Meritocracy On The Web

The Washington Post has a longish piece on a new trend coming to the internet. Some groups are sifting though the enormous babble of voices that virtually inhabit the world wide web and finding the real experts. Some are experts at stock picking, some are extremely good at picking winners in the weekly sports games. But the trend is out that and is emerging.

For the past decade, much of the Internet has been animated by the "wisdom of crowds," the notion that the tremendous masses drawn to the Web can together provide collective knowledge that outperforms even that of experts. By marshaling the knowledge and tastes of millions of people, the Web has fundamentally changed the way people can gain knowledge about their world.

This group wisdom, for instance, underpins the link-analysis formula Google Inc. uses to rank search results. It influences the book recommendations offered by Amazon.com. It is also reflected in the votes of thousands of users who select the videos featured on YouTube, the articles showcased on the news aggregating site Digg.com and the ratings awarded movies on IMDB.com.

But this wisdom of the crowd could be outsmarted by what Michael Arrington, editor of the TechCrunch blog, recently dubbed the "wisdom of the few." Sites like PicksPal rely on input from the masses chiefly as a venue for auditioning prospective experts, on the theory that these virtuosos could provide even more accurate information and predictions than the crowd.

"If you figure out which ones did the best and get rid of the ones who have no idea, you'd do even better. Distill it down to the people who really know," Arrington said.

While generations have looked to pundits for guidance, it has often taken a long time for their expertise to be recognized, and many have remained in obscurity. Now the Internet promises new ways to discover those who might otherwise get overlooked. And it can do so with breathtaking speed. Some business professors remain skeptical, warning that luck can often be mistaken for expertise. But as more Web sites try to find ways to tap the expertise of smart people, a great debate is shaping up between two competing models for harnessing the human mind.

One pioneer of the wisdom of the few is Marketocracy, a site that has been recruiting Internet users to manage model stock portfolios and evaluating their performance for more than three years. Marketocracy tries to identify the top stock investors out of 55,000 users who manage portfolios by evaluating both their long- and short-term performance. Each month, the virtual portfolios of the 100 best investors are converted into a mutual fund that is sold to the public for real money.

"We think investing is a skill that's hard to find. When you find it, that's where you want to put your money," said Chief Marketing Officer Mark Taguchi. The fund has outperformed the S&P 500 in four of the five previous years and is roughly even so far this year.

That is not to say that all people are buying into this notion of "real" experts versus the wisdom of the crowd:

The notion of separating the best from the rest is heresy for those who advocate the wisdom of crowds. According to its proponents, a large number of diverse, independent individuals will typically outdo experts because even experts lack perfect information and make mistakes. But with a crowd, the many small pieces of information and perspectives held by individuals come together to form a more complete picture while the mistakes can cancel each other out.

In a classic example cited by James Surowiecki in his recent book, "The Wisdom of Crowds," a professor asked 56 members of his class to estimate the number of jellybeans in a jar. The average of the guesses came to 850, only 21 beans off, and was better than the individual estimates of all but one of the students.

So far, this appears to be a localized phenomenon tied to only a few fields. However, we will wait patiently until the world beats a path to the door of the Crabitat. After all, we are the foremost experts on the animal uprising. And dehydrated water.