We Need More Transparency
The health star rating on food packaging is a good model that we should be emulating in other sectors, where there are far greater consequences for being uninformed about what you’re buying.
The Food Health Star Rating
In the context of a free market, things go great when consumers are both informed and make good decisions. Unfortunately, consumers are rarely informed of the things they should care about. Or the information is available but hard to access, or the information is easy to access, but the consumer just doesn’t want to know.
One nationwide campaign that’s made consumers more informed whether they like it or not is the introduction of health star ratings on food packaging. I like to think that I’m a rational person who makes conscious decisions on what food to eat, but it’s just not true. In 1982, Time Magazine declared salt as ‘A New Villain’. I wasn’t around for the advent of low-sodium diets, but I’ve lived through low fat diets being the craze, and right now I’m living through low-sugar diets. I suspect protein is next, sorry bodybuilders. At any rate, if the dietician community can’t get their act together when it comes to knowing what’s good and bad for me, I’m not going to pretend I can count macros on nutritional labelling and know what decisions to make.
But even so, I appreciate that on the whole, food can be far less healthy than it proclaims to be on the packaging. When you’re buying banana bread and you find out it’s only 2 stars, it gives you pause. ‘I probably should have known this wasn’t super healthy, but it just never occurred to me’. You look at the nutritional labelling, and fad diet confusion aside, surely enough, it’s not super healthy.
I’ve had the same ‘huh’ moment many times now, and it’s really shown me just how remiss I was at judging the food I put in my mouth. It’s also been a bridge to nutritional labelling, and I probably look at labelling more now than I did before the star rating system was introduced.
I consider the health star rating system a success. You just can’t get away with buying unhealthy crap the way you used to, because the star rating is looking you in the face. Granted, it’s not applied on every product, but in general it’s been a powerful awareness-raiser.
You might object to the health star rating by bringing up instances of brands intentionally gaming the system, like Nutri-Grain adding protein to their cereal to obtain a 4 star rating, concealing added sugars. This is an instance of Goodhart’s Law, named after economist Charles Goodhart, which declares ‘When a measure becomes a target, it ceases to be a good measure’. The health star rating was introduced as a measure of the healthiness of food, and now manufacturers are eroding its measuring power by exploiting the underlying formula to yield a misleading rating.
I have a few responses to this objection. Firstly, Nutri-Grain is healthier than before, thanks to the health star rating. But in response to the obvious counterargument, which is that consumers may have erroneously switched from a healthier cereal to Nutri-Grain based on its star rating, I merely point to the fact that the star rating’s formula is evolving to care less about protein, more about sugar (somewhat in line with my fad diet trend predictions) and to prevent easy gaming by manufacturers. Nutri-Grain, under the proposed changes, will drop from 4 stars to 2.5. Natural Greek Yoghurt will increase from 1.5 to 3.5.
It’s worth noting that whenever you try to regulate something in a centralised way, Goodhart’s Law enters the picture, and you soon find yourself trying to kill a hydra. For every change you make to a policy, there will be a corresponding change in strategy from whoever you’re trying to regulate, resulting in somewhat of a policy arms race. It’s happened with the tax system, it’s happened with the welfare system. As a libertarian, this is my cue to say ‘it’s all a waste of money in the end!’ but I think the reasonable thing to do in a policy arms race is to ask yourself how fast the complexity is increasing and what the costs are. The health star rating was introduced in 2014 and five years later we’re getting a revamp, that has cost $400,000. I don’t think that’s too bad, and I personally don’t think we’ll need another revamp for some time afterwards; whatever arms race there is will be moving at a snail’s pace.
Conclusion: health star rating — force for good!
Now, where else can we apply a similar system. What is a product that people buy without thinking through the consequences…
An Education
Conflict of Interest statement: I despise the education system. I think it’s a morally bankrupt, incompetent, inefficient waste of resources, and I cannot wait until online courses destroy the brick and mortar universities that have become profit machines through exploiting vulnerable students.
With that out of the way, I have always felt uncomfortable with the HECS scheme. I know it’s better than the alternatives. I know it’s better than $100k courses in America, and I know it’s better than requiring students to pay upfront. But it must be noted that students are going to university without really thinking about how much it’s going to cost them, because they don’t really know what it means to be tens of thousands of dollars in debt. Good luck getting students to do a philosophy degree if they had to earn the money ahead of time. Granted, some people do just want to shell out thirty thousand dollars to spend three years learning philosophy in a brick and mortar institution. But on the whole I just don’t buy it. Anything you can learn at a university undergraduate course you can learn online. MIT’s OpenCourseWare is filled with courses, Khanacademy ventures far into university level subjects and my mum has watched Stanford professor Robert Sapolsky’s Human Behavioural Biology course on youtube, along with three million others. The only added benefit a brick and mortar institution gives you is the ability to bounce ideas off your student peers and a certificate at the end. And it’s not like anybody is stopping you from sitting in on university lectures without paying. As Brian Caplan puts it, if you ask your average professor if you can just sit in and watch his lecture without being enrolled in the unit, they will break down in tears of joy at the concept of a student actually voluntarily watching the lecture for the sake of learning something.
So I’m not convinced that your average undergraduate degree is worth the money, or is worth any money at all, except insofar as it protects you from the ever climbing credential creep that is in my opinion (subject to change) the fastest growing contributor to human suffering in the world. I made the most of my education, getting an internship that helped me get my foot in the door of the software engineering world, but if I did it all over again, I would keep the money for myself, and spend the three years learning online and coldcalling employers for internship positions. And three years is probably an overestimate for how long it would take to get the skills that actually matter.
Speaking of skills that matter, a friend of mine (sorry if you’re reading this) once boasted about how much they were enjoying a breadth unit on wine-tasting at uni. And my response was ‘Would you have paid a thousand dollars to have that experience in any context outside of getting a university degree?’. One thousand dollars. How do you feel when you have to pay for your car rego each year? The answer is, you feel like shit. And that’s in the case where you actually made use of your car throughout the whole year and couldn’t have lived without it. A thousand dollar university unit costs more than that, is possibly useless for the future and is doubtfully enjoyable in the present, and you get four of those per semester. If you visualise yourself getting the bill for the unit and having to pay it then and there, you might find that your intuitions about how much the whole degree costs are wrong.
My grudge against university aside, if you’re smart enough to treat a degree as a financial investment in your future, given that any other perspective makes absolutely no sense, you ought to know what you’re actually signing up for in terms of employability.
Courseseeker, the recently launched government website, allows students to, at a glance, see what courses are on offer for them after they leave highschool, and what the ATAR requirements are. But there is no mention on the website about what the employment outcomes are for the given course, or the industry sector in general. Isn’t that important information? And available? If I didn’t know banana bread was unhealthy, how can you expect a bunch of eighteen year-olds to know what courses might be a complete waste of time and money? Especially when we can all remember back to when we were highschool graduates and we all kind of knew that we were a google search away from getting the cold hard truth on what the job market looked like in our chosen field. In my case, I transferred out of engineering after my first semester for computer science, assuming I was taking a big financial risk for the sake of my true passion. It sounds silly in retrospect, but if I had just looked up the right stats, I would have found that computer science grads do fine. I just wonder if there are people who stuck to degrees they hated because they didn’t have the information they needed, or were too scared to go digging for it.
Whether it’s a highschool grad or a uni student, we shouldn’t allow people to wait three years and go into tens of thousands in debt before finding out they picked the wrong course.
Graduate Opportunities dot-com annually publishes graduate employment statistics by field, showing full-time employment and general employment figures, as well as median income for grads. Reading through the data, it actually surprised me how secure jobs in psychology were: I suspected it would be hard to get a job as a clinical psychologist or a researcher, but it seems that’s not the case! If you had this data shown to you on courseseeker, you would be in a far better position to decide on a field.
And it need not stop there. We currently have a graduate outcomes survey that invites entries from recent grads, there is absolutely no reason why we couldn’t gather ratings on courses and display them in courseseeker. If I have the right to know that banana bread is bad for me, students have the right to know that a course is shit. Maybe the uni just doesn’t have a strong enough faculty to teach the material, or it’s just poorly administered, or there’s no recorded lectures. But if a course would get a two star rating, then it should get a two star rating, and prospective students should know about it. How the data is gathered could be either as an end-of-degree evaluation, or on a unit-by-unit basis as they’re completing the degree. Most universities already gather feedback at the end of a unit for their own internal purposes: we should standardise the format and enforce transparency. We don’t need to show the unit-by-unit breakdown to students (otherwise a lot of professors will lose face), but just the aggregate result.
Given how much we’re subsidising their courses for commonwealth supported places, I don’t think it’s an unreasonable request. And if it turns out that it’s not too hard to get the equivalent of a 3 star rating or higher for a course, it could even be an opt-in system like the food health star rating is, and after a while, if your course doesn’t have a rating at all, it would be rightly perceived by students as an admission that you’ve got quite a few skeletons in the closet when it comes to quality.
You might say it’s hard to reduce the worth of a university degree into just a few stats, and that a holistic approach is required, but I feel like the same argument can be made about the food health star rating. My enjoyment of banana bread is a subjective experience you cannot reduce into a stat. Likewise, I might be exercising a lot and so I can handle a few more carbs and sugar than the average person, so the health star rating isn’t necessarily tailored to the things I care about. But who cares! The rating gives people a simplistic heuristic from which to start their deeper investigation as to whether something is the right fit for them. The rating might tell people something they didn’t want to know, because they were afraid it might be true.
What about Goodhart’s Law? If universities want to get high student ratings, they might start handing out chocolates more often in classes to superficially win the affection of students, and the universities that get the highest ratings will be the ones who know best how to manipulate students into thinking they’re getting a good education. Firstly, I’ll take all the chocolate you’ve got, universities. Secondly, I trust students are more or less good at knowing when they’re learning something valuable. If my trust is misplaced there, then we can still break down the student evaluations into categories that would adequately defend against bias. For example, maybe you just fill out a questionnaire, giving each criterion a rating from 1–10. One criterion might be ‘I felt like I learnt things I will use in my career’, or ‘I was pushed outside my comfort zone’. However flawed it may be, however universities try to game the system, it’s still better than finding out you’ve wasted time and money when it’s too late.
Having looked at food and education, the final place I want to talk about transparency is…
The Workforce
There are a lot of bad managers. For some bizarre reason, I have never had one myself. Working at the Apple Store, there were more managers than you could count with two hands, so you could often take your pick about who you’d approach for an escalation. And in general they were all pretty well-rounded people. Is there a good reason for that?
The Apple Store was obsessed with feedback. I’m not sure if I’m disclosing a trade secret here, but there is this system called ‘fearless feedback’ where employees are encouraged to directly approach people and give them feedback, whether good or bad. I received my fair share of both positive and negative, and I gave other people feedback a few times as well. The system was pretty good; it’s hard to prolong a bad habit when somebody names it and makes you aware of it, and makes you aware that they are aware of it.
Part of the feedback system involved quarterly reviews on managers. To my recollection you wouldn’t single out specific managers but you would comment on the overall quality of management and how the store was run. As Goodhart’s Law dictates, the store manager would be handing out chocolates as a review period was approaching, and most of us knew what was going on. But even so, feedback from employees was taken seriously. Changes were implemented where people had issues, and god knows the managers’ managers were keeping score: I often felt that the positivity levels from the store managers often exceeded what would qualify as within normal human behaviour, but who cares about a thin layer of superficial positivity if there’s a larger layer of genuine positivity, and if the alternative is no positivity.
I have many people close to me struggling with bad management, workplace bullying, and cases that border on criminal. In every case, there is no peer review system for management. The best you can do is escalate your grievances up the chain of command, and you might need to go up a few links before you get somebody who cares. Breaking rank and escalating issues to upper management (or HR) is a psychologically stressful process, so it’s no wonder it’s so rarely done. And it’s no wonder that incompetent, malevolent managers retain power for as long as they do. If quarterly peer reviews became a matter of normal process, so much managerial rot could be washed away. And businesses have an incentive to implement such a process: good employees leave when bad managers stay.
In the franchisee world it’s slightly trickier, because franchisees have far more autonomy, but even franchisors can add peer reviews to the terms of agreement, with disciplinary action taken on those who regularly underperform on employee satisfaction.
But even franchisees have been victims to a lack of transparency. In March this year the government released a report on the Franchising Code of Conduct which makes recommendations for increased transparency for prospective franchisees when deciding to enter into a franchise agreement. If the recommendations are accepted, Franchisors will need to provide the prior two years’ Business Activity Statements, a profit and loss statement and balance sheets for the franchise, so that franchisees know what they’re signing up for.
Back to my original point, according to research by the University of Tennessee, 46% of business failures are due to incompetence, and 30% are due to unbalanced experience or lack of managerial experience. Managerial incompetence is a world-wide issue that does not get enough attention. If structures are put in place from the top-down to shed light on incompetence, far fewer employees need to suffer that incompetence.
I’ll finish by saying that increasing transparency isn’t a particularly expensive endeavour. You could implement this all with Google Forms and some emails. And yet it would cause seismic improvements in the internal health of organisations, and allow students to know at the beginning, rather than the end, whether an investment is a good idea.
