“Nothing that is off-limits to political data mining”

Your consumer data is of value to political campaigns and parties eager to reach individual voters:

But as presidential campaigns push into a new frontier of voter targeting, scouring social media accounts, online browsing habits and retail purchasing records of millions of Americans, they have brought a privacy imposition unprecedented in politics. By some estimates, political candidates are collecting more personal information on Americans than even the most aggressive retailers. Questions are emerging about how much risk the new order of digital campaigning is creating for unwitting voters as the vast troves of data accumulated by political operations becomes increasingly attractive to hackers…

“There is a tremendous amount of data out there and the question is what types of controls are in place and how secure is it,” said Craig Spiezle, executive director of the nonprofit Online Trust Alliance. The group’s recent audit of campaign websites for privacy, security and consumer protection gave three-quarters of the candidates failing grades…One firm, Aristotle, boasts how it helped a senior senator win reelection in 2014 using “over 500 demographic and consumer points, which created a unique voter profile of each constituent.” Company officials declined an interview request.

When investigators in Congress and the FTC looked into the universe of what data brokers make available to their clients – be they political, corporate or nonprofit – some of the findings were unsettling. One company was selling lists of rape victims; another was offering up the home addresses of police officers.

I think several things are relevant to note. First, it sounds like the majority of this data is not collected by political actors but rather is aggregated by them to help predict voter behavior. In other words, this data collection is happening whether political actors use the information or not. This is a bigger issue than just politics. Second, should American residents be more concerned that this information is available in the political realm or is available to corporations? The story suggests political campaigns aren’t well prepared to protect all this data but how do corporations stack up? Again, this is a larger issue of who is gathering all of this data to start, from where, and how is it being protected.

Another area worth thinking more about is how effective all this data actually is in elections. This story doesn’t say and numerous other stories on this subject I’ve read tend not to say: just how big are the differences in voting behavior among these microgroups or people identified by particular consumer behaviors? Is this the only way to win campaigns today (see media reports on political campaigns successfully using this data here and here)? Is this knowledge worth 1% in the final outcome, 5%, 10%? Perhaps this is hard to get at because this is a relatively new phenomena and because data companies as well as campaigns want to guard their proprietary methods. Yet, it is hard to know how big of a deal this is to either consumers or political actors. Is this data mining manipulating elections?

The reasons behind and consequences of the possible extinction of the starter home

Why are fewer builders constructing smaller starter homes that first came to prominence after World War II?

It’s several things. Land is too expensive to put the more modest house on it. Municipalities’ fees are another reason. And then there’s this phenomenon: Entry-level buyers just don’t want a starter home — they want something fancier…

From the time that high-production builders gained traction in the ’40s and ’50s and into the last part of the last decade, they were able to access inexpensive land and get labor and materials in ways that allowed them to produce an accessible and affordable entry-level home. But the Great Recession didn’t cause land to decline in value the way that houses did, and the lots aren’t widely available. When they are available, there are multiple bidders for them, which pushes the price up. Builders also downsized during the recession, and they don’t have the same capacity to build in volume that they once had. Today, if you’re building a $300,000 or $400,000 house, you’re going to make more money than if you were building two or three $150,000 houses.

Some of the sticker shock for buyers of entry-level homes comes from the local entitlement and permit fees that effectively ward off entry-level neighborhoods from established communities. These fees get baked into the cost and may add 20 to 25 percent to the cost of the home, for schools, infrastructure and support services. Municipalities seem to be doing everything they can to prevent lower-cost housing from being developed. They want property values and, in turn, property taxes, to be higher…

The startup of household formations is lagging the generation earlier by a few years. They’re becoming couples later and having children later. In some seismic way, we’re seeing that age group that we call the millennials buying their first homes at age 35, 36, 37. Because that generation grew up in what are really the nicest homes that ever existed in any society, they’re not going to want to go back to a very modest first home that will set them back, in terms of what they’re used to. They have a whole different mindset about that than we did. Certainly, some percentage of this group is going to want (the simple starter), but most will want what they’ve become used to — even in student housing, it’s like major apartment amenities. “Modest” is not what they have in mind.

It sounds like there are issues on both the supply and demand sides:

1. Consumers now expect more from their first homes. With demographic shifts (later marriage and kids) plus higher standards of living over time, homebuyers want more. This is something that also works against downsizing arguments: once people have a standard (and in this case, it comes from their earlier years and not even from something they have owned yet), it is hard to step back from those features.

2. Builders just can’t make as much money off of starter homes. Land is more valuable – think of all those suburbs that have expanded in recent decades – and fees have gone up so they need to construct more expensive homes to make up the difference. How many established communities, particularly wealthier ones, want cheaper starter homes constructed which might lower their own housing values as well as contribute more children to the school system and possibly require more funding?

A few side effects that might emerge:

1. Those who do want starter homes will likely have to go to less wealthy and older communities with older housing stocks.

2. This might limit particular groups, such as lower-income workers, from buying a home as they will have a harder time making the leap to a more expensive new home.

3. This could keep rental prices higher if people have to save larger amounts for more expensive first homes.

4. Those same communities that want to protect their housing values may find they have precious few places for people they might want in the community – such as recent college graduates or downsizing older adults – to own homes.

Chicago innovation #14: Consumer preference research

A cousin of social science research, consumer preference research, got its start in Chicago:

It was 1928. Benton was working at Chicago’s Lord & Thomas advertising agency when owner Albert Lasker told him to land Colgate-Palmolive by impressing the outsized toiletry powerhouse with market research. Benton worked night and day for two months to record housewives’ preferences for the products of each company.

The firm used the pioneering survey in its initial Colgate-Palmolive campaign and landed the account before the survey was completed.

This drew criticism from an early sociologist:

Sociologist Gordon Hancock hated the idea. It was tantamount to cheating.

In a statement that must have brought grins to the faces of that up-and-coming generation of ad men, Hancock decried in 1926: “Excessive scientific advertising takes undue advantage of the public.”

This was, of course, the point.

This tension between marketing and sociology still exists today. The two areas use similar methods of collecting data such as surveys, focus groups, interviews, and ethnographies or participant observation. However, they have very different purposes: marketing is intended to sell products while sociologists are trying to uncover how social life works. The tension reminds me of Morgan Spurlock’s documentary The Greatest Movie Ever Sold that questions the marketing complex.

This comes in at #14 on a list of the top 20 innovations from Chicago; I highlighted the #5 innovation, balloon frame housing, in an earlier post.