From RANKING to REPAIR!

Nobel prize

One important signifier of reputation is the receipt of a prominent award or honor in one’s discipline or community. It is difficult to deny that Nobel prize can be identified with being ranked as #1. The Nobel prize takes its name from Alfred Nobel, a chemist, inventor, engineer, entrepreneur, and author who invented dynamite and held 355 patents during his lifetime. In his will, Alfred Nobel set aside his fortune to fund prizes for outstanding achievements in physics, chemistry, physiology or medicine, literature, and humanitarian or peace-related work. Since 1901, the Royal Swedish Academy for Sciences, the Karolinska Instituet, the Swedish Academy, and a committee elected by the Norwegian Parliament have been responsible for awarding the Nobel prizes, and in 1968, the Sveriges Riksbank established a prize in economic sciences that is awarded alongside the Nobel prizes. (There is a recurring gossip about the reason why there is no Nobel prize in mathematics. Different versions of the rumor claim that it is due to an eventual rivalry over a woman between Magnus Gösta Mittag-Leffle, the leading Swedish mathematician and Nobel. The rumor seems to be unjustified 29. To date, 590 Nobel Prizes have been awarded to 935 Nobel laureates.

The nomination and selection process The nomination and selection process for Nobel laureates takes over a year and involves dozens of reviews and expert consultations to determine the winner(s) in each prize category. In all categories but the Nobel Peace Prize, nominations are accepted by invitation only, and nomination forms are sent out in September of the year preceding the awarding of the Prize. Invitations for nominations are typically sent to selected professors at universities and to former Laureates, who have until January 31 of the following year to submit their nominations. The process typically generates about 250􀀀350 unique nominees, and consultation with experts proceeds for several months to assess the worthiness of each candidate. Over the summer, the Nobel Committee writes a report to be submitted in September to the institution responsible for awarding the particular Nobel Prize, and in October a winner is selected through majority vote and announced. Prizes are then awarded in December.

Literature prize: from betting to scandal In the last fifteen years or so, the big sports betting company, Ladbrokes has begun taking bets to the literature prizes in their on-line menu. So you can bet, who will win the Nobel Prize in Literature. (Only in literature, probably the others attract much less public attention.) Bookmakers at betting companies set fixed odds on all horses in a specific race, or on the result of soccer games. Betting became a big industry and even bigger business. The duty of a Nobel Prize bookmaker is particularly challenging. If you bet for sports events, you have a lot of data about past achievements, actual injuries, etc. Predictions based on finding patterns in data are not terribly bad. For the prize in literature, I am note sure. You should have a behavioral model of the committee. Betting for the Nobel prize somehow reflect people’s demand, and we could not exclude, that the selection committee does not totally neglect the public opinion. Well, we have a long list of unlikely non-winners (Tolstoy, Chekhov, Proust, Kafka, Virginia Woolf, Joyce, Nabokov).

In 2017 Kazuo Ishiguro was awarded for his ”novels of great emotional force, has uncovered the abyss beneath our illusory sense of connection with the world.” Margaret
Atwood, Ngugi Wa Thiong’o and Haruki Murakami had better odds, still Ishiguro’s win was approved by the community.
Is there any collusion between the selection and the betting process? I would have liked to bet that it isn’t. The committee receives annually about two hundred nominations from literary nobilities. Maybe ten-fifteen percent are first-time nominees. I might be wrong, that I believe that first-time nominees had initially a better chance than now. Rabindranath Tagore (1861-1941; NP: 1913), Sinclair Lewis (1885-1951; NP:1930, Pearl Buck (1892-1973; NP:1938, Bertrand Russell (1872-1970; NP:1950) and William Faulkner (1897-1962; NP:1949) were awarded Nobel Prize in Literature after being nominated in one year only. The ugly sex and leakage scandal 30, which led to the cancellation of the award in 2018 might have a cataclysmic consequences
for the Nobel prize in literature. We will see.

The illusion and manipulation of objectivity: Is there any gender bias? As noted above, 935 individuals have received Nobel Prizes since the Prize’s inception in 1901. Yet only 51 women have received the Prize (Marie Curie won twice), meaning that less than 6% of Nobel Prize winners were or are women. In the sciences, the chemist and science writer Magdolna Hargittai notes, that figure is even smaller, with just 19 women receiving the prize in physics, chemistry, or medicine or physiology since its inception. This abysmally low number has led some to suggest that the Nobel Prize exhibits a gender bias against female scientists. Certainly, there have been female scientists that have been overlooked for Nobel Prizes during the nomination and selection process, but it may be the case that the relatively low number of women who have been awarded the Nobel Prize is attributable more to implicit bias than explicit discrimination. Stereotypes discouraging women from pursuing education and careers in STEM fields have helped the number of women receiving doctoral degrees in physics, chemistry, and medicine relatively low in comparison to their male counterparts, and although these numbers are increasing, they remain lower than population statistics would suggest. Take physics as an example: according to the American Institute of Physics, in 1975 women earned just 5% of PhDs in physics, and they still earn only 18% of PhDs in physics. If less than one in five physics PhDs is awarded to a woman, the odds of being awarded a Nobel Prize in Physics has shrunk significantly for a woman. Even after PhDs are awarded, implicit bias manifests itself in the barriers that women face to hiring and publication, as studies show that women are more likely to be judged on superficial qualities like appearance and personal information than the quality of their scholarship. In terms of publication, women are less likely to be cited than men and their research is more likely to be attributed to men, and they are underrepresented in journal editorships. Both of these factors work against the likelihood that women will be invited to speak at conferences to present their findings or to be nominated for awards. Since the Nobel selection committees refuse to publish information about nominees until 50 years after the nomination has been submitted, it is difficult to assess the rate at which women are nominated for Nobel Prizes in STEM fields, but based on the state of gender representation in physics, chemistry, and medicine, there is a good chance that women are not being nominated at the same rate as men are. If we acknowledge the kinds of institutionalized biases that greet women at every step of their careers, it is less surprising that so few women have received Nobel Prizes in STEM fields. Although bias certainly exists, the nature of implicit bias is such that it is nearly impossible to pinpoint at which stage in a woman’s career her chances of receiving a Nobel Prize were diminished, and it may be the case that the bottleneck occurs well before names ever reach the Nobel Prize committees.

Marek Claassen: Director of ArtFacts.Net

We introduced a quantitative method to measure how much an artist is embedded in the international art world. We start with long term relationships between artists and galleries or collections that represent them. These are very strong commitments that last very long. We count the number of countries and the number of collections and galleries. And then we look at solo and group shows. The more international artists a gallery or a museum has, the more its exhibitions value. Let’s say that we have an institution like Tate Modern where thousands of artists are collected. If you have a solo show there you get all the points from these artists and your rank will go up extremely. Biennials, group shows work like collections, their value is based on the artists whose works they show. So if there’s an Andy Warhol its value goes up a lot.

Top 100 Artists

 

Salon, Exhibition of Rejected Art, and the emergence of Impressionism

Historically, the Académie des Beaux-Arts dominated French art. Academy controlled both the content and the style. Religious and historical themes and portraits were supported, landscape and still life were not really permitted, while precise brush strokes characterized the style. For centuries, showing at the Salon was a necessary condition for establishing an artist’s reputation and career in Paris.168. A success in the Salon implied the emergence of reputation, both in terms of prestigious jobs (as teaching positions at the Ecole des Beaux-Arts, and awards, as the Legion of Honor, created by Napoleon, and maintained by all French governments. The selection process was led by the Salon’s jury controlled by members of the Academy. As it happens always, selection committees attempts to conserve the status quo. We cannot blame them, it is due to human nature. The reputation of artists depended on the Institution. As Gustave Courbet (1819-1877) famously stated after the refusal of all the paintings he submitted to the Salon of 1847:

It is bias on the part of the gentlemen of the jury: they refuse all those who do not belong to their school, except for one or two, against whom they can no longer fight, such as MM. [monsieurs] Delacroix, Decamps, Diaz, but all those who are not as well known by the public are sent away without a word. That does no bother me in the least, from the point of view of their judgment, but to make a name for oneself one must exhibit, and, unfortunately, that is the only exhibition there is.

The Exhibition of Rejected Art ”Salon des Refusés”) was established in 1863, somewhat as a consolation price, and an alternative pathway to show paintings that have been rejected by the selection committee. This year is refereed as the birth of ”modern art” is 1863 – as Edouard Manet (1832-83) exhibited his – than infamous -painting Le Dejeuner sur l’herbe. (Please, don’t kill me: 1863 is also the year when the Football Association was founded in England. Football means soccer, of course. So, modern art and modern sport were born synchronously.) The breakthrough happened in 1874, when the first Impressionist exhibition was organized. Claude Monet, Edgar Degas, Pierre-Auguste Renoir, Camille Pissarro and Berthe Morisot called themselves the Anonymous Society of Painters, Sculptors, Engravers. The paintings were modern, still lives and portraits as well as landscapes, by adopting small, thin, still visible brush strokes. After 1874 Paul Gauguin and Georges Seurat and other major artists had a different career pathway, they no longer debuted at the Salon. There was a life outside the review of the Salon’s juries!

The emergence of market-driven reputation

Paul Durand-Ruel (1831-1922) has had a reputation for discovering impressionists. As an anecdote tells ”One of his artists came in one day with a young French painter, introducing him and saying, ’This artist will surpass us all’ — and that artist was Claude Monet.”169. He made an innovative (which also means risky) business by buying a huge number of paintings of artists with low reputation. Duran-Ruel’s was also an early adopter of the single artist exhibition, called that time as ”one-man show”. He also established a journal to explain and support what later became not less, than modern art. He was not an art historian, but a businessman, a dealer. His instinct, however, led him to trust and invest to a totally new school of painters. Soon the impressionists had won initial reputations at their independent exhibitions, and Durand-Ruel bought between 1882 and 1884 a large numbers of paintings from Monet, Pissarro, Renoir and Sisley. A new mechanism, the dealer-critic system produced a new social market, and gradually superseded the academic system. Art galleries emerged to became the forum for the modern art to meet its public. The slowly growing reputation of the Impressionists was not sufficient to ensure the artistic and financial success. Durand Ruel made another innovative step: he made the market from local to global, by organizing exhibition in addition to Paris in London, and in New York. In 1886, Durand Ruel produced an exhibition of 289 Impressionist paintings at the American Art Galleries in New York. The American public was fascinated by the paintings of Monet, Renoir and others. Many of the artworks sold became the core of impressionist collections in major American museums. The artistic and financial success obtained by the help of American collectors allowed Durand-Ruel to get out to debt, The reputations of the Impressionists, the first real modernists, quickly became established in the advanced art world. In the early twentieth century the number of ”for profit” art galleries grew large enough to create a genuinely competitive market. The transition from the monopoly of Academy to a market-oriented contemporary art was completed.

7.1 Reputation
7.1.1 From “I don’t give a damn ’bout my reputation” to reputation
management

It is not necessarily compulsory to start this chapter with a story about the role of reputation in popular culture. However, I let myself be seduced by recent news, and I wrote a preliminary draft about Taylor Swift’s on-going “Reputation” tours. As you may know from the introduction of this book, Natalie Thompson is my copy-editor, and she enthusiastically comments when she disagrees with me. In reading my draft, she wrote: “I think in it’s current formulation it is a bit awkward, but there might be a way to restructure it.” Here is the result:
The importance of reputation in popular culture has been vastly expanded by the
Internet and our ability to broadcast information about our lives on social media platforms to both friends and strangers. We carefully curate the best possible images of ourselves, but we may also be subject to scrutiny and cannot control what others say about us, which may become more important than what we say about ourselves.

The recent popularity of Taylor Swift’s studio album Reputation is a perfect microcosmof both the importance and uncontrollability of our reputations in a digital age. Born out of a spat between the pop star and rapper Kanye West, Reputation addresses the constant negativity that Swift faced from individuals on-line and the ensuing damage to her reputation and attempts to demonstrate that reputations can be falsified and misleading. With lines like, “My reputation’s never been worse, so you must like me for me” and “Ooh, you and me, we got big reputations, and you heard about me. Ooh, I got some big enemies (yeah),” Swift speaks to the distinction between public and private personas that everyone navigates on a daily basis. While Swift’s reputation
as an artist defines her celebrity and is, as a result, fundamentally distinct from the reputations of most individuals, her desire to call attention to the ways in which reputations can be misleading or manipulated, especially on-line, provides a telling example of the difficulties of navigating the subjectivity/objectivity dilemma that we have repeatedly encountered in this text. Swift has also garnered attention in political headlines as the Congressional midterms approach with stories like: Conservatives are turning on Taylor Swift after she endorsed Democrats, and here is a quantified effect: Trump “likes Taylor Swift 25% less” after political post.

When I asked my youngster family friend and former coworker, Judit Szente (who just got a PhD in Climate and Space Science at University of Michigan) about the role of the word “reputation” in these songs, she wrote me back that she prefers Joan Jett’s Bad Reputation from 1981:
I don’t give a damn ’bout my reputation
You’re living in the past it’s a new generation
A girl can do what she wants to do and that’s
What I’m gonna do … 149
While I was somewhat surprised that the concept or reputation plays such an important role in the rock music, it is less surprising that Gloria Origgi, an Italian philosopher working in Paris, raises and answers the questions: What does it mean to have a good reputation? What do we lose when we lose a reputation?150. Our character and our actions shape our reputation, and reputation is a form of currency. Our reputation determines whether or not other people invest in us, buy from us, or give us an award.

Who determines our reputation?

How many friends do you have? Despite what Facebook might suggest, we cannot have a thousand friends. We cannot even have a thousand close acquaintances. The British anthropologist Robin Dunbar has estimated the number of persons with whom we can form stable social relationship: 150, which more precisely means that between hundred and two hundred. When I began my aboutranking.com and searched my email inbox to decide whom I could easily ask to follow my website, I was shocked. The number was 149 (well, only sixty of them kindly pushed the follow button). They are the people who know some of my characteristic features and my actions, so my reputation is based on their perception of my activities. But in a broader sense, my reputation is the collective opinion of everybody else, except myself.  As most people know, it takes time to build a reputation. We all know that a single moment is sufficient to destroy a good reputation. As a quote attributed to Warren Buffett says, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” Unfortunately, even malicious gossip is sufficient to smash a reputation. Having a good reputation among friends might help, as they may defend you even without your knowing.
The traditional mechanism for constructing a reputation is hierarchical. First, your reputation emerges in the layer of people closest to you, so among your friends, and propagates through layers of more distant acquaintances to the friends of your friends of your friends, etc. Modern media have produced other mechanisms and enabled the emergence of overnight popularity. One of my recent favorite examples of overnight popularity is Baddie Winkle, a grandma who conquered the hearts of the Internet when her great-granddaughter posted her photo on Instagram. She now has millions of followers.151

Of course, being an overnight sensation does not necessarily imply (positive) reputation. Reputation is social information about the value of a person and their activities. To conduct business, for example, people rely on having a good reputation to communicate their trustworthiness to their clients. It is not enough to be honest; you must also be seen as honest in the eyes of the others. (I don’t want to adopt the cynical perspective by suggesting that because you need to be seen as honest, it is not necessary to be honest).

The World’s Most Reputable Companies For Corporate Responsibility 2018

I am writing this chapter, and reading lyrics of Taylor Swift’s songs.
Should I start the chapter by

Big reputation, big reputation
Ooh, you and me, we got big reputations
Ah, and you heard about me
Ooh, I got some big enemies (yeah)
Big reputation, big reputation
Ooh, you and me would be a big conversation
Ah, and I heard about you (yeah)
Ooh, you like the bad ones, too

(from Endgame)

?
or

This ain’t for the best
My reputation’s never been worse, so
You must like me for me…
We can’t make
Any promises now, can we, babe?
But you can make me a drink

(from Delicate)

?

Critics on ratings based on their subjectivity

It is (not) difficult to believe that rating agencies perform consulting services, and this is an obvious source of potential bias in ratings. (Remember the story of woolf-boolf!) The credit ratings game is played under the condition that their principal source of revenue comes from the firms whose products they are rating.133 CRAs have been accused of biased evaluation and violating principles of objectivity. Generally, CRAs have denied the existence of any conflict of interest. They have stated that rating decisions are not made by individuals, but by committees, and the analysts have not received any compensation based on their ratings. Rating agencies now us mathematical models, the details of which are not fully disclosed. We already know that models are based on human assumptions. Furthermore, the results of any model can be overridden by humans (they might be called a “rating committee,” whose activity are kept secret). To make the rating procedure more transparent, the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) required CRAs to disclose their methodologies. (Well, it would be nice if they did so.) So we have the question: who should have the last word: the computer or the human?

Objective algorithms versus subjective conflict of interests

What would be the difference between a subjective credit rating and an objective credit rating? We have again the dilemma: what would be the difference between a subjective and an objective credit rating? A subjective credit rating would be one individual’s, or CRA’s, point of view. It would reflect the expertise of a particular analyst and their agency’s proprietary algorithms. An objective credit rating, on the other hand, would be something based on open databases and open source algorithms. If CRAs were really objective, then there wouldn’t be any need for more than one agency, and we wouldn’t have different rating results. CRAs would not make big revenues; anybody could simply use the only ratings agency’s publicly-available, consistent criteria to generate the (objectively existing) ratings.

Unhappy Reactions:From China to Europe

Several years ago, S&P downgraded China’s credit rating, and the finance ministry of the huge country vehemently criticized the validity of both S&P’s procedure and its result. Other developing countries, most importantly India, continuously rebel against the CRAs. India has a battle with Fitch, which has refused to upgrade India’s credit ratings each year since 2006. Since India has recently tried to attract more foreign investment, it is very painful to get a mediocre grade for creditworthiness. Europeans generally feel the Big Three CRAs show bias towards the United States. The US has managed to maintain its AAA rating despite a growing deficit and high levels of public debt. But in August of 2011, S&P downgraded the US’s credit rating to AA+ for the first time ever in history. The other two agencies still assign top credit scores to the U.S., but S&P affirmed the US’s AA+ credit score this year, reflecting the balance between positive and negative factors expected over the next two years.

Should we or should not we?

As debates over the merit of credit ratings abound,they remain a crucial facet of the international financial system. The spirit of this book is in accordance with the evaluation of Sebastian Mallaby from the Council on Foreign Relations:134 The best way to counter the monopolistic power of the Big Three, he argued, is for investors to stop giving their ratings so much weight.

“The reason why the subprime bubble could happen, or the reason why the European sovereign debt crisis can happen is, largely, that very blind investors bought bonds relying on ratings, and [didn’t do] their own homework about what the real credit risk was in the bonds.”

We already know that individuals get credit scores, while corporations and governments receive credit ratings. This is just the jargon. Governments of countries require ratings to borrow money. Credit ratings also reflect the quality of a country as an investment target, and a county’s credit rating depends on the economic and political state of the actual country. Why do countries need credit ratings?129

          Many countries rely on foreign investors to purchase their debt, and these investors rely heavily on the credit ratings given by the credit rating agencies. The benefits for a country of a good credit rating include being able to access funds from outside their country, and the possession of a good
rating can attract other forms of financing to a country, such as foreign direct investment. For instance, a company looking to open a factory in a particular country may first look at the country’s credit rating to assess its stability before deciding to invest.

 It is well known that the US leads the list of countries ranked according to external debt, followed by the United Kingdom. It is remarkable that Luxembourg has much larger debt per capita than any other countries (6 million per capita). Luxembourg is known as a major financial center, so presumably the country owns large deposits belonging to foreign people.

In principle, the rating process should give an objective and independent assessment. If the procedure were totally objective, it would be sufficient to have only one credit rating agency. But we have three big (Fitch, Moody’s and Standard & Poor), and many smaller, agencies, who might use different databases and (generally private) algorithms, and they therefore produce (slightly) different results,

Capsule history of the three famous credit rating agencies (CRAs)

In 1860, Henry Poor (1812􀀀1905) published History of Railroads and Canals in the United States, an attempt to collect and provide comprehensive information about the financial state of such transportation companies. Standard Statistics started to published ratings of different bonds in 1906, and they merged in 1941 to form Standard and Poor’s Corporation. Their product, the S&P 500, became a stock market index, a measure of economic activity. John Knowles Fitch (1880 􀀀 1943) founded the Fitch Publishing Company in 1913 to provide financial statistics for helping investors’ decision making. In 1924, they introduced the AAA through D rating system that has become the industry standard for bond ratings 130. John Moody (1868 􀀀 1958) and his Company first published “Moody’s Manual” in 1900. Moody’s Investors Service has provided ratings for nearly all of the government bond markets and today is a full-scale rating agency.

There is a Latin phrase that goes: “Quis custodiet ipsos custodes?” It is literally translated as “Who will guard the guards themselves?” A natural question arises: Who rates the credit rating agencies?131 In 1975 nationally (US!) recognized statistical ratings organizations (NRSRO) were created. Investors simply needed more reliable information to help their decision making to allocate their resources, and this demand has led to enormous growth, expansion, and influence of the credit ratings industry. Three decades later, the Credit Rating Agency Reform Act of 2006 allows the main regulatory agency—the Securities and Exchange Commission (SEC)—to regulate internal credit-rating processes. CRAs had a critical role in the financial crisis of 2008, and the details are far beyond the scope of this book. The lesson I learned from Michael Lewis’s bestseller 132 was: “The line between gambling and investing is artificial and thin.”

While there are almost infinitely many ways to rank countries, many readers will agree with me that one of the most important questions to answer is how happy a country is. In 2011, the UN General Assembly initiated a project that sought to measure the happiness of citizens of member countries. But how do we measure the happiness of a country? The measurement is mostly based on a simple task: in each country, a significant number of people are asked: “Please imagine a ladder, with steps numbered from 0 at the bottom to 10 at the top. The top of the ladder represents the best possible life for you and the bottom of the ladder represents the worst possible life for you. On which step of the ladder would you say you personally feel you stand at this time?”

A report issued by the UN in 2017 ranked Norway as the happiest country in the world. (The Reader already knows that the phenomenon of “pecking order” among chickens was discovered in Norway, and the Norewgian Magnus Carlsen has the highest Elo number. The neurobiologists among our readers will also remember that May-Britt Moser and Edvard Moser from Norway were awarded the Nobel Prize in Physiology or Medicine in 2014 for discovering certain types of neurons called grid cells, which are responsible for spatial information processing.) It was remarkable to see the reaction of the Prime Minister Erna Solber: “even if we top this statistic now we must continue to prioritize mental healthcare.” Actually there is no statistically significant difference among the happiest five countries, which each received scores around 7:5: Norway – 7:54; Denmark – 7:52; Iceland – 7:50; Switzerland -7:49 and Finland – 7:47. The Central African Republic had the lowest score at 2:69. In 2018, Finland took the lead, and the United States ranked 18th out of 156 countries surveyed–—down four spots from 2017’s report. In spite of a strong economy, the US ranks quite poorly on social measures such as life expectancy and suicide rates. Major factors possibly contributing to this drop in ranking are the worsening of the opioid crisis, the growing economic inequality, and the decrease in confidence in government. Investment in mental health care is likely to correlate to average happiness. A good proxy for investment in mental healthcare is the number of psychiatrists and psychologists working in mental health care per capita. Based on these figures, average happiness appears to be higher in countries that invest more in mental health care. Like it or not, developed mental health care implies the more frequent use of antidepressants. Increasing antidepressant utilization and decreasing national suicide rates have been reported recently from the happiest country in the world.