On The Economics of the Space Industry

I knew very little about the space industry, let alone its economics, before reading the piece that I am going to speak about today. And that’s one reason I enjoyed reading this guest post in Not Boring so much, about the space economy.

The second reason I enjoyed reading this so much is because it is a rare combination of three things: it was in-depth, it was informal and it was informative. That takes skill, and reading it was therefore a pleasure.

I’d strongly urge you to take an hour ot two out of your week to read the whole thing at leisure. What follows are points that interest me, and that I have made notes of – but this is something I really do think you should do for yourself too.

Before we begin, I question that I have thought about after reading this article. What, I asked myself, is the chance that I will get to experience space tourism in my life? The question would have been hilarious in the 1990’s, when I was in school, and while it still seems fanciful right now, I’d go as high as even 10%. And for my daughter during her lifetime, I’d put the chances at above fifty percent. What a time to be alive.

  1. I’d memorized during my school quizzing days the name of the first dog to go into space (Laika). I learnt while reading this article that Sputnik-2 didn’t have any “Earth return capabilities”, and I felt very sad indeed.
  2. NASA had a predeccosr called NACA, and responding to the Russian advances in space in the late 1950’s necessitated the formation of a new organization. I found this to be very interesting.
  3. “Astronauts were living legends and international celebrities. They drove (or, more accurately, raced) Corvettes across town in Houston.” James May had a lovely segment on this in one of the episodes in The Grand Tour. The reverence in his voice as a he drove the very same Corvette that was once owned by Neil Armstrong (I think it was NA’s) was wonderful to behold.
  4. NASA’s budget in its heyday was 4% of all US federal government spend. It is now at 0.4%.
  5. COTS, or Commercial Orbits Transportation services, and the incentives offered by that program have resulted in Starliner’s $/kg in 2021 to be about the same as that of Mercury, in 1961!
  6. I learnt about flippening.
  7. The value in space exploration is mostly about driving benefits back to earth: GPS, transparency about what is happening back on earth, fighting climate change, and spillovers. Speaking of spillovers, here’s a useful list.
  8. Turns out you can see cow farts from space!
  9. The Russo-American conflict has not been good for space exploration, and the Chinese are doing some really advanced stuff. Speaking of which, I also learnt about hypersonic glide vehicles.
  10. The chart below this paragraph doesn’t show India’s budget separately. I wish this were not so.
  11. The economics of funding space startups is (surprise, surprise) very different. But that being said, read the section that comes next very carefully, and then take a look at this talk, and this book.
  12. The launch cost curve is encouraging, as is the satellite cost curve.
  13. Take a look at the market map below this paragraph to get a sense of the firms working in this (n.p.i) space.
  14. I had no clue space manufacturing was a thing!
  15. SpaceX will “not recognize international law” on Mars.

Again, I strongly encourage you to read the whole thing yourself, and take your own notes. If you are a student of finance, for example, the sections on funding, business models and risks deserve a deeper dive.

Argue The Point, Not The Person

There’s no end to the number of scenes in movies and television series in which you’re told to play the man, not the hand, when it comes to poker.

This is because the objective is to win, and poker is, by definition, a zero sum game.

But arguments are not zero-sum games, although most (all?) of us tend to think so, at least when we’re actually arguing. We get so caught up in winning that we often choose to defeat the person making the argument, rather than the argument itself. And we’re much likelier to do this if we realize that our own argument is unlikely to carry the day. The fancy-pants word for what we are likely to do next is ad-hominem. We’ve all used this strategy, if nowhere else, at least in school while growing up. And I’m not proud of this, but I’ve used it well into adulthood too.

And the reason this happens is because we think the point of an argument is to win it. Which is wrong, of course. The point of an argument is to figure out what is right (or true). But this simple point is hard to remember, and so we end up turning arguments into a battle for preserving our egos.

There has been a bit of a kerfuffle in a subset of Twitter in the recent past, and while you will be able to click your way through and figure out what it has all been about, I’d much rather you didn’t, not right away at least. Focus, instead, on what the thread is telling you about how to argue:

While the thread itself doesn’t mention it, my biggest takeaway from reading it is to ask myself what the point of an argument is. Or, to put it in a way that resonates with one of my favorite questions, what should one be optimizing for in an argument? And my own answer is that one should be optimizing for figuring out what is right (or what is true), rather than winning the argument.

Note that this is hard to do, and note that the person dispensing this gyaan to you right now (i.e., me) often isn’t very good at following his own advice!

But that being said, it still is advice worth pondering over.

By the way, if you’ve been wondering why I’ve been careful to distinguish between that which is right and that which is true, I have a movie recommendation for you.

And on a related note, learn to read the news in such a way that you end up updating or changing your beliefs, rather than being in a rush to confirm them. Statisticians will say that I’m simply asking you to be more Bayesian in your outlook, and they wouldn’t be wrong (click here and read hansn’s answer).

I’d urge you to spend some time in thinking through the paragraph immediately above this one, making sure you understand what Baye’s theorem is and why I bring it up in the context of reading the news, and then read this excellent post by Tyler Cowen. It is excellent (to me) precisely because it isn’t clear the first time you read it.

But the reason I bring that post up here is because I would argue that the Twitter thread and this post are making the same point: arguing should not be about feeding your ego, and neither should learning more about the world be about feeding your ego. Arguing and learning more about the world should, instead, be about figuring out that which is right (or true).

Note to self: this is, of course, much easier said than done.

Let me be clearer: whether while reading something or while arguing with someone, continually ask yourself this question: in what ways might I be wrong? How does this article/video/movie/podcast/argument help me update my understanding of how the world works?

And if you find yourself resolutely saying “it doesn’t! I’m obviously right!”, be very afraid!

Ethan Mollick is Now on Substack

Who is Ethan Mollick?

Ethan Mollick is an Associate Professor at the Wharton School of the University of Pennsylvania, where he studies and teaches innovation and entrepreneurship. He is also author of The Unicorn’s Shadow: Combating the Dangerous Myths that Hold Back Startups, Founders, and Investors. His papers have been published in top management journals and have won multiple awards. His work on crowdfunding is the most cited article in management published in the last seven years.
Prior to his time in academia, Ethan cofounded a startup company, and he currently advises a number of startups and organizations. As the Academic Director and cofounder of Wharton Interactive, he works to transform entrepreneurship education using games and simulations. He has long had interest in using games for teaching, and he coauthored a book on the intersection between video games and business that was named one of the American Library Association’s top 10 business books of the year. He has built numerous teaching games, which are used by tens of thousands of students around the world.


Here is the Interactive (that’s the name of the site, hence the capitalization) website, and it has a lovely little pun for its title. Here is his Google Scholar page, and here is his academic page. He doesn’t have a Wikipedia page, but here is an interesting Twitter thread about Wikipedia written by him. And if you insist on a Wikipedia page, well, you have to qualify to be able to read it. Can you eat glass? Here is a tweet by him, it’ll allow you to make progress on following Ethan Mollick on all platforms.

In short, Ethan Mollick is that all-too-rare example of a person who is consistently interesting, and from whom you’ll get to learn a lot. And he is now, as I mentioned, on Substack.

His first post on Substack tells you how to be more creative, and if I may be allowed to paraphrase his advise, it boils down to chilling and sleeping. That’s the kind of under-rated advice the world really needs right now!

The sleep suggestion is important. It is really clear that sleep is critical to successful idea generation, especially in the context of making entrepreneurs more creative. The effects go beyond just creativity, however. People who are sleep-deprived not only generate lower-quality ideas but become bad at differentiating between good ideas and bad ones. Worse still, research shows that sleep-deprived individuals become more impulsive and are more likely to act on the bad ideas they generate. That means that a chronically sleep-deprived person would be more likely to come up with bad ideas, think they are good, and suddenly quit their job to pursue them! So, creativity starts with a good night’s sleep, and if you can’t manage that, a 75-minute nap has been found to do almost as a good a job in putting people in the right frame of mind to be creative.


And as a bonus, he says you can hurry your creativity along by having more coffee!

The world needs more people who are interesting, helpful, creative and interested in making the world progress. Please do follow Ethan Mollick wherever possible, and learn how to help make the world a more interesting, and therefore better, place. What else is there in life, no?

Veritasium on FFT’s and Nuclear Testing

What Should The Fundamental Unit of Analysis Be, And Why?

https://indianexpress.com/article/opinion/columns/ews-verdict-underscores-that-judiciary-has-been-a-reluctant-supporter-of-caste-based-reservation-8255165/ (Highlight added)

As you might imagine, I’ve been asked about the EWS judgment in class during random question time. And it is something that I’ve been thinking about myself, naturally.

But I have been thinking about a very basic question, and I haven’t yet landed upon an answer that satisfies me. This post is more a request for help, suggestions and reading material, and I do hope some of you end up helping me!

When we’re analyzing something – it could be reservations (affirmative action) or something else altogether – what should we choose as our unit of analysis? Should it be the individual or the group? Whatever one’s answer, why? What are you optimizing for when you choose your answer?

More: say you choose to change your unit of analysis, either while analyzing the same problem, or a related one. Say it is the hijab ban controversy. Or maybe the question of banning beef. Or the Sabarimala issue. Or pick any issue of your choice in any country of your choice – I’m not interested in what your (or my!) opinion is on any of these controversies. I’m interested in what our choice of unit of analysis is, and why. I’m also interested in whether we are tempted to change our unit of analysis depending upon the context, and if yes, on what basis.

I’ve spoken about this with some folks privately, and the best answer I’ve gotten so far is that of “agency”. I’m paraphrasing the argument here, but in effect, one should use an individual as the unit of analysis if that individual has agency – that is, the power to bring about meaningful change in their own circumstances. In the case of the hijab controversy, for example, this line of thinking would imply that we should be leaving the choice to wear (or not wear) the hijab to the individual in question.

Whereas in the case of reservations, it should be the group that is the unit of analysis, because you can’t change your caste, and societal structures impose costs on you for belonging to a particular caste. No agency, therefore the unit of analysis should be a group.

This argument seemed appealing to me when I first heard it, but the more I think about, the more I ask myself if the hijab example really is a good example of agency. You may agree or disagree with me when I say this, but I would argue that girls don’t necessarily have agency in this case. Whether it is rules or laws or norms, they take away this agency no? Again, this isn’t about what is “right” in the case of the hijab controversy – it is an important question, but not the one I’m trying to get at here.

This is, by the way, an important question to ask in economics, with many implications for how research is conducted and policy is designed and implemented. But the importance of this question is much more than that, with implications for fields as diverse as management, sociology, politics and more.

I’m hoping to learn more about how to think about this and why, so please do let me know what you think!

The Long and Winding Road For The First Time

I’ve been on a Beatles spree this week, and have no desire to stop – please feel free to send along thousands of more videos my way!


I hadn’t scheduled a post for today, but I was fairly relaxed about it, since I knew both the topic that I wanted to write about and what the entire post would look like. Shouldn’t take me too long, I thought to myself as I went through my to-do list yesterday evening, and I kept some time aside today morning to do just that.

But just as I was about to settle down and thump said post out, my daughter came and asked me if we could “play the geography game”. What is the geography game, you ask? Oh, a very simple thing: we have created chits of paper on which we have written down the names of India’s states and union territories. We pull these chits out, one at a time, from a small pouch, and we have to name the capital of whichever state or union territory we’ve picked. A very simple, but also a very fun way to spend a part of the last chunk of her Diwali holidays.

But as with all young kids, remembering all of them is a little tricky. And even after four or five rounds of the game over the last two days or so, she was having trouble remembering all of them successfully. And so I taught her about ping!

Remembering random things used to be a weird little hobby of mine when I was in school. It helped me win all the quiz contests when I was in school (except for the last one, in my 10th standard, a fact which still upsets me – but let’s not go there), and it helped me mug up dreary old facts while “studying” in school.

I would tell myself little stories about these factoids to help me better remember them. These stories were completely nonsensical, almost utterly random associations, but they seemed to help. And the more I did it, the better I got at memorizing things. Much later, I learnt about neurons, synapses and plasticity (see here for a reasonably simple explanation), and the how and why of my little trick made much more sense. And I now think of the art of memorizing stuff as “ping!” – as neurons and synapses going, well, “ping!” in my head when I think of a particular topic.

To give you just one of literally millions of possible examples, here’s what the word “spice” brings up in my head. I “get” pings about “Spice Kitchen”, one of my favorite restaurants in Pune. I get pings about different kinds of spices, about my trips to Kerala, about Mark Wiens (a YouTuber who loves eating spicy food), about the Carolina Reaper – it goes on and on.

But as it turns out, you can train your brain to associate certain pings with certain things, and help you remember things better. Again, an example from my own experience. The word “ASEAN” I’ve learnt to associate with BIMP-ST-CMLV (I pronounce this as BIMP-ESS-TEE-CEE-EM-ELL-VEE). And that stands for Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Cambodia, Myanmar, Laos and Vietnam.

I’m not for a moment suggesting that you remember the ASEAN countries this way (or indeed, even remember them at all). I’m simply explaining what works for me inside my head. And the more you play this game, the better you get at it. There’s much, much more that’s going on here, and far more than I can hope to condense into a single blogpost, but you might want to learn about more about, say, spaced repetition, eidetic memories and above all, memory of loci – just to get you started. And feel free to go down any rabbit hole that seems particularly interesting – ’tis Friday, after all. If you’re looking for recommendations, memory of loci would be my pick to get you started.

Which is what I call “ping!” I suppose – and isn’t it a much better way to remember this than “memory of loci”? And so we went ahead and “ping!ed” the list of India’s states and Union Territories. Himachal Pradesh, for my daughter, is a cold state, which she remembers now because I explained to her what the word “him” means in Sanskrit, and that reminds her of a trip she’d taken to Simla. Ping!

Tripura she now associates with agratala sancharam (she’s learning bharatanatyam), and that helps her remember the capital, of course. She was wearing pink pyjamas when we were playing this game, and that’s one way to help her remember the capital of Rajasthan! Again, to be clear, the specifics don’t matter, nor does the list of things to be memorized. Getting the idea behind “ping!” – that’s the important bit.

“Why did the pings in panji’s head go wrong?”

My maternal grandmother, and therefore my daughters great-grandmother (panji in Marathi) passed away earlier this year. She was suffering from dementia, besides other complications, and towards the end, she had forgotten almost all of our names. She would often confuse me with my maternal uncle, for example.

I was so happy that my daughter had learnt the concept, enjoyed applying it – and understood it well enough to be able to ask the question that she did – and at the same time, so overcome with emotion at the question and its timing, that I couldn’t fully respond. Kids, I tell you.

We’ll be ping!ing a part of today afternoon with our good friend Sal Khan re: this topic, and if you don’t feel like battling your work, feel free to “join” us instead!

Choosing Where to Eat

I just got back from a lovely holiday in Goa. Oodles of good food, loads of fantastic beer, hours of staring out at the sea, and not a laptop in sight for miles and miles. Just wonderful.

But if you know me at all, you’ll know that the first of these was the most important bit. Duh.

I spend a large chunk of my day thinking about food – what to make next, what to eat next, where to eat next. And today’s blogpost is about the last of these – where to eat next. How should one go about choosing where to eat?

  1. The book to begin with if you want to use economist-y principles is Tyler Cowen’s excellent “An Economist Gets Lunch”. The book is full of delightfully Cowenian advice:
    • Choose a restaurant where the patrons aren’t smiling (because that means the regulars are here to eat, not socialize)
    • When it comes to cuisines not native to the town you are in, choose a restaurant located on the outskirts of town rather than in the centre, it is more likely to have genuinely good food (lower rents, closer to recent immigrants into said town, both of which are likely to be good indicators of genuinely good food.)
    • The weirder a dish sounds relative to the rest of the menu, the more likely it is to be worth ordering (for why else would the restaurant choose to include it in the menu in the first place)
  2. Krish Ashok had a nice post on Instagram recently, where he pointed out that you should ignore negative reviews of restaurants, since the internet incentivizes one to be nasty and negative with one’s opinions.
  3. Here are my own tips, noting that your mileage may vary when it comes to adopting them:
    • Triangulate – if a restaurant has good reviews on Zomato, and on Google Maps and on blogs, it is likely to be good. A high rating only on Zomato is, to me, a worrying sign.
    • I tend to rate reviews on Google Maps higher because Google Maps seems to go out of its way to make putting up reviews more difficult (a somewhat unintuitive interface) and unrewarding (the gamification for reviewers simply isn’t good enough). So if somebody has taken the time and trouble to write a review, and that too a positive one, it is likely to be a very good restaurant.
    • YouTube reviews merit their own separate bullet point. There’s tons of stuff out there, but rely on folks who have put out a lot of stuff regularly, and tend to have a balance of 60:30:10. That is, 60% positive reviews, 30% so-so reviews and 10% negative ones. Note that this is a thumb rule! Once you find a channel you like, optimize for the very top of the 60%.
    • A limited menu and only one cuisine is a huge plus. This implies that the restaurant is focusing on what it knows best, and is not pandering to everybody. I’m even more reassured if the waiter informs me that certain items are not available, and my confidence in the quality goes up even more if they do so brusquely. I take it as a sign that they are focused on quality, and that they couldn’t care less if you leave. This must mean that there are enough “regulars”, and that can only be a good thing, right? I am from Pune, please note, so this may just be my genes having gotten used to rude service.
    • Make friends with the chef, the senior most waitstaff member, or both. I am a hopeless introvert in most social settings, but people who talk about food with passion are my people, and I have no problem striking up a conversation. Ask them to teach you how to appreciate the food they’re serving – what should you be looking out for on your palate, what details should you not be missing, and what variants of this dish are possible. Folks love to teach self-declared amateurs, and this will go a very, very long way in a restaurant.
    • I wish this weren’t true, but there is a very low bar for striking up a conversation in a restaurant in India. Politeness and a friendly demeanor are seriously underrated, use this fact to your advantage.
    • A corollary to the last point: try and visit a restaurant as early as possible. Most folks in urban India prefer to have late dinners – if you sit for dinner at 7 pm, you are likely to have fresher food and a not quite so busy staff who will be that much more willing to chat with you.
    • Avoid buffets like the plague. Unless you know the chef or the senior most staff member (or both). They will then not only recommend the best things to try, but will also give you freshly made dishes that they would like you to try. If you find such a restaurant, you’ve struck gold.
    • Avoid glitzy restaurants that are prominently located. They are more likely about signaling then about eating.
    • Well established and cheap watering holes are likely to have very good food. My favorite example in this regard is Pecos, in Bangalore, but there are lots of examples in all cities in India.

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.

Why 7 is Weird

Divisibility tests are a lot of fun, and they kept me awake through boring lectures in school. My most fun “discovery” was regarding the number 27, and remind me to tell you about it whenever we meet.