Use Social Media in Study of E-Cigarettes

Five-year grant from the National Institutes of Health will support project that is as much about data-gathering methods as it is about public health. Credit: UA

When Facebook announced in September that it would use all that personal data it collects to roll out a new ad platform to rival Google, privacy advocates groaned and marketers grinned.

But what if all that intelligence could be used to crack open one of today’s most pressing — yet least understood — public health issues?

That’s precisely the vision of the University of Arizona’s Daniel Zeng, MIS professor at the Eller College of Management, and Scott Leischow, adjunct faculty in the UA College of Medicine and professor of health services research at Arizona’s Mayo Clinic.

Fusing cutting-edge informatics and public health, their plan to scrape social media to create the world’s best data on e-cigarette usage and marketing recently won a five-year, $2.7 million grant from the National Institutes of Health.

The project will tackle four distinct goals. It will:

Create a massive, real-time and continuously growing data set of what consumers and marketers say about e-cigarettes on sites such as Facebook and Twitter, as well as social media forums focused on e-cigarettes and "vaping."

Mine that content for insights into why people use e-cigarettes, how they believe they affect their health and whether they help them quit smoking.

Document the marketing landscape — all the ways brands and vendors use these channels to promote their products and how consumers respond.

Integrate all of that information in the world’s first one-stop resource for wide-ranging data on e-cigarettes as revealed through social media as a tool for other researchers, health care professionals and more.

While e-cigarettes are relatively new in the U.S. — they were introduced in 2007 — sales are doubling annually and were expected to reach $1 billion last year. Even so, any time public dollars fund research, two questions naturally arise: Why study this? And why study it this way?

"There’s so much we don’t know about e-cigarettes," Leischow says. "The scientific community has found mixed data on whether they’re helpful for smoking cessation. We have questions about how different flavorings impact use, particularly among minors. And many health professionals worry that e-cigarettes may ultimately lead to more young people taking up smoking. All of these blind spots around a product that is still totally unregulated make this a top-priority area for the FDA."

As for why it makes sense to study e-cigarettes in this way, Zeng’s MIS expertise holds the key.  By mining social media in real time, as Zeng and Leischow have proposed, there are a number of strategic advantages:

Data comes from people interacting naturally in their day-to-day lives, thus removing “presentation bias” problems intrinsic in surveys.

The data collection is automated, which means sample size is not constrained by how much money or how many eyeball hours researchers can muster.

The lack of constraint also makes anecdotal information scientifically relevant: One personal story is just that, but 10,000 or 100,000 personal stories over time equal robust statistical data.

Because content is processed by algorithms, not people, data is available in near real time, not months or even years after countless hours of labor-intensive review.

The world of e-cigarettes, like that of any niche product or interest, has its own specialized vocabulary of acronyms and slang, so the research team will first need to construct a base lexical dataset for “training” the computers that will collect and process content.

It’s also one thing to scrape words but a much more complex challenge to automate the process of extracting meaning, so that a computer can spot when someone cites a reason for using e-cigarettes or mentions how the products affect his or her health (both of which first require a computer to detect who is or isn’t a user) or correctly catalog the marketing strategy used in an advertisement.

"We basically will be creating a suite of novel technologies for this study using both established building blocks of informatics and methods that have yet to be developed," Zeng says, "including analysis and visualization tools that were developed here at the U of A. 
Beyond that, we’re relying on proven tools for pattern mining, group behavior prediction, social network analysis and a lot more, but in ways that have never been combined for this level of research and in this topic area."

For Leischow, the knowledge those tools will produce is invaluable.

"There are all kinds of messages out there, from how effective e-cigarettes can be to help smokers quit tobacco to how they’re totally harmless or taste like candy," he says. "It may be that e-cigarettes prove beneficial to public health, or they may be shown to do more harm than good. In either case, it often takes many years for experts to fully recognize how products are being used and how they impact well-being, and even longer for regulation to catch up.

"This time, it’s going to be different. This time, we’re getting out ahead."

Source: UA

Study of brokers' potential conflict of interest in routing limit orders leaked to Wall Street

A new academic paper about potential conflict of interest in large retail brokers' routing of limit orders has stirred controversy on Wall Street and caught regulators' attention -- even before the paper has been submitted to a journal.

While some in the industry have compared the study's possible impact to an earlier one that reformed Nasdaq trading, the authors caution that the paper is not yet final and the findings should be taken in proper context.

The authors, professors at Indiana University's Kelley School of Business and the University of Notre Dame Mendoza College of Business, found that some large retail brokers regularly route clients' limit orders to the exchange that pays them the highest rebates. Under certain circumstances, this can lead to some clients' trades not being executed at the best possible times -- or not being executed at all.

"Certain brokers, led by Ameritrade and including E*Trade, Scott Trade and Fidelity, were bifurcating the order flow -- sending market and limit orders to different exchanges -- but seemed to send all their limit orders to one place," said Robert Jennings, the Gregg T. and Judith A. Summerville Professor of Finance at Kelley.

"Brokers were paid for almost every order received; the conflict of interest occurs because some exchanges will pay brokers more to route limit order flows there, even if the chance that the limit order gets executed is lower on that exchange than somewhere else."

U.S. equity exchanges typically charge traders taking liquidity -- such as market orders -- and pay traders making liquidity -- such as limit orders. The payments, or rebates, are funded by take fees, so exchanges with the highest liquidity rebates also have the highest take fees. Brokers can generate revenue from customers' order flow.

According to the paper, "Can Brokers Have It All? On the Relation Between Make Take Fees & Limit Order Execution Quality," study results also indicate that, under some market conditions and for certain stocks:

-- Fill rates for displayed limit orders are lower on exchanges with higher fees. -- Limit orders executed on venues with high fees take longer to execute than those with low fees. -- On average, limit orders executed on venues with low/negative take fees are more likely to fill at the most opportune time for the limit order customer.

"Our results suggest that order routing decisions have an important impact of at least some measures of limit order execution quality and routing decisions based primarily on rebates/fees appear to be inconsistent with best execution," Jennings said. "Even if fees/rebates are passed directly through to the investor, the decision to use a single venue that offers the highest liquidity rebates does not appear to be consistent with the objective of obtaining best execution."

Paper leaked to financial community; FINRA asks brokers for data

The authors presented the paper to relevant industry representatives, including several brokerages, the Securities and Exchange Commission and the National Association of Securities Dealers. This common practice is generally accepted by all parties to be a confidential forum to test and refine study hypotheses and findings.

However in this case, the paper was leaked to the broader financial community without the authors' knowledge or permission. This led some to suggest the paper's impact could equal that of a 1994 study by Bill Christie of Vanderbilt University and Paul Schultz of Notre Dame showing implicit collusion among Nasdaq market makers; it led to sweeping reform of Nasdaq market (and a billion-dollar legal settlement).

The paper's leak -- and the Financial Industry Regulatory Authority's subsequent request for routing data from the 50 largest brokers -- has the authors concerned that the findings about brokers' maximizing liquidity rebates might be oversimplified.

Routing limit orders to maximize make rebates reduces fill rates, produces less profitable limit order executions -- and might be inconsistent with a broker's fiduciary responsibility to obtain best execution, the authors concluded.

"This is a classic case of adverse selection. If there's really bad news about the stock, everybody gets filled. If there's good news about the stock, then only the places where the order gets filled first get filled," Jennings said. "We are not alleging that the use of such rebates is illegal or that it violates securities laws, but there is a need for further transparency for consumers."

The authors expect to publish the revised and final version of the paper in the near future, after incorporating feedback they received.

"Given the competitive nature of the retail brokerage business, if brokers can get exchanges to pay for their orders, they could charge lower commissions," Jennings said. "Thus, customers may be slightly better off; if the payment was eliminated, commissions might have to be higher."

Commissions may be based on the total revenue that brokers receive, "but lower commissions do not compensate those investors who miss out on profitable limit order executions," Jennings and his colleagues concluded. "Brokers cannot have it all."

Jennings co-authored "Can Brokers Have It All?" with Robert Battalio, a professor of finance; and Shane Corwin, an associate professor of finance, both at Notre Dame. Battalio earned his doctorate at Kelley.

Source: Indiana University