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Black Swan Events and the Importance of being Data-Driven in Higher Ed

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Black Swan Events

By Alex Ziko, Data Analyst

The metaphor of a black swan was a common expression dating back to the 16th century. The phrase was used to describe an event believed to be non-existent. At the time, swans were believed to only be white. For something to be a black swan would be unheard of and impossible. This phrase took new meaning when in the late 16th century, black swans were found to actually exist – disproving the once commonly held belief.

This story of irony and discovery gave meaning to the phrase “black swan event”. Currently, economists, political scientists, and historians refer to black swan events as perceived impossibilities that can be disproved – with dramatic consequences. Statistician and Risk Analyst Nassim Nicholas Taleb defines black swan events using these three attributes:

  1. It must lie outside the realm of regular expectations.
  2. It carries an extreme impact through its consequences.
  3. Upon hindsight, a realization is made that the event itself was misclassified as impossible; when it should have been classified as improbable.

The consequences of black swan events are troublesome for analysts because the events themselves are extremely difficult to predict, they cause ripple effects elsewhere in a system, and they leave a legacy that must be accounted for when future observations are made of those systems.

Since these events, by their definition, lie outside the realm of regular expectations, it’s not only difficult to gauge their likelihood of occurrence, but it’s also difficult to quantify the size and scope of the impact across the system. Examples of black swan events can be:

  • Cheating Scandals
  • Major Sporting Event Performances
  • Sexual Assault Scandals
  • Homicides within the Institution
  • Notable Accolades Published by the Press
  • High Profile Performance of a Campus Club or Activity

Scandals and Cinderella Stories

An important distinction, when thinking about black swan events, is the fact that the event can result in either negative or positive outcomes. The most important variable to consider with these events is the psychological misrepresentation of the event itself. In other words, thinking that the event either could not happen, or is so unlikely to happen that it isn’t ever considered. Two other important factors to consider when thinking about black swan events is the amount of media attention the event receives, and the size and name recognition of the school itself. Both of these factors can play a role in the amount of attention such an event receives.

Major sports victories are great examples of black swan events that result in positive unforeseen consequences. Moreover, these positive results can be multiplied under circumstances such as major seed upsets and come from behind wins – especially if it is a smaller institution. According to a 2017 Bloomberg article, everybody loves an underdog school getting its moments of fame. When Florida Gulf Coast made its presence in The Sweet 16, their admissions rate increased by over 27% the next year from the year previous. Most interestingly, the positive effect of NCAA performance can boost application rates by as much as 10% depending on details of the event, such as upsetting a school 10 spots ahead of their own rank. According to Bloomberg, just appearing in the NCAA tournament alone can result in an average increase in applications by 4%; with a positive upward trend in application rates the higher a school makes it in the tournament.

Application performance isn’t the only windfall that schools could receive from such events. Spikes in giving to the university, sales in apparel, royalties, and increased name recognition through essentially free marketing on major sports media outlets are all benefits from NCAA positive black swan events.

 How to Quantify Something That (seems to) Come Out of Nowhere

A data-driven culture at any college or university is highly beneficial to achieving institutional goals on a regular basis. Quantifying the unexpected all starts with comprehensive data and the means to apply a good analysis. An institution with a data-driven culture and strong data analytics tools, like the Rapid Insight platform, can begin to select metrics and measure performance. For example, schools that want to take a strong proactive approach to curbing sexual assault on campus can measure the participation of students who attend sexual assault prevention and awareness seminars. This metric can better measure the effectiveness of those programs based on the number of reported assaults on campus – a statistic that is legally required under Title IX.

In addition, schools can closely measure their media presence (both with social media, and more traditional press media), catalog the number of negative or positive media reports, as well as the size and scope of the media story based on who is carrying the story. These metrics can be compared against chosen variables, like traffic across the school webpage or number of applications received. Schools that are more likely to make an appearance in the NCAA Tournament could create sensitivity charts that quantify the impact of tournament performance on year over year applications to the school.

Although it can be impossible to do anything more than recognize the existence of a black swan event happening; schools can put themselves in a better position to measure the impact of such an event by crafting a strong data-driven culture, thereby setting a wide baseline of observations to be used to measure the significance of change over time. Having a data-driven infrastructure already in place can aid in the preparedness of a school in the aftermath of the rare and unexpected black swan events.

To read more about creating a data-driven culture at your institution, take a look at our higher education solutions page.

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