Simplify. Then Simplify More. And Then Some More.

I try and post daily here on EFE, and as regular readers may have noticed, don’t always succeed.

I would like to try and write daily, which is a whole other challenge. But I cannot always manage to do so, alas. And let me be clear, the reason I can’t manage either is not because of my other commitments, or my regular job, or anything like that. It is simply because I am not good enough at managing my time well.

It is, for example, 10.03 am as I’m typing this out, and today’s blog should have gone out at 10.00 am. Better late than never, I am consoling myself as I type this out.

So it goes.

One major downside of trying to write/post daily – beyond the fact that I find it difficult to build this habit – is that I am certainly unable to read through my posts once before posting. In an ideal world, I would like to sit down with each post a day after I have written it, and go over it in detail. I would like to scrub out the unnecessary adverbs, rewrite passive sentences into active ones, adjust the length of the sentences so that they sound better, and so much more from a grammatical and aesthetic perspective.

But above all, I would like to be able to take out the time to make sure that what I’ve written is clear, concise and comprehensible.

I’ve christened this blog EconforEverybody. And at least some of my posts, I am sure, aren’t for everybody. Folks without a background in econ theory might not get them, or might be turned away by the opening paragraph, or hell, even the title. And even if they do make it past these hurdles, the topic may still prove too complicated for them.

So two things for me to note, then. One, try and write as simply as possible. An admonishment that I have regularly handed out to one of my favorite students is one that I should follow myself: shorter sentences always. Simpler words, too.

Two, before clicking on the “Publish” button, try and read the whole thing once. Try and eliminate the obvious errors, at the very least. And if you can find the time to make it even simpler, please, go ahead and do so.

If I can make this a habit, my writing elsewhere will benefit too. And that can only be a good thing.

So when I write, I must simplify. Then simplify more. And then some more.


On Hierarchy and Sociology

The Browser (which, if you can, you should seriously consider subscribing to) recently linked to an excellent article by Malcolm Gladwell.

It’s a very short read, but one paragraph stood out for me.

But before we get to that, here is what I wrote a couple of months ago:

The worst kind of zero sum games are those involving status and hierarchy as end goals. Unfortunately, these also are the most prevalent, no matter where you go and what you do.

And now here’s the paragraph from Malcolm’s article:

The first is a sociological observation. One of the core concepts in cross-cultural studies is “power distance,” which refers to the degree to which a culture values hierarchy. Places such as France and Saudi Arabia and Colombia have high power-distance cultures: authority, in all its manifestations, matters a lot there. Places such as Australia and Israel are low power-distance cultures. A friend of mine, who was the Middle East correspondent for a major newspaper, once told me that he would sometimes call the Israeli Prime Minister’s residence, and the Prime Minister would pick up. That’s low power distance. I guarantee you that the President of France does not answer his own phone.

What is “power distance’? As Malcolm himself points out, it is the degree to which a culture values hierarchy. This can be the number of “layers” you must get through before you are able to reach somebody with the ability and willingness to make a decision in an organization, it can the insistence on the use of honorifics, or something much more subtle (but all too noticeable if only your antennae are attuned enough to be able to see).

Consider this explanation:

Power distance refers to the extent to which less powerful members of organizations and institutions (including the family) accept and expect unequal power distributions. This dimension is measured not only from the perspective of the leaders, who hold power, but from the followers. In regard to power distribution, Hofstede notes, “all societies are unequal, but some are more unequal than others.”
In a large power distance society, parents teach children obedience, while in a small power distance society parents treat children as equals. Subordinates expect to be consulted in small power distance societies, versus being told what to do in large power distance societies.

I debated about whether or not to include that second paragraph in the excerpt, because you might be tempted to go down a whole new discussion about parenting (god knows I’m tempted!). But I’ll park that second paragraph here, and maybe return to it in another blogpost.

But a later excerpt from the same article is even more telling: “Individuals with a low power distance cultural background may more openly express agreement and disagreement”

Particularly from the viewpoint of organizations, this ought to set off alarm bells. Any organization that is “high power distance” is likely to be an organization that doesn’t allow bad news to filter up to the highest level, and in my opinion, this is therefore an organization doomed to eventually flounder.

But this is also true in classroom settings! “Ashish, I think you’re talking crap” is far easier to say, and far more honest a comment than “Professor Kulkarni, I’m not sure I understand”. Because let’s be honest, you really want to say the former, but a high-power distance setting like a classroom will almost force you to say the latter. This is why I ask all my students to call me Ashish!

The point for me – and a point I hope you agree with – is that I like to set up for myself low-power distance environments. At home, among my friends, with my colleagues and among my students – it makes sense (to me) to have low power distance settings. Life just seems better that way.

Although I’m not sure I would have been allowed to wear an apron over my kurta pyjama on my wedding day:

The people serving the meal were the wedding party. The bride’s father gave us our picnic basket. The bride’s sister made the pulled pork sandwiches. The groom did the cole slaw. And at the end of the line, the bride—who had put an apron on over her wedding dress—served the mac and cheese. The receiving line was turned into a service line.

Basketball’s 3 Point Line

I’ve lost count of the number of times I’ve rewatched parts of The Last Dance, the documentary on Michael Jordan, and now, in the 40th year of my life, I’ve slowly started to develop more than a passing interest in basketball.

This video, about the 3 point line in basketball, might not resonate much if you haven’t seen a single game of basketball, but I would argue it is worth thinking about how your sport has changed over time, and how players are responding to these changed (non-monetary) incentives.

Will Classroom Teaching Change This Semester Onwards?

The new semester is underway in some colleges and universities, and others will begin soon enough. Across the country, a new bunch of students will be attending their first semesters in undergrad or postgrad courses.

This is both old news and news at the same time. There’s is nothing new in this if you take the long view, but given that this is the first semester post the end (?) of the pandemic, it is very new and very different.

Why different? Because we’ll be teaching students who have spent two years learning at/from home, and the way they have learnt is very different from the way they will learn in this semester.

  • Physical attendance will be required. Not by me, to be clear, but colleges and universities will require it (of course).
  • Usage of internet enabled devices might be frowned upon. Again, not by me, to be clear, but there will be a fair few number of colleges, universities and professors who will require complete attention, and that will mean no phones, tablets and laptops allowed.
    Let me be clear: I personally don’t mind usage of these devices in classes, but don’t hold very strong views on the subject, and am well aware of the fact that there are a large number of professors who hold very strong anti-device views. How this will play out is something I am very interested in seeing this semester.
  • Discussions, debates, arguments will be centre-stage once again in a classroom, and this time with many more people involved, whether they like it or not. Have we lost the skill? Will there be new norms given the last two years? Will it be more difficult to get discussions going, or will it be easier than ever before?
  • Every single professor I have spoken to has bemoaned the lack of eye-contact and visual cues while teaching. How will we adapt to having these advantages with us once again?
  • How screwed up are attention spans post pandemic? Not just because of ‘taking’ classes from home, but because of the pandemic itself – and how will these affect both teaching and learning?
  • Have students learnt to think of material available online as definitely being a substitute for an in-class experience, as opposed to a complement? And if so, are they likely to take less kindly to some of the teaching they will experience offline? And if so, how will colleges and universities respond? As my favorite blogger says, solve for the equilibrium.
  • Do pen and paper exams make sense anymore? If yes, why? If not, how are we thinking about substituting for them? Are these discussions taking place in higher-ed institutions across the country?
  • How should our pedagogy change? More videos shown in class? More interactive content? More discussions?
  • Will all classes be recorded and shared with students? Should they? If not, why not?
  • What percentage of subjects/courses offered in a semester will be offered ‘remotely’?
    • This is not just about habit formation. The one lesson that all course coordinators learnt during the pandemic (including yours truly) was that we need no longer be restricted by geography when it comes to hiring really good profs. But now that all classes are offline, should we just give up on profs we know are good, simply because they are not located in the same city/town as your campus? If the truth is to lie somewhere in the middle, how do we decide?
  • How will students solve what I’ve taken to calling the 2x problem? Imagine listening to the prof speak at 1x – how quaint (and quite possibly frustrating) it might seem to post-pandemic cohorts of students!

I don’t know the answers to even one of these questions. But in the semester that is coming up, I hope to spend a lot of time talking to folks who are in the higher-ed business to understand how classroom teaching will evolve from here on in. It promises to be a fascinating five months!

Here is an old blog post in which I predict that classroom teaching will decline from here on in, and wither away in the long run. And here is one in which I try to force myself to take the opposite position.

Thoughts, opinions and feedback is always welcome, but in the case of this blog post, especially so. If you are teaching a course in this semester and wish to chat, please drop me a line at ashish at econforeverybody dot com.

Deepak Gopalakrishnan Visits the Maldives

@chuck_gopal on Twitter and here is his linktree

Read, Listen, and Observe. Then Write.

I don’t know how I missed reading this paper earlier, but a conversation this past week helped me land up on a lovely little paper written by Hal Varian, called How to Build an Economic Model in Your Spare Time. The paper was written in 1997, but was published again in the AER in 2016, and the editor’s introduction is worth reading, excerpted below:

Originally published in Volume 41, Number 2, Fall 1997, pages 3-10. Hal Varian (born 1947) is widely known by professional economists for his pathbreaking work in the economics of information and networks. Many more know him as the author of two bestselling microeconomics textbooks, one written for undergraduate college students and one designed for advanced graduate students. Through his research and his books, Professor Varian’s ideas have influenced a generation of economists. In this paper, Professor Varian outlines how he approaches the task of building an economic model to explain an observed phenomena or solve a problem. His words are encouraging advice for graduate students and young economists learning how to “practice the art” of economics. Professor Varian offers a number of tips ranging from how to choose a topic, when to read the literature, and even to how to effectively manage your bibliographic citations. Professor Varian’s advice has passed the market test as this paper remains one of the most referenced and downloaded papers in The American Economist’s backfile. However, after including the paper on a course reading list several years ago, one doctoral student pointed out to this editor that Professor Varian fails to explain how to find the “spare time” that he references in the title!

Varian, H. R. (2016). How to build an economic model in your spare time. The American Economist61(1), 81-90.

It is a very short paper, and the faint hurrahs that you might hear in your neighborhood come from tortured souls who will no doubt be relieved to hear that there isn’t a single equation in this paper. Tortured souls (myself included), in this context, are those who have had to plod through Hal Varian’s graduate text. He mentions this text in the paper, and his undergraduate text (which is a lot more fun to read). In fact, his ruminations about how that undergrad book came to be form one of the most important takeaways from this paper for me.

But my favorite bit from the paper is about “where to get ideas from” in order to write a paper. Hal Varian says that one shouldn’t look to academic journals as a source (and I agree), but look at pretty much the world itself:

My suggestion is rather different: I think that you should look for your ideas outside the academic journals- in newspapers, in magazines, in conversations, and in TV and radio programs. When you read the newspaper, look for articles about economics. . . and then look at the ones that aren’t about economics, because lots of the time they end up being about economics too.
Magazines are usually better than newspapers because they go into issues in more depth. On the other hand, a shallower analysis may be more stimulating: there’s nothing like a fallacious argument to stimulate research.

Varian, H. R. (2016). How to build an economic model in your spare time. The American Economist61(1), 81-90.

This was written in 1997, remember – that explains the now-quaint advice about magazines. There’s also a reference to a JEL CD later on in the paper, for those of you interested in ancient history. But if you are a student wondering “what to write about”, this is excellent advice. Look at the world, and write about what puzzles you about it. Forget papers, entire books can come out of this (very fun) exercise.

And if you’re looking for a concrete example, the unbelievably prolific Matt Levine obliged us in a recent podcast with Longform, where he spoke about how he came to write about the aluminum “scam”. What is the aluminum scam, you ask?

During the summer of 2011, officials at the London Metal Exchange got an unexpected complaint from The Coca-Cola Company. The amount of physical aluminum in storage was piling up, said a representative of the soda maker, and, along with it, so was the expense of buying the metal for beverage containers.
The culprit, as Coke saw it, wasn’t simple supply and demand—in fact, there was plenty of aluminum sitting in warehouses. It was the shrewd tactics of Goldman Sachs, the bank that owned a network of metal-storage facilities in the Detroit vicinity, where waiting times for extracting aluminum were longer than ever. Every day those metal bars sat idle, Goldman’s warehouse company effectively drove up the premium amount that aluminum producers could charge for delivering supplies to beverage-packaging factories, a cost that amplified the expense of the actual metal and, thus, the prices Coke and others paid for soda cans.

If you want to find out whether it actually was a scam or not, you might want to read Levine’s column on it, which you can find here. TL;DR? Hanlon’s Razor. But the point is that if you’re looking to write an academic paper (or a Bloomberg column) on commodities, the place to look is the mainstream media, not obscure journals on commodities trading.

Learn the art of asking “but why?” when you read mainstream media, and if you do it long enough, you’ll realize that you’ve become an economist, like it or not.

My thanks to Pranav R Satyanath for recommending this paper to me.

The Higg Index and Incentives

The Higg Index is an apparel and footwear industry self-assessment standard for assessing environmental and social sustainability throughout the supply chain. Launched in 2012, it was developed by the Sustainable Apparel Coalition, a nonprofit organization founded by a group of fashion companies, the United States government Environmental Protection Agency, and other nonprofit entities.

I had no clue that such a thing existed, but it would seem that a lot of apparel stores use this index as a way to advertise the fact that the products that they’re selling have been produced in a sustainable manner.

The Higg Index is spread across three categories: product tools, facility tools and brand and retail tool.

I came across the Higg Index in a New York Times article that warns us about depending too much on an index of this sort:

An explosion in the use of inexpensive, petroleum-based materials has transformed the fashion industry, aided by the successful rebranding of synthetic materials like plastic leather (once less flatteringly referred to as “pleather”) into hip alternatives like “vegan leather,” a marketing masterstroke meant to suggest environmental virtue.
Underlying that effort has been an influential rating system assessing the environmental impact of all sorts of fabrics and materials. Named the Higg Index, the ratings system was introduced in 2011 by some of the world’s largest fashion brands and retailers, led by Walmart and Patagonia, to measure and ultimately help shrink the brands’ environmental footprints by cutting down on the water used to produce the clothes and shoes they sell, for example, or by reining in their use of harmful chemicals.
But the Higg Index also strongly favors synthetic materials made from fossil fuels over natural ones like cotton, wool or leather. Now, those ratings are coming under fire from independent experts as well as representatives from natural-fiber industries who say the Higg Index is being used to portray the increasing use of synthetics use as environmentally desirable despite questions over synthetics’ environmental toll.

I don’t know enough about the Higg Index to able to tell you about whether it ‘makes sense’ or not, but this is a good way to start to think about incentives.

When you meet an index such as this one, some simple questions are worth asking:

  • How long has this index been around?
  • Who created it?
  • Who funds it?
  • Who uses it?
  • What did it replace, and why?
  • Are there other indices that do a similar job?

Try and answer these questions for the Higg Index, for example. The NYTimes article carries a slightly sceptical tone about the Higg Index (but is, ultimately, a balanced take) – once you finish answering these questions, try giving it a read, and then reach your own conclusions about its reliability.

And as usual, the most important lesson of them all: all the other indices that you may have come across, apply the same set of questions!

Nothing more than three days old

I was feeling a bit under the weather yesterday, and I ended up doing mostly nothing as a consequence. This, in a happy coincidence, was also a day on which there were two sports events of note, and I got to watch all of one and parts of the other.

The second one had a sense of inevitability to it, and Rafael Nadal won his 14th French Open title, and his 22nd Grand Slam overall, underlining his status as the best tennis player ever. The first one didn’t have a sense of inevitability to it, and was on that account more interesting to watch. This was the fourth day of the Test match between England and New Zealand, and given how calamitous England’s batting has been in recent times, there was no guarantee that they would be able to chase down the required number of runs.

I’m happy to report that they did chase it down, and Root, somewhat like Nadal, was able to underline his status as the best Test batsman going around at the moment. But the point of this little sports update was to highlight how the conclusion, in the case of the cricketing contest, took well over three days. This, of course, has also been a complaint in recent times about men’s tennis matches as well – that they tend to go on for too long in some cases.

I don’t want to get into a debate about whether the rules for both cricket and tennis need to change, at least for the moment. But I do wish to point out that every now and then, savoring something over a large period of time is a good thing, and that we, at the margin, are perhaps doing lesser of this than we should.

T20’s over test matches, YouTube clips over television series, and television series over movies. Blog posts over books, and tweets over blog posts. Myself included, to be clear! Our attention spans are dwindling, and we have to fight the urge to take short sips of content optimized for brevity, rather than make the time for extended periods of concentration.

And I’ll be the first to admit that Twitter is a great way to consume a large amount of content in a very short period of time. A T20 game is, among other things, easier to consume in terms of time spent, and given the lives that we lead, that isn’t an entirely bad thing. And similarly, it is a nice feeling to be able to learn something in a short ten minute video on YouTube. All happily conceded as being excellent points.

But the problem (at least for me, and maybe for you as well) is that we end up consuming far too much of relatively short and relatively new content, and that may not necessarily be An Entirely Good Thing.

I cannot remember where I read or heard this quote that I am about to share with you. I think it was by Jonathan Haidt, but I might be wrong about that too (and if I am, my apologies!). It goes something like this: “we are reading more than ever before, but none of what we’re reading is more than three days old”.

Again, this is entirely from memory, and I have been unable to find the original quote online, but it is a quote that makes a lot of sense.

Robert Pirsig said something very similar in a book that I really like reading (and rereading):

What is in mind is a sort of Chautauqua—that’s the only name I can think of for it—like the traveling tent-show Chautauquas that used to move across America, this America, the one that we are now in, an old-time series of popular talks intended to edify and entertain, improve the mind and bring culture and enlightenment to the ears and thoughts of the hearer. The Chautauquas were pushed aside by faster-paced radio, movies and TV, and it seems to me the change was not entirely an improvement. Perhaps because of these changes the stream of national consciousness moves faster now, and is broader, but it seems to run less deep. The old channels cannot contain it and in its search for new ones there seems to be growing havoc and destruction along its banks. In this Chautauqua I would like not to cut any new channels of consciousness but simply dig deeper into old ones that have become silted in with the debris of thoughts grown stale and platitudes too often repeated. “What’s new?” is an interesting and broadening eternal question, but one which, if pursued exclusively, results only in an endless parade of trivia and fashion, the silt of tomorrow. I would like, instead, to be concerned with the question “What is best?,” a question which cuts deeply rather than broadly, a question whose answers tend to move the silt downstream.

Pirsig, Robert M.. Zen and the Art of Motorcycle Maintenance (p. 7). HarperCollins e-books. Kindle Edition.

I’ve bene thinking deeply about how and what kind of content I consume, and am trying to change its composition. Watching (and rewatching) old movies, listening to old songs, reading older books and older papers is all part of the plan, and I hope to share some of this with you over time as well.

I hope this change lasts where I am concerned, and while I would be loathe to recommend, let alone insist, that you do the same, I would urge you to think about whether there is a recency bias in your content consumption.

But speaking for myself, I think I need to consume some of the more timeless works of art, and I hope to do just that in the months to come.

And two recommendations to end with:

An excellent series on art appreciation that I am watching with my daughter:

And a selection of songs that will help you get started on learning more about the advent of Texas blues.

To Go Right, Go Left

Veritasium is hours of endless fun learning!

The Economics of ReCAPTCHA

This has been doing the rounds on my Whatsapp groups recently, and maybe you’ve seen it too:

Mildly funny, but the story behind it is quite something.

Bots have been a problem for many many years – much before Elon Musk thought of buying Twitter. And as long as sixteen years ago, folks were trying to solve the problem of stopping bots from signing up for services. So how does a computer make sure that the entity trying to sign up for a service actually is a human?

Well, by showing images such as these, and asking the entity on the other side to make out what the word is:

We’ve all been subjected to a variant of this, haven’t we.

Now, one of the folks who came up with this system – it’s called Captcha (say it out aloud and you can figure out the reason behind the name) ran the numbers:

And at some point I did a little back of the envelope calculation about how many of these were typed by people around the world, and it turns out the number I came up with was about 200 million.
So about 200 million times a day somebody would type one of these CAPTCHAs, and that’s when I started thinking, “I wonder if we can do something with this time.” Because the thing is each time you type one of these, not only are they annoying but also they waste about ten seconds of your time, and if you multiply ten seconds by 200 million, you get that humanity as a whole is wasting like 500,000 hours every day typing these annoying CAPTCHAs.

Work that will gladden the heart of any economist. And so the guy who did these back of the envelope calculations tried to figure out how these 500,000 hours might be put to better use. Thus was born reCAPTCHA. And the idea was a very, very good one.

When you digitize, or scan books for the first time, there will be books with old fonts, outdated fonts. And therefore there will be a fair few words that computers will not be able to decipher. And not just books, this is also true of newspaper archives.

So if we have scanned books and newspaper archives that are non-machine-readable, and we have humans spending 500,000 hours every day… what about connecting the two, and having humans read these words, one at a time?

Scanned text is subjected to analysis by two different OCRs. Any word that is deciphered differently by the two OCR programs or that is not in an English dictionary is marked as “suspicious” and converted into a CAPTCHA. The suspicious word is displayed, out of context, sometimes along with a control word already known. If the human types the control word correctly, then the response to the questionable word is accepted as probably valid. If enough users were to correctly type the control word, but incorrectly type the second word which OCR had failed to recognize, then the digital version of documents could end up containing the incorrect word. The identification performed by each OCR program is given a value of 0.5 points, and each interpretation by a human is given a full point. Once a given identification hits 2.5 points, the word is considered valid. Those words that are consistently given a single identity by human judges are later recycled as control words. If the first three guesses match each other but do not match either of the OCRs, they are considered a correct answer, and the word becomes a control word. When six users reject a word before any correct spelling is chosen, the word is discarded as unreadable.

The system has evolved since then, and this version of reCAPTCHA (known as reCAPTCHA v1) is no longer around. We now have reCAPTCHA v2 and reCAPTCHA v3, and if you’re curious, you can learn more about it here.

But I really like the idea behind reCAPTCHA v1, even though it is no longer in use. It used the opportunity presented by a necessary but time-consuming activity by matching it with a necessary but money-and-effort-consuming activity, to the benefit of all concerned.

Turns out the person who came up with the idea has been thinking about computers and human brains as being complementary to each other for a fairly long time, even writing a PhD thesis about it:

Von Ahn’s Ph.D. thesis, completed in 2005, was the first publication to use the term “human computation” that he had coined, referring to methods that combine human brainpower with computers to solve problems that neither could solve alone. Von Ahn’s Ph.D. thesis is also the first work on Games With A Purpose, or GWAPs, which are games played by humans that produce useful computation as a side effect. The most famous example is the ESP Game, an online game in which two randomly paired people are simultaneously shown the same picture, with no way to communicate. Each then lists a number of words or phrases that describe the picture within a time limit, and are rewarded with points for a match. This match turns out to be an accurate description of the picture, and can be successfully used in a database for more accurate image search technology. The ESP Game was licensed by Google in the form of the Google Image Labeler, and is used to improve the accuracy of the Google Image Search. Von Ahn’s games brought him further coverage in the mainstream media. His thesis won the Best Doctoral Dissertation Award from Carnegie Mellon University’s School of Computer Science.

There’s an old talk by Louis von Ahn on the topic as well, if you’re interested.

And here’s the kicker: the same idea, human computation, is at work another venture that Louis von Ahn has started. You may have heard of it, it has got this cute little green owl as its mascot:

So the way this works is whenever you’re a just a beginner, we give you very simple sentences. There’s a lot of very simple sentences on the web. We give you very simple sentences along with what each word means. And as you translate them and as you see how other people translate them, you start learning the language. And as you get more advanced, we give you more complex sentences to translate. But at all times, you’re learning by doing.

Both reCAPTCHA v1 and Duolingo have different business models now, of course. But as students of economics, its’s worth appreciating the idea of complementarity between humans and computers, and the idea of turning a necessary but time intensive activity into a socially useful one.

It may be a funny Whatsapp forward, sure, but as it turns out, there’s quite a story behind it. No?