Are Algorithms becoming our Overlords?

algosAn apocalyptic piece from the Evening Standard last Easter which highlights all the different points in our lives where algorithms are controlling what we see or hear or do. A few examples include:

  • social network feeds
  • travel websites
  • song compositions
  • pension investments.

Why should we be concerned? As Robert Colvile, author of The Great Acceleration, mentions in the context of financial markets:

‘The real danger is that it can all happen at speeds to which humans can’t react. Firms go bankrupt or markets get shattered before anyone’s really realised what’s going on, which is why it’s really important to have the right safeguards in place.’

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Do you really need Data Scientists?

Data_Science_VDThis and many more common questions about Data Science are tackled by Instacart VP Data Science Jeremy Stanley, and former LinkedIn data leader Daniel Tunkelang. The term Data Science was only coined a decade or so ago but has gathered so much momentum that most business leaders now feel like they should have a Data Science team – even if they don’t know what they would do with them.

Jeremy and Daniel take us through some common misconceptions and recommended ways for thinking about finding real impact from Data Science. Some of my favourite lines from the article:

The above may sound a lot like data analytics, and indeed the difference between analytics and decision science isn’t always clear. Still, decision science should do more than produce reports and dashboards.

But collecting data isn’t enough. Data science only matters if data drives action.

Similarly, data-driven decision making requires a top-down commitment. From the CEO down, the organization has to commit to making decisions using data, rather than based on the highest paid person’s opinion ( or HiPPO).

Many people equate big data to data science, but size isn’t everything. Data science is about separating the signal in data from the noise.

Don’t hire a head of data or build a team until you have work for them to do. At the same time, ensure you’re collecting key data early on so that team can have an impact once you’re ready.

Build a company culture early that makes it a great place to practice data science, and you’ll reap dividends when they matter most.

Over time, the impact that a data science team has will be far higher if you build a diverse team with extremely different backgrounds, skill-sets, and world views.

Finally, focus early on hiring data scientists who reflect your company ideals. To be effective, data scientists must be trusted by their teams, the users of their products, and the decision makers they influence.

DJ Patil wants Silicon Valley to work on real problems

I was fortunate enough to attend a Q&A with United States Chief Data Scientist DJ Patil at the Commonwealth Club last week. DJ was keen to stress the challenges facing the US government and the Big Data available to help solve these problems. But noted that the talent and progress we see in technology is not being applied to ‘real’ problems.

djpatil

DJ gave examples from Law Enforcement and Health Care amongst as areas that are ripe for disruption by data and technology. He also stressed that much public data is readily available online, both at the local and national level – and he invited the Data Scientists in the audience to start hacking for social solutions!

Hedge funds are luring away Tech’s AI superstars

hedgefundsai An arms race has resumed amongst the world’s biggest hedge funds. Seeing the potential of the technologies produced at some of the most prolific Machine Learning groups in big tech companies such as Google and Facebook, a recent article notes that hedge funds are lifting lead Data Scientists to work on building better alpha strategies.

In the past, algorithmic trading prided itself on hiring highly skilled statisticians to sculpt informative signals and combine them in a state-of-the-art model to predict movements in prices. With the success of deep learning software, such as IBM’s Watson, hedge funds now see potential in throwing their financial big data at artificial intelligence at these artificial intelligence black boxes to predict alpha.

Bridgewater hired David Ferrucci, former lead engineer at IBM for developing Watson, Renaissance Technologies was founded by Bob Mercer and Peter Brown, former language recognition leads at IBM, and recently Blackrock hired Bill MacCartney, a former Google scientist.

For these robotics rockstars moving from Tech to Finance, one downside is that there work becomes a lot more secretive. The nature of algorithmic trading is very hush hush with all hedge funds in direct competition with each other. Compared to publishing research papers at IBM or Google, the traders at these funds will have to keep their advances to themselves – which is a loss for the rest of the scientific community.

Airbnb launches first ever Kaggle competition!

In an exciting new partnership, Airbnb has teamed up with Kaggle to create an online Data Science data challenge. In this challenge we provide historical data on the first country guests book and then ask candidates to predict future first bookings.

kaggle

Try the challenge yourself! You have until February 11th 2016 to submit your entries. And if you have any questions you can use the forum and I will respond as soon as possible. Good luck and hope you have fun playing with our data!

The trees have confidence

My latest Machine Learning blog post Confidence Splitting Criterions Can Improve Precision And Recall in Random Forest Classifiers is out on the Airbnb Data blog:

confidenceblog

The Trust and Safety Team maintains a number of models for predicting and detecting fraudulent online and offline behaviour. A common challenge we face is attaining high confidence in the identification of fraudulent actions. Both in terms of classifying a fraudulent action as a fraudulent action (recall) and not classifying a good action as a fraudulent action (precision).

A classification model we often use is a Random Forest Classifier (RFC). However, by adjusting the logic of this algorithm slightly, so that we look for high confidence regions of classification, we can significantly improve the recall and precision of the classifier’s predictions. To do this we introduce a new splitting criterion (explained below) and show experimentally that it can enable more accurate fraud detection.

Have a read and let me know what you think!