Data Storytelling
Foreword
- Output options: ‘tango’ syntax, the ‘readable’ theme.
- Results only.
1, Preview
Data science and storytelling
People like stories. If data science brings value to data, storytelling can bring value to data science. The reader can also follow a thread relating all the elements.
For this project, we incorporate cases to fake scenes inspired by the motion picture Pulp Fiction. Does it make any sense to mix a 1994 scenario and modern data science cases: the answer is… no. Nevertheless, interweaving cases into the movie framework can be… enjoyable.
Following each scene, we tackle a context case in econometrics.
Econometrics is a broad term pulling together economics with data science. Other fields have coined their own terms: biometrics in the health sciences and psychometrics in psychology/psychiatry.
The cases we focus on are business-oriented and readily applicable in business planning: quantitative marketing, operation and inventory management, etc. We rule out any macroeconomic modeling as we would encounter in large financial institutions and governments.
Pulp Fiction classical scene
(...)
VINCENT
Well, in Amsterdam, you can buy beer in a movie theater. And I don't mean in a paper cup either. They give you a glass of beer, like in a bar. In Paris, you can buy beer at MacDonald's. Also, you know what they call a Quarter Pound with Cheese in Paris?
JULES
They don't call it a Quarter Pound with Cheese?
VINCENT
No, they get the metric system there. They don't know the f-@!* what a quarter pound is.
JULES
What'd they call it then?
VINCENT
They call it: a Royale with Cheese.
JULES
Royale with Cheese! What'd they call a Big Mac?
VINCENT
A Big Mac is a Big Mac, buy they call it Le Big Mac.
JULES
Le Big Mac! What do they call a Whopper?
VINCENT
I dunno, I didn't go to Burger King. But you know what they put on French fries in Holland instead of ketchup?
JULES
What?
VINCENT
Mayonnaise.
(...)The Big Mac index
In Pulp Fiction, there seems to have a burger fixation. We hear about burgers in three main sequences: in the ‘74 Chevy (above) where Jules and Vincent discusses differences between the US and Europe, at the apartment where Jules discusses with Brett (the later is having a nutritious breakfast), and at the diner, Jackrabbit Slim’s, where Vincent takes Mia out. Considering the movie’s success, such placements are good publicities for large chains and small joints: MacDonald’s, Burger King, Wendy’s, Jack-in-the-Box, Big Kahuna Burger. For the record, the burger Mia is having is a ’Durwood Kirby’.
Since 1986, the business magazine The Economist publishes an informal article about Burgernomics. The article seeks to make monetary economics more digestible.
The new scenes
The followings scenes happen around the same time but in different settings.
Marsellus Wallace, the big man, is associated in business with a syndicate supplying Southern California with opiates. The merchandise comes from the Middle East and passes through Europe. The syndicate imports it into the US. In explains Vincent Vega’s sojourn in France and Holland where he spent some time looking after the syndicate’s interests.
The syndicate would like to legitimize both sides of its business: the time and money spent in Europe and the profit reaped in the US. Marsellus and other associates have hired consultants to advise them: your managers. Both sides are scheming to cover for the syndicate’s illicit activities.
As an employee of the consulting firm, your job is to attend to the data science part. Many other experts are involved: lawyers, accountants, tax specialists. You don’t want to know what is behind the numbers you are working on. You like your job and you simply attends to what your managers expect from you.
2, Results Exploration and Problems of Multicollinearity
Marsellus and the wine business - part 1
Marsellus and his associates own bars, clubs and restaurants. They want to cover up their activities in Europe. They think a smart move would be acquiring mid-size wine producers in France and import wines. The trade would legitimize their presence in Europe and supply their catering business. They seem to be fixated on champagne producers.
VINCENT
Do ya know that some Champagnes are not real Champagnes?
JULES
What are ya talkin' about?
VINCENT
See, Champagne producers have copyrights on the brand Champagne.
JULES
Copyrights?
VINCENT
Well, Champagne is a produced in a region called Champagne. Only wines from that region can be called Champagne. So, the cheap stuff you drank was probably not Champagne. It was some cheap fizzy wine from who knows where.The R Case and Extension
3, Structural Break and Changes over Times
Marsellus and the wine business - part 2
JULES
I saw the big man this morning. He was pissed off because he can't acquire no Champagne producer. Even a small one.
VINCENT
Why? Money issues?
JULES
Money is never an issue! Theses crackers over there... they don't wanna sell. At any price. No partnership, nothing.
VINCENT
Well, I got to know these guys. I hafta say it's a matter of national pride.
JULES
You know there are ways to relax someone's pride.
VINCENT
We wanna keep good manners. Remember they want a cover-up, not a mess. If it was for me, I would try something else. There are loads of wineries in France.The R Case and Extension
4, Correlation, Model, and Variable Selection
Marsellus and real estate
The consultants advised Marsellus about the wine business volatility. Due to ‘recent’ changes in the legislation (Pulp Fiction, 1994), the consultant explained how the market had become more volatile and the business does not pay off anymore. Marsellus backs off from the wine idea.
VINCENT
Paul told me the wine thing dampened their spirits. The big man is mercurial.
JULES
The big man likes results.
VINCENT
Paul said they wanna invest in real estate now. Around L.A.
JULES
Okay. Whereabouts?
VINCENT
Around your town. In the Valley.
JULES
Real estate is always a sure shot. Especially for money laundering schemes.
VINCENT
Apparently, they spotted buildings. Business offices in a booming area.
JULES
That's the spirit. It's easier to cheat on the occupancy rate and cook the books. The R Case and Extension
5, Multicollinearity (again), Hypothesis Testing
Marsellus and the holding - part 1
The real estate model is conclusive. Marsellus is willing to invest, but he decides to hold his decision to give it some thought.
He switches back to the European affairs. He stresses the importance of building a legal facade abroad.
JULES
Why does he care so much about a legit business in Europe? He needs to wash out illegal profits over here, not over there.
VINCENT
One of Marsellus' partner thinks they should use a European tax haven for money laundering. Here is how the scheme breaks down: you set up a holding, invest in public corporations, reap dividends, save taxes, and transfer the money back into the US.
JULES
Okay. 'sounds legit down the line. But how do ya recycle dirty money into a holding in Europe? The money 'doesn't exist'. Loads of money can't just pop up out of the blue? You will get the authorities on your back.
VINCENT
With the help of our Swiss friends.
JULES
What? Are they magicians?
VINCENT
No, but they can cloud issues with their banking secrecy (Swiss banks were reformed in 2004). You then use legal profits to purchase merchandises in Europe, import it in the US,...
JULES
...and the leftovers can be transferred back to the US as legal profits.
VINCENT
I would pay to see Marsellus' face. Right now, he is lectured about the European economy, French corporations...The R Case and Extension
6, Qualitative Variables as Explanatory Variables
Marsellus and the holding - part 2
JULES
The big man likes to be in command. But this time, Marsellus looked like a lost pupil. He was trying to decipher all these figures about 'capitalization', 'leverage', 'indebtedness'...
VINCENT
'Indebtedness'? You mean 'owing money'?
JULES
Yeah. But big corporations, the ones on stock exchanges, they don't owe money. They are 'indebted'.
VINCENT
Is this a big problem?
JULES
Well, go figure. Don't worry. They won't send us over there for this one. It's too big. We wouldn't know who to talk to. Ya know it's big when the French government owns the majority of your shares.
VINCENT
Why? Because the company owes them money?The R Case and Extension
7, Measuring/Forecasting with Dynamic Models: Distributed-Lag Models
Marsellus and the holding - part 3
VINCENT
Mia said Marsellus went ballistic and fired one of the consultants.
JULES
Should I be surprised? And Mia tells you that kinda shit now?
VINCENT
Why? I have to drop her off. She talks to me. I make her conversation. I do my job.
JULES
Whoa... whoa... whoa... What else did she tell you?
VINCENT
Well, that Marsellus had enough with the big public companies. He wants to invest in smaller schemes. Something private. Mia said he likes the new consultant. He is teaching him about publicity models and that kinda shit. Marsellus is figuring out how to use all these crazy-ass models for his drug deals.
JULES
What kind of crazy-ass model?
VINCENT
Well, something that has to do with 'persistence'.
JULES
What do ya mean? Like a drug effect?The R Case and Extension
8, Measuring/Forecasting with Dynamic Models: Autoregressive Models
Marsellus and the holding - part 4
JULES
You might have ups and downs. But in the long run, how do you perform?
VINCENT
I think this Butch has not much left in the tank. He is overrated.
JULES
In average, he won more fights. Many by K.O. He's still a hell of a slugger.
VINCENT
Anyway, I don't like him. JULES
You don't like anyone giving you the look. Ha! Ha! Ha!
VINCENT
I don't like palookas.
JULES
Well, well, well. Because you're worth more? Oh, I sorry, did I make you cross? I would want to intrude on your affair.
VINCENT
What affair?
JULES
The one with Mia.
VINCENT
There's nothing going on with Mia.
JULES
You changed Vincent. Since the last few days. There is something cooking. You are more... volatile, I may say. I tell you. You snap...
VINCENT
Knock it off!The R Case and Extension
9, Specification: the Polynomial Model to Measure/Forecast Profitability
Marsellus and the holding - part 5
JULES
How are things with their European investments?
VINCENT
Because Marsellus wants to avoid public corporations, they have to deal with private companies.
JULES
And...
VINCENT
Numbers are not public. Nothin's available. You can't just invest blind-sighted.
JULES
I hafta say, everything seems different over there. From burgers to... running a business. Whaddya think?
VINCENT
It's the same problem over here. When a company is private, you don't get no numbers. Not a goddamn thing.
JULES
What are they gonna do? Guess?
VINCENT
No. 'Estimate'. They gonna find companies, public ones, with available numbers and compare them. Just like a rule of three.
JULES
Just like? I tell ya, it's never simple with these guys.The R Case and Extension
10, Specification: the Polynomial Model to Measure/Forecast Marginal Costs
Marsellus and the holding - part 6
JULES
I don't quite follow you. You tell me they wanna avoid companies making good money and invest in companies not making any. What are these guys? Dopes? How did Marsellus react?
VINCENT
I know, I know. But it perfectly makes sense. See, you want to draft a young player. He's young. He's got a bright future. But only in a few years. These old ball players are expensive. They're good, but their best years are behind them. If they get injured, you're stuck with a huge contract.
JULES
And the green ones are cheaper. 'makes sense.The R Case and Extension
11, Specification: the Growth Model to Measure/Forecast Stock Returns
Marsellus and the investment fund - part 1
Marsellus comes to the conclusion that a holding is a bad idea. Heavily regulated, closely scrutinized, holdings are too complicated. Above all, they appear too risky for what they can bring in. Marsellus knows a thing or two about taking risks that do not pay off. He wants to hear about simpler solutions: something with smaller-size companies.
The consultant suggests that an investment fund or shares in a hedge fund could better fit his needs in the longer term. These shrouded funds invest in smaller-size companies such as fast-growing start-ups. These young sprouts have the potential to generate swift cash.
JULES
The big man once told me: if ya ain't big enough, be the quickest. Marsellus thinks quick profits can be generated with 'accelerating growth'.
VINCENT
Tough luck Jules. You finished your growth, you're getting old, and you're not as quick as your used to be.
JULES
Look who has been gaining weight, old slob! I might have slowed down, but I got smarter!The R Case and Extension
12, Specification: the Logistic Model to Model Lifecycles
Marsellus and the investment fund - part 2
JULES
In the 'start-up ecosystem', Paul's own words, no kiddin', there might be 9 losers for any big winner. But the winner grosses up so much money, not only does it cover for the losers, it pays off a lot more.
VINCENT
This Paul is getting smarter. He won't be working the bar anytime soon!
JULES
He spends his day eavesdropping. Around Marsellus, it's a very bad habit for your health. He'll get burned. He might as well be passing away anytime soon.
VINCENT
Where does all the money come from?
JULES
The start-up? Well, you know, just like with new markets. In the beginning, you don't find many buyers. You have to push the merchandise. Time passes. You build a good customer base. Regulars come back. The word spread. You get more and more demand. And finally, it's a windfall. You make so much money.
VINCENT
Until the competition smells the opportunity and comes in to undercut you.
JULES
Exactly. Paul calls that a 'mature market'. So, the goal is to skim the market before the others notice it.
VINCENT
Paul should get out of there before Marsellus notices him. A matter of self-preservation instinct.
JULES
Yeah. But I don't think he knows how to manage is own 'life-cycle'.The R Case and Extension
13, Specification: the Power Model to Model Price Elasticity
Marsellus and digressions on business management - part 1
Marsellus is growing impatient with the consultants. Setting up a business in Europe is not going as smoothly as he would have expected. First, the winery plan that came to a dead end left him a bitter taste. Second, the holding convolutions put him off. Now, he seems overtaken by the consultants’ speech about the investment fund. It all sounds like rocket science to him.
As he met Vincent, Marsellus surprisingly confides his sentiment of incompetence in the matter, and that he is seeking another point of view. Didn’t Vincent spend some time in Europe? He should be able to understand a thing or two. Vincent is bewildered. First, he had to look after Mia, the boss’ wife. Now, he must look after his boss’ special requests. In a panic, Vincent seeks help, again.
THE WOLF
It's the same beans, but it's not the same coffee. Some coffees are pricey, some are cheap. Still, some people like pricey things and others like cheap stuff. Remember, for each product, there is a price tag. What holds the price tag is the elastic. We call it 'price elasticity'. If you know the price elasticity, you know how far you can stretch your pricing. Capiche?
VINCENT
Yeah, yeah. I think I get it.
THE WOLF
Does he want to max out the profits? Tell him to employ different pricings. To apply 'price discrimination'.
VINCENT
Yeah, yeah. But I would use the term 'discrimination' with him.
THE WOLF
I was lead to believe the importance of being clear.
VINCENT
Not 'discrimination'. Not with the big man.
THE WOLF
Does Marsellus have a problem with some words?
JIMMIE
Marsellus is... quick-tempered these days.The R Case and Extension
14, Specification: the Cobb-Douglas Model and More on Elasticity
Marsellus and digressions on business management - part 2
VINCENT
He shot the guy.
THE WOLF
He shot him?
VINCENT
It's not your fault.
THE WOLF
Of course. How can it be my fault? I provided a simple and sharp explanation.
VINCENT
The other guy pushed the glory.
THE WOLF
How?
VINCENT
He followed up on our conversation about elasticity. The consultant took everything a step further. He said that elasticity could be applied to the demand side as well as to the supply side of the business. He went on a demonstration about production, workforce, assets... And this is where Marsellus pulled the trigger.
THE WOLF
Marsellus is a sensible man. He must have thought the consultant wanted to outsmart him.
VINCENT
Now we have another body to take care of. The R Case and Extension
15, Specification: Logit and Probit Models to Model a Probability?
Marsellus and the usury loans - part 1
Marcellus’ associates decide to pull him off the European deals. The big man clearly lacks in tact. They do not want to draw too much attention to the business developments. One dead man is more than enough. They will take care of Europe while Marsellus will only focus on the home business.
VINCENT
Paul told me the other guy wanted to swindle Marsellus with extra fees by talking his way through. The more they talk, the more they charge. That's how lawyers work.
JULES
Well, he got fired. With a .357. Now I warned the other guys to stop overbilling and to remain concise.
VINCENT
What are they working on now?
JULES
Marsellus would like to grow the loan business. Usury loans bring in good money. He is worried about repayment though. They are working on a way to minimize defaults.
VINCENT
How? By employing us to pay visits to the borrowers.
JULES
No. With a 'credit default model'.
VINCENT
Not that shit again. Not with Marsellus. Why do they keep playing with fire?
JULES
They already have a working model for forecasting loan approval. Now they just need to fit it to loan defaulting. The R Case and Extension
16, Heteroscedasticity
Marsellus and the usury loans - part 2
VINCENT
How did it go?
JULES
The guy survived I guess.
VINCENT
Is he still there?
JULES
Yeah. They talking about saving rates.
VINCENT
What do saving rates have to do with loans?
JULES
The consultant is trying to convince Marsellus to lend smaller amounts and to steer away from the high-rollers. You know, when it comes to budgeting and saving, humble households are more disciplined. On the other hand, you have all kinds of rich people. Smart people, high-rollers. The same thing applies to loans. Poorer people happen to be more reliable.
VINCENT
Get it. Marsellus wants to lend smaller amounts and make sure he gets them back.The R Case and Extension
17, Panel Data: Mixing Cross-Sectional with Time-Series Data
Marsellus and the investment fund - part 3
PAUL
Come on in!
JULES
How is the big man?
PAUL
He is doing fine. They are closing on their business deals.
JULES
Really?
PAUL
He is with a bunch of smart kids. They are running the numbers.
JULES
What do they do?
PAUL
Just like with dog races, they go over a bunch of stats for each dog. Then, they pick the ones they wanna bet on. By the way, where is Vincent?
JULES
He's on a case. On his own.The R Case and Extension
