A Column, A Tweet and a Substack

There’s been a fair bit of controversy recently in my corner of the internet. What does my corner mean, you ask? Well, my corner of the internet is where I focus on figuring out how to help people (young folks in particular) learn better. Anything related to this topic is my specific area of interest, and anybody who writes on this topic is my tribe.

And as it so happened, a recent column, a recently deleted tweet and an old Substack coalesced in my mind recently.

The recent column was written by Nitin Pai. The title of the column is “The Misleading Outrage over 18-Hour Work Days“. As always, it is an interesting, thought-provoking read. If the Livemint article is behind a paywall, Nitin has a version up on his own website, available here.

Earlier this month, the chief executive officer (CEO) of Bombay Shaving Company was forced to apologize for advising people in their early twenties to put in 18-hour work days for 4-5 years, and work hard. The social media backlash accusing him of promoting a toxic work culture was so strong that he quit that platform entirely.


I have not read the original post, and if the person who came up with the post has now deleted his entire profile, let alone the specific post, I suppose digging it up will be quite difficult. If you’ll permit me the indulgence, I won’t go around looking for archives of the post.

Nitin’s next paragraph is where things get truly interesting:

The man would be wrong if he had demanded that his company’s employees work such long hours and judged them solely on that basis. But to the extent that he was counselling young people on the attitude you need to adopt early in your career, he was speaking in your interest.
Remember, all those people on social media stoning the folk devil of the day don’t care about your interests. I think you have a better chance of success heeding his advice than of those who criticized him for what he said. For those of us who started from humble beginnings, hard work is the surest ticket to upward mobility.


And I’m sure somebody on Twitter will tell me why I’m wrong to agree with these two paragraphs, but… I honestly do not see why what Nitin has said here is even remotely controversial. The attitude that Nitin is speaking about is, in my opinion, indispensable. There’s no alternative to hard work, and you can pick any number you like – 18 a day or 10,000 in total, or any other. But it’s not so much about the number as it is about the attitude – and the attitude is about being willing to put in the work.

And because there is no such thing as a free lunch, putting in the work might mean having to cut some things out of your life.

Now, you might well decide that 18 hours of working is far too much. Or you might decide that you might want to put in 18 hours five days a week. But don’t get hung up on the specific number – put in the hours that you need to put in, and you need to figure out what those hours look like given what you know about yourself and your own life.

That’s it.

And if this is deemed controversial, so be it. This was good advice to me when I started on my career, and this is advice that I give to young folks today.

But there was another line in Nitin’s column that caught my eye.

“Your family and well- wishers would have advised you to sacrifice some of your leisure so that you can improve your life prospects.”

A person I follow on Twitter recently came up with a somewhat similar tweet. He’s since deleted it, and I’m afraid I cannot quote it in its entirety from memory, but here’s what I remember of it:

The tweet advised one to have more serious pursuits/hobbies at a young age. Sports might come later, as might dance, for example. If you’re seeking out leisure, try and develop hobbies of a more serious nature.

Again, let me be very clear. I’m telling you what I remember of the tweet, and I may well be not remembering it entirely accurately. But while in Nitin’s case I found myself in complete agreement with his column, I find myself in slight disagreement with this tweet.

Disagreements are fine! Please feel free to disagree with my post, and please feel free to tell me, whether on social media or by way of commenting on this post, or by email. I hope we can get into a lovely little argument about why we disagree, and figure out for both our selves about what is the correct way to think about this issue. Not, note, who is right and who is wrong between the two of us. But rather, what is the right way to think about it. That is the point of an argument – figuring out what is the correct answer. Not winning it.

I should note over here that this is easy for me to write, but difficult for me to practice. I struggle with it every time I get into an argument, but this is one of those things that is worth the struggle.

But let me now tell you why I disagree with the spirit of the tweet. Because the tweet was telling me what to do to get the best out of life, not how to go about it.

The YouTube channel MKBHD produces some really good videos, as does 3Blue1Brown, and they both work extremely hard at both creating fantastic videos, and also at doing so regularly. You might say that one is frivolous and the other is not, but trust me, both require a lot of extremely hard work.

In my opinion, it is not for me to tell you what you should be doing at any age. That answer can only come from within. The answer (for you) may well be making Instagram reels, or TikTok videos. Or it could be composing a saga in Sanksrit. Or it could be becoming the next best thing in Indian cricket. Or something else altogether.

But once you’ve decided what that something is, Nitin’s point becomes applicable. Boss, you want to be the best at this thing you’ve chosen to do? Start working!

Which brings me to the Substack post. So you should work hard, no matter what you chose to do. But what should you choose to do?

Well, as I said, not my place to tell you – that choice must come from you, and you alone. Not me, not Nitin, not the person who wrote the deleted tweet, not your best friend, not your parents, not your significant other. You, and you alone.

But I’m happy to tell you that I think I can give you advice in this regard. If you’ve chosen to do something, do you enjoy the process of working at it? Do you enjoy the hours you’re going to have to spend on working at it, day in and day out? Do you, in fact, enjoy this so much that this – the journey – ends up becoming its own reward? So much so, in fact, that the outcome doesn’t matter that much in comparison?

If yes, then congratulations, for now you’re not working 18 hours a day. For it’s no longer work, is it? It is something that you truly enjoy doing for its own sake. And a positive outcome, however defined (a prize, first place in class, a great career, awesome pay packages) is a bonus, but not the point. The point is the process.

So, your motivation should not be primarily based on the goal/outcome/results. Success is best achieved by those who find motivation in the process, rather than the outcome.


So what should you do in life? You know best! But don’t choose to do something for the sake of the expected outcome, choose to do something in which you enjoy the process.

“For example”, I hear you ask? Well, I enjoy the process of trying to write (and then post) everyday. Do I manage to do so every single day? Alas, no. Life sometimes gets in the way. But do I enjoy the process of reading stuff, and asking myself if what I’ve read will help me help young folks learn better, and then writing about it?

I love it. I adore it, I am besotted with it, and I never want to stop.

Try it. And by it, I mean optimizing for the enjoyment of the process, rather than the potential outcome.

And if it clicks, I envy you the happiness you’re about to feel. 🙂

Relative to What?

“We should not measure GDP because there are so many problems/controversies surrounding it.”

“Democracy doesn’t work.”

“Three hour examinations using pen and paper, sans Internet access, don’t make any sense .”

Just three examples of assertions out of many, many possible ones – and there is just one question that is good enough by way of response:

Relative to What?

That is, if you are saying that we should not be measuring GDP, are you saying that we shouldn’t be measuring economic output at all? Or are you saying that GDP isn’t the best measure of economic output? But both can be summarized more easily by saying “relative to what”? If you’re saying that a world with no economic measurement is better relative to a world with economic measurement, why are you saying so? If you are saying that GDP isn’t the best possible measure – relative to what? Whatever this other measure – is it as objective, as easy to obtain, as easy to meaningfully compare, as GDP?

Democracy doesn’t work compared to what? Are you suggesting a political system such as anarchy? And if yes, why is it better than democracy? Along what dimensions is it better, along what dimensions is it worse? How do you know? Are you suggesting another political system, not the absence of one? If so, which – and how is this system better and worse relative to democracy? Short summary: relative to what?

Wake me up at three in the morning, and I’m happy to go on a rant about how three hour examinations with no internet access simply don’t make sense for much of higher education. There are exceptions, and I don’t mean this as a one size fits all rule, but I should still be able to defend my stand if I’m asked the question: relative to what? Take home essays? Open book examinations? Take home question papers? No examinations? Vivas? Capstone projects? In what ways are these alternatives better, and in what ways are they worse than three hour in class examinations sans internet access? Short summary: relative to what?

It is extremely easy to poke holes in any system, because no system is perfect. The reason no system is perfect, as far as an economist is concerned, is because there is no such thing as a free lunch. That is, opportunity costs are everywhere.

So this, my second question, is effectively a restatement of the fact that opportunity costs are everywhere, or that there is no such thing as a free lunch.

But however you phrase it, the point is that as a student of economics, it is not enough to criticize the status quo, or to reject an idea as being bad/problematic. Evaluate the status quo or the alternative by gauging it against its competition.

“But xyz is bad because of abc reasons” is bad economic analysis. Well, incomplete economic analysis, at any rate. “Xyz is bad because of abc reasons, but it is also good because of pqr reasons, and it is better/worse than efg. Hence we’re going with xyz/efg” is better economic analysis.

Always remember:

Relative to what?

Two Magic Questions

I’ve linked to this magnificent paper by Robert Frank quite a few times by now, and will begin today’s blogpost with a quote from it as well:

Again, the important point is not whether this is the best possible short list of principles but rather that instructors will teach their introductory students more effectively if they begin with a well-articulated short list of some sort and then doggedly hammer away at it, illustrating and applying each principle in context after context.


His list of principles is worthy of discussion, because it is different from mine. Of course, as he himself says, a different list is just fine (I would argue it’s a good thing, because there is then more to learn), and when I say worthy of discussion, I mean that as a “Yes, and” discussion rather than a “No, but” discussion. (Have I linked to this tweet before? Yes. And I will do so again, as will I link to Robert Frank’s paper again, because one should doggedly hammer away at points that need to be reiterated, giving context after context!)

But the reason I begin with this excerpt is because I want to add to my own list of principles two different questions which I believe help one become a better economist. I’ll speak about the first of these questions today, and add the second one in tomorrow.

Here’s the first question:

What are you optimizing for?

Here is a list of questions that I usually get at the start of every academic year:

  1. Which stream should I take, or if from a parent, which stream should my child take?
  2. Should I accept admission in xyz college, or should I go to abc college instead?
  3. Which universities should I apply to in which country once I graduate out of this course?
  4. Which textbook should I read to understand subject xyz?

And my answer to all of these questions is the same. I respond with a question of my own: what are you optimizing for?

With regard to the first question in the list, here are questions you might want to think about. Are you optimizing for a course that maximizes the likelihood that your (or your child’s) passion will be nurtured? Or are you optimizing for future income streams, regardless of passion? Are you optimizing for the ability to graduate without breaking into a sweat? Or are you optimizing for the best possible brand of university/college to graduate from? Or something else?

With regard to the fourth, here’s another list of questions. Are you looking for a book that will help you learn the most about this subject? Or are you looking for a book that will help you score well? Or are you looking for a book that will help you score reasonably well without working too hard? The fact that there are meaningful answers to each of these questions is an indictment of the way we teach and conduct examinations. But the fact that entirely acceptable (and different) answers exist for each category is the point.

And of course, one can come up with a similarly long list for virtually every single question that you can come up with, or will encounter. The reason you can always do so is precisely because of the fact that choices matter.

As a politician in power, are you optimizing for long run growth, or are you optimizing for votes in the next election? As a politician in the opposition, are you optimizing for toppling the current government, or are you optimizing for what’s best for your constituency/country? As a judge, are you optimizing for the best application of accepted and laid-down principles of justice, or are you optimizing for currying favors? As a teacher, am I optimizing for pretending to finish a syllabus by putting in the least amount of effort, or am I optimizing for making sure that my students leave the class wanting to learn more? As students, are you studying a particular subject in order to learn as much about it as possible or are you optimizing to score the highest amount of marks for the least amount of effort? As an employee in an organization, are you looking to do the best possible job in your role, or are you looking to meet the minimum amount of effort required to keep your job?

Always remember, the question “What should I do?”, whether asked to yourself or to somebody else, always deserves to be met with a question in response. The answer to this question will go a very, very long way in terms of helping you answer the original one.

Here is the question once again:

What are you optimizing for?

A Rare Ol’ Treasure Trove

After yesterday’s post, I asked some folks for their choice of textbooks that undergraduate students should definitely be reading before getting their BSc/BA degree in economics. And what a list we have, already!

If you are an undergraduate student, please bookmark this post, and keep coming back to it when you want book recommendations. And I would argue that even if you are not an undergrad student of economics, you might still want to keep checking on this post, because I will be updating it regularly.

In what follows, I have not mentioned who has recommended what. That’s simply because I’m writing this post out on the fly, and haven’t had time to format it, add hyperlinks or even figure out how I want to tabulate this data. More than one person has recommended some of the books on the list too, and that’s an additional complicating factor. Note that not all of them are textbooks, and some aren’t even books (they’re essays), but hey, when it comes to reading, there’s no bureaucratic stuffiness in these parts.

Folks who have read some of these books might wonder at the very broad political and economic ideology spectrum over here, but surely this is a plus and not a minus. As an undergrad student, read far and wide, and figure out over time what resonates and what does not (and why).

Finally, to everybody who took time out of their busy schedules to reply, thank you very much!

Here is this most magnificent list, in no order whatsoever:

  1. On the Wealth of Nations, by Adam Smith
  2. That Which We See and That Which We Do Not See, by Frederic Bastiat
  3. (Bonus points if you saw this coming) Economics in One Lesson, by Hazlitt
  4. Micro Motives and Macro Behavior, by Schelling
  5. Free to Choose, by Milton Friedman
  6. Both the Freakonomics books, by Levitt and Dubner
  7. Road to Serfdom, by Hayek
  8. Modern Principles of Economics, by Cowen and Tabbarok
  9. Public Finance and Public Policy, by Jonathan Gruber
  10. Economic Growth, by David Weil
  11. The Effect: An Introduction to Research Design and Causality, Nick Huntington Smith
  12. Economics Rules, by Dani Rodrik
  13. An Uncertain Glory, by Amartya Sen
  14. Everybody Loves a Good Drought, by P Sainath
  15. In The Service of the Republic, by Vijay Kelkar and Ajay Shah
  16. Of Counsel: The Challenges of the Modi-Jaitley Economy, by Arvind Subramanian
  17. In Spite of the Gods, by Edward Luce
  18. The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy, by Thomas Sowell
  19. The Meaning of it All, by Richard Feynman
  20. Delhi Rape: How India’s Other Half Lives
  21. Principles of Economics, by Mankiw
  22. Intermediate Microeconomics, by Hal Varian
  23. Macroeconomics, by Dornbusch Fischer and Startz
  24. International Economics, by Dominic Salvatore
  25. Introduction to Econometrics, by Woolridge
  26. Complete Business Statistics, by Aczel and Sounderpandian
  27. Using Econometrics: A Practical Guide, by Studentmund
  28. Introduction to Economics, by Richard Leftwich
  29. Theory of Econometrics, by Koutsoyiannis
  30. Principles of Economics, by Koutsoyiannis
  31. The Worldly Philosophers, by Heilbronner
  32. Macroeconomics, by Alex Thomas
  33. Economic History of India, by Tirthankar Roy
  34. India After Gandhi, by Ramchandra Guha
  35. Macroeconomics, by Snowdon and Vane
  36. Causal Inference Mixtape, by Scott Cunningham
  37. International Economics, by Paul Krugman
  38. Capital, Vol. 1, by Karl Marx
  39. Classical Political Economy and the Rise to Dominance of Supply and Demand Theories, by Krishna Bharadwaj
  40. Three Essays on the State of Economic Science, Koopmans
  41. Universal/University Economics by Alchian and Allen
  42. Introduction to Econometrics, by Cristopher Dougherty
  43. Studies in Indian Public Finance, by M. Govinda Rao

Which Textbooks Are We Recommending Our Students Read?

I chanced upon this excellent website via Marginal Revolution yesterday.

What is Open Syllabus?

Open Syllabus is a non-profit research organization that collects and analyzes millions of syllabi to support novel teaching and learning applications.  Open Syllabus helps instructors develop classes, libraries manage collections, and presses develop books.  It supports students and lifelong learners in their exploration of topics and fields.  It creates incentives for faculty to improve teaching materials and to use open licenses.  It supports work on aligning higher education with job market needs and on making student mobility easier.  It also challenges faculty and universities to work together to steward this important data resource.
Open Syllabus currently has a corpus of nine million English-language syllabi from 140 countries.  It uses machine learning and other techniques to extract citations, dates, fields, and other metadata from these documents.  The resulting data is made freely available via the Syllabus Explorer and for academic research. 
The project was founded at The American Assembly, a public policy institute associated with Columbia University. It has been independent since 2019.


Tyler Cowen linked to a Davis Kedrosky thread about the most cited papers, and the thread is well worth your time. Here are the top five papers assigned as readings in economics since 1990, worldwide:


But I dug around on the website to see what textbooks have been recommended. And worldwide, this is what comes up:


If you’re wondering, The Wealth of Nations comes in at number 13, and the General Theory comes in 22. I don’t intend this as snark or criticism, and I would in fact argue that the General Theory is not the best book to read if you’re starting on a study of macroeconomics – but that’s a topic for another blogpost. The top 5 is actually a pretty good list, although my personal preference would be to have it reversed. That is, a book on the principles of economics ought to be number one, in my opinion. Should it be N. Gregory Mankiw or some other book? Some other book(s) if you ask me, but that too will be a topic for another blogpost!

Take a look, however, at India’s most recommended textbooks (you can filter by country):


And personally, I find it worrying that a Principles text doesn’t make the top 5, and neither does an introductory text on micro or macro! Modern Microeconomics by Koutsoyiannis makes an appearance at number 7 and the first macro text is Shapiro, in at number 10.

I have nothing against any of the textbooks mentioned in this list, and I have (genuinely) fond memories of doing battle with all of them when I was a student, but I do ask myself if these five ought to be the most assigned texts for Indian students.

Which, of course, begs the obvious question, and that will be tomorrow’s blogpost. But for now, a request: if you are (or have been) a student of economics in an Indian university, what would your top 5 list look like? Much more importantly, if you are a professor of economics in India, what would your top 5 look like?

If you can spare the time, I would love to know!

Top Gear and The Division of Labor

You may or may not agree, but I think Top Gear to be one of the best television shows ever produced. Yes, they were politically incorrect more often than not, yes they were occasionally outrageous and yes they courted controversy. But also, the show was of extremely high production quality and if nothing else, it made for excellent entertainment.

Phull paisa vasool, as they say.

But hey, Jeremy Clarkson, Richard Hammond and James May can also help us understand the importance of the division of labor.

What is the division of labor?

Here is the opening paragraph from an essay on the topic over on EconLib:

Division of labor combines specialization and the partition of a complex production task into several, or many, sub-tasks. Its importance in economics lies in the fact that a given number of workers can produce far more output using division of labor compared to the same number of workers each working alone. Interestingly, this is true even if those working alone are expert artisans. The production increase has several causes. According to Adam Smith, these include increased dexterity from learning, innovations in tool design and use as the steps are defined more clearly, and savings in wasted motion changing from one task to another.


Two questions at play here, really. First, what is division of labor? It is “the specialization and the partition of a complex production task into several sub-tasks”. Second, what is the benefit to society of this concept? It is “the fact that a given number of workers can produce far more output using division of labor compared to the same number of workers each working alone.”

And over millennia, this division of labor has resulted in humans building ever more complex things in ever more affluent societies. This process has, of course, rapidly accelerated over the last two hundred years or so. But precisely because we have gotten so very good at division of labor, we have experienced yet another benefit of this concept:

The reason is that division of labor produces a cost advantage where none existed before—an advantage based simply on specialization. Consequently, even in a world without comparative advantage, division of labor would create incentives for specialization and exchange.


This, to me, is an underrated point, and worthy of elaboration. Division of labor is (partly) specializing in a particular task, but the magical bit is that division of labor itself creates incentives for further specialization. Or, to put it another way, division of labor begets more division of labor, and more specialization.

And one indication of this, to me, is the fact that we’ve created a society in which we tell three middle-aged British gentlemen that they can spend about three decades and counting on creating ridiculous, over-the-top television shows that will entertain and enrage in equal measure. This – climbing dams in a car, dropping a car from the sky, taping a car on top of another car and playing football with cars, among other mad things – is what they should specialize in.

Not only will we lap it up, but we’ll pay for knock-offs, spin-offs and versions in different countries. This is going to sound faintly ridiculous, but imagine the three of them trying to pull this off in a hunter-gatherer society. Not a show about cars, of course, but a proposal that the rest of the tribe should get on with the business of hunting down food or foraging for it, while the three of them entertain the others with mad-cap capers. I suspect it wouldn’t have gone down well.

But today, we have enough of a surplus from other parts of society for us to be able to say that hey, a section of our 7 billion plus tribe should drop cars from the sky, and record it so that the rest of us can watch it and be entertained.

Which brings me back to another topic of discussion: perhaps you are of the opinion that surely this is not what we created our modern civilization for. All the efforts of the past thousands of year culminate in… “this?“, you might quite reasonably ask.

Well, this and the Laser Interferometer Gravitational-Wave Observatory. Specialization has resulted in us building tunnels over four kilometers in length so that we can detect gravitational waves that originated 1.3 billion light years away also.

Go back to the question embedded in the first sentence of this section: what did we create our modern civilization for? The question is “what”, not “how”. Economics doesn’t tell you what you should be optimizing for, that’s your business.

But if you have decided that what you should be optimizing for is having cars fall out of the sky, then economics can tell you how to go about getting this to happen. Economics will help you align the incentives, set the prices, deal with the unintended (is that the word I’m looking for?) consequences, and execute the trades necessary for the show (or the laboratory) to come to fruition, and stay popular.

But every time I watch an episode from Top Gear, I can’t help but wonder at how far we’ve come. You might wonder if the direction in which we’ve come is the right one, but you can’t help but marvel at the distance civilization has traveled.

What a time to be alive.

A Shared Plate at Bedekar’s

My first assignment in the Principles course at the Gokhale Institute is essentially Robert Frank’s famous assignment (pp. 61 in this PDF). Submissions are due on the 5th of September, and I look forward to reading them.

In today’s blogpost, I am going to try and write one of these myself! Three reasons for doing so:

  1. Skin in the game, practice what you preach, only ask others to do something if you’ve done it yourself.
  2. Some students might find an example essay useful
  3. It will be fun!

The essay is below the fold.

One of my favorite places to eat in Pune is Bedekar Misal. The place has been around forever, and the quality of the food has remained consistently good. If you haven’t yet been there, consider trying it!

The last time I was there, though, I noticed something interesting. The menu is printed on two flex sheets that have been put up at both ends of the premises. And the menu says that a regular plate of misal costs 90 rupees. If, however, two people choose to share one misal, then the price goes up to 130 rupees.

Why should this be so?

The costs of production don’t change depending on how many people eat a plate of misal. Neither do the costs associated with serving a plate go up depending upon how many people share a plate. Why then should the owners be charging a higher price for a shared plate?

Because what is scarce, and therefore at a premium, is a place to sit within the cramped confines of the restaurant. Try visiting the place at around one pm, and you’ll see a queue of hungry but patient would-be patrons waiting outside.

Now, if two people occupy a table but have only one plate of misal, that is revenue foregone for the restaurant. If two strangers were sitting at the same table, that would be revenue worth two plates of misal. Even if they knew each other and ended up having one plate each, that would still count as revenue worth two plates. But if they share a misal, well, that’s a loss.

And so what Bedekar Misal does is it puts up a negative incentive in place. Sure, they say, you can have one misal between two people. But you must then pay more. In effect, you are getting half a plate of misal for 65 rupees. At the margin, there will hopefully be folks who will consider this deal and reach the conclusion that paying just 25 rupees more is worth it. If they do, Bedekar Misal gets revenue worth two plates.

And if people choose to walk away from the restaurant rather than pay more for the same plate, well, it still works out just fine for Bedekar Misal. Why? Because there is no shortage of hungry people waiting in line!

So the problem of scarcity of space is solved by not explicitly charging for renting a seat. It is solved, instead, by increasing the price of the good you consume while occupying the scarce resource. That lowers the demand for a shared plate, and therefore increases the number of customers paying full price, while occupying space.

And that’s why this rather odd policy makes sense, once you apply simple principles of economics. Incentives, as it turns out, do matter.

I ended up having two plates all by myself, for the record, but alas, Bedekar’s doesn’t yet offer bulk discounts.

This essay clocks in at 484 words, well within my strictly enforced limit of five hundred words. To everybody reading this, an invitation – and especially to my students: feel free to tell me how the essay could be better! In effect, grade my submission, because I will soon be returning the favor 🙂

P.S. There are some folks who don’t like misal, but that’s fine. Nobody’s perfect.

Opt-In, Opt-Out

I ended up paying somebody else’s electricity bill by mistake, and therein lies a tale.

About three weeks ago or so, an alert popped up on my phone. It was a notification from the Cred app. Or it may be that I saw this notification while doing something else on the Cred app. But whether it was a notification on my phone or within the Cred app, the call to action was clear. Two days left to pay your electricity bill, it said, inviting me to go ahead and pay.

Now, I usually pay the electricity bill by using either Amazon Pay or Google Pay, but I had no aversion to paying it via the Cred app. I already pay my credit card bills using the app, so why not electricity bills too? The amount that I had to pay looked right (based on what I remembered from the bill that the utility had sent me), and so I went ahead and paid.

And that was that, I thought.

Except we received, some days ago, the next month’s bill. And this latest bill said that we had to pay a whopper of an amount. Upon going through the fine print, we realized it was a whopper because I had not paid last months’ bill.

Except, of course, I had!

And so I dug through Cred’s sections, hunting down the notification re: I having paid the bill. And sure enough, there it was… except, on closer perusal, for one crucial fact. The consumer number wasn’t correct.

So what had happened?

I still get notifications in my inbox for electricity bills from the last apartment I used to stay in. We shifted out of that place in 2016, but I continue to get electricity bills for that apartment. And Cred, for some reason, decided for me that this was an electricity bill I needed to pay. And told me to pay it. And I went ahead and paid for it.

What is Cred? It is a start-up through which you can pay your credit card bills. There is a lot more going on there, but that is (maybe) a story for another blogpost. For now, it is an app that helps you pay your credit card bills, and that is good enough for us.

How do you go about adding your credit cards on the app? Well, you enter the number, you enter an OTP that you get on your phone, you jump through a couple of other hoops, and then you’re set. You get bill alerts, payment due day alerts, and there’s some gamification after you’ve made payment via the Cred app.

But the most important thing is that you have to opt-in when it comes to adding your credit card. It is not added in by default, you have to choose to add your credit card.

But the electricity bill? Ah, that was opt-out. I wasn’t asked to confirm if this was my bill. I’m sure I must have pressed yes at some point of time to a question along the lines of “Can we trawl through your inbox to identify bills you need to pay”, and I’m well aware of the fact that I was a lazy chump to do so. This blogpost is not me complaining about Cred, or saying something illegal happened.

But it certainly is about choice architecture. Having trawled through my inbox, and having surfaced an electricity bill, I sure do wish that Cred had added an additional verification step. If the name on the bill doesn’t match my name on Cred, maybe ask if this bill is mine? Or even if it does, still check if I should be paying this bill (maybe I’ve rented out that flat, and my tenant should be paying it, for example?).

And only post this confirmation should you be sending me a message to pay “my” electricity bill?

This is, of course, a well known problem in behavioral economics. See here, for example. Or open up the Zomato app! Just before you make payment, take a look at the fact that you’re paying INR 4 to the Feeding India Foundation – this is opt-out. That is, Zomato assumes you are willing to pay the 4 rupees, and you have to opt-out of paying it.

And Zomato will not send you cutlery by default – you have to opt-in to have the cutlery be sent to you.

And I do wish that electricity bill payments on Cred were opt-in, not opt-out!

P.S. This is a true story, but is also a useful way to segue into announcing that GIPE is hosting a week-long seminar on behavioral economics. I will be taking a couple of these sessions, and I now have skin in the game when it comes to talking about choice architecture. An ironical thank you is due to Cred, I suppose.

P.P.S I’m in touch with Cred about this, and while I am not asking for a refund, I do hope that they change their choice architecture. I’ll keep you guys updated 🙂

How To Get the Most Out of Life

Oof, it’s taken me a long, long time.

About a month ago or so, I wrote a blog about parsing my favorite definition of economics, and Akshay Alladi responded on Twitter thusly:

And coming up with a reply to this tweet is what has occupied my mind for all this while. I don’t mean that as a complaint – quite the opposite, in fact. It has been a very enjoyable thing to keep gnawing away at, and it has resulted in more than a couple of lovely, relaxed conversations. It has also taken me down many a rabbit hole online, including on the etymology of the word religion. I have, in fact, a whole other draft of a post in response, but it ended up being so chaotic and full of links that I decided to start anew instead.

And in this new post, I decided to keep things simple. Rather than try to define religion (and I invite you to take a stab at it), or think about why one should be (or should not be!) religious, I decided to step back for a bit and take a look at the definition again:

Economics is the study of how to get the most out of life

And here’s my first line of defense against Akshay’s question. “What might be the thing that will give you the most out life?” is a question whose correct answer may well be religion for some. What is religion?

Here’s the definition Google will give you:

“the belief in and worship of a superhuman controlling power, especially a personal God or gods.”

Wikipedia goes on an extended trip, with a twist at the end of the sentence, if you prefer a more thorough definition. But whichever definition you go with, you may well decide that it is this – the practice of this thing called religion – that will get you the most out of life. And I say this will all sincerity: good for you, if that be the case!

Again, to be clear, religion isn’t my own answer to the question of how to get the most out of life, but it may well be yours.

But now that you have decided to get the most out of life by practicing religion, economics absolutely can help you from here on in.

What is the cost to you of practicing religion? What are you giving up in order to do so? What incentives can be put in place for you to be religious – both positive and negative? Should you be needing incentives at all in the first place when it comes to being religious? What are the short term benefits and costs, and what are the long term benefits and costs? Economics can help you frame these questions, and can help you answer them.

Or put another way, economics does not help you decide what “most” should be. In fact, it cannot help you decide what “most” should be. It may well be the case that something associated with religion (or even religion itself) helps you answer this question. But once you’ve decided that this – whatever this may be – is your definition of “most”… then the how to go about it is all economics.

Remember, economics is about choices, horizons, costs and incentives. Choices regarding what? Costs pertaining to what? Incentives for what? The answer to this question must come from you.

The how?

That’s economics.

Econ Ain’t About Money

A somewhat less sexy, but more accurate title would have been ” Economics Isn’t Just About Money”.

But the decision to jettison the word “just” is deliberate, and not just for the sake of a headline that makes you want to click through. It is, instead, to emphasize the point that economics is about so much more than just about making money.

I have some close friends to thank for inspiring this post, with whom I had a conversation about tomorrow’s blogpost. They told me that they had been under the impression that economics is about money, and to my surprise, that seems to be an idea that most people I have spoken to are comfortable with.

But these people I have spoken with, and whoever has taught them economics, have less than half the right answer. Economics isn’t about money alone.

I’d written a post a while back about Choices, Horizons, Incentives and Costs. And to me, that’s what economics is about.

No matter what you do in life, you have a range of choices to choose from. Should I watch Netflix for an hour or study for an hour? Should I read a couple of pages from a book, or should I quickly scroll through Twitter? Should I enroll in an engineering course, or should I pursue law instead? Should I start with the salad at a buffet, or should I start with desserts instead?

Life is all about choices, every single second of your life. Economics helps you be clear about your choices, and also helps you potentially expand your choice set. One option regarding the last question in the paragraph above, is to say neither, and fast instead. Be aware of your entire choice set, and only then set about choosing one.

Horizons is about thinking about the long term, rather than the short term. My favorite example in introductory economics is to ask my students if I should have a second gulab jamun for desserts after lunch today. I tell them that present day Ashish will definitely say yes, and seventy year old Ashish (assuming I live for that long) will definitely say no. Because the consequences of choices I make today truly matter in the long run, bur are underestimated in the short run.

Incentives are about what motivate you to do (or not do) things. Economics teaches you how to use your own incentives, and those of others, to Get Things Done. My favorite example comes from Tyler Cowen, who helps us understand how to use incentives to not be bored in a museum. Ask yourself, he suggests, which painting would you choose to steal from each room, to install in your own home – and you cannot choose more than one per room. Your incentives have flipped – now it’s not about “seeing” each and every painting having paid the price of admission, but instead about asking yourself which painting will look best in your home.

And costs are about the realization that nothing in life comes for free. No matter what you are doing, you could always be doing something else. Instead of having read this far (thank you!), you could have given up halfway through and watched funny cat videos instead. Opportunity costs are everywhere, and whatever your choice, it ain’t for free.

The point that unites each of the examples above is that none of them are about money! They are economics-y concepts: choices, horizons, incentives and costs. But what to have in a buffet, whether to have a second gulab jamun, deciding which painting to steal and watching cat videos are not about money.

You could put a monetary value to all of them using subjective valuations, of course, but some things shouldn’t have numbers attached to them. Not because they’re not important, but because they’re fundamentally unquantifiable. What price (and I’m not joking here) can you possibly put on a parent choosing to read a story to a child? Economists have an answer to this question, of course, but it isn’t one that I am entirely comfortable with, especially if it involves a definitive number.

And that’s what I mean when I say that economics is about so much more than just money.

That still does not answer the question of what economics is about – I have written about it earlier, and will defend my answer in tomorrow’s post.