
notifications saying players should take a break don’t help.
Here’s the rub: Because a suggestion to take a break may arrive at a time when a gamer is not yet satiated with a gaming session and is in a “hot habit state,” as Nevskaya calls it, it also may motivate the gamer to return quickly to the game—and reinforce the gaming habit. Notifications lead to a pattern of shorter but more frequent sessions resulting in a significant increase in active gaming time, for a large group of gamers, the authors discovered.
“Our paper addresses the important question of how to curb excessive screen usage, which has been a frequent concern among public policymakers,” Nevskaya said.
Since 2014, the researchers note, the World Health Organization has been evaluating the public health implications of excessive use of the internet, computers, smartphones and other devices. Last year, the WHO included “gaming disorder” in the 11th edition of the International Classification of Diseases as a clinically recognizable and significant syndrome when “the pattern of gaming behavior is of such a nature and intensity that it results in marked distress or significant impairment in personal, family, social, educational or occupational functioning.”
With about $19.9
billion in sales in 2016 worldwide, the online video gaming industry especially
benefits from new technologies that allow almost-constant online connectivity.
Online and mobile games and social media platforms have spent significant
resources to increase product use through customized content, frequent
promotions and virtual rewards, the authors note.
“‘Gamification’ of products is a common practice, which makes understanding of how consumers react to game-like product features increasingly important,” they write.
“We’re not claiming that gaming is harmful. It can be a wonderful pastime,” Nevskaya said. “But it’s potentially harmful when enjoyed in excess.”
As a marketing expert,
she said she feels a responsibility to consumers.
“We can agree that marketing has become very sophisticated” in large part because of the massive troves of data now available to companies, she said. “Academics as well as responsible businesses should help consumers navigate the field safely.”
September-October issue of the Harvard Business
Review features insights from their paper “Manager Sentiment and Stock Returns,”
forthcoming in the Journal of Financial Economics. The article, “Beware
of Excessively Chipper CEOs,” highlights the finding “that high degrees of
positivity signal that managers are overconfident and apt to overinvest,
causing profits to decline.”
In addition, Martin, a professor of accounting, was selected as the Poets&Quants Professor of the Week. The August 20 feature “WashU Olin’s Martin: When Managers Are Too Bullish, It’s Time to Sell” focuses on the same paper.