On The Inverted U Shaped Curve of Online Tribalism

An article in the Washington Post about vaccine hesitancy caught my eye recently, but for a weird tangential reason. The post is titled “How wellness influencers are fueling the anti-vaccine movement“, and it is about how “influencers” are impacting the vaccination drive in America.

Glance at Jessica Alix Hesser’s Instagram page and you may feel a little like you’ve just opened up a pamphlet for a meditation retreat. Amid photos of lagoons and a waterfall, Hesser (eyes closed, one hand touching the side of her face) is awash in rainbow-hued lens glare or soaking in a bath with flowers floating on top. Her website contains blog posts recommending natural cardamom floss and Gregorian chants.
Sprinkled throughout, however, are posts where Hesser urges her nearly 37,000 followers to question the safety of the coronavirus vaccines. “Would you sign your children up to be part of a pharmaceutical trial and take them into a lab to get shot up with some experimental drug created by a criminal company?” she asks in one June post. In another from April, she writes that “many of you have heard about the large number of poke-free women” experiencing changes in their menstrual cycles “after spending time with people who got the jab.” Medical experts say that’s impossible. Hesser did not respond to requests for comment.

https://www.washingtonpost.com/technology/2021/09/12/wellness-influencers-vaccine-misinformation/


But there are influencers and there are influencers, it would seem:

Still, it’s those with anywhere between 10,000 and 50,000 followers — sometimes known as “microinfluencers” — who are believed within the marketing industry to have an especially outsize impact on their followers. In a post last year for a blog owned by the Association of National Advertisers, Lesley Vos wrote that social media users “don’t trust celebs or experts with more than 100,000 followers anymore.” Micro-influencers, on the other hand — and their even more niche cousins, nanoinfluencers, with fewer than 10,000 followers — can seem less sold-out and more authentic, approachable or relatable.

https://www.washingtonpost.com/technology/2021/09/12/wellness-influencers-vaccine-misinformation/

So who are micro-influencers, and what is special about them?

Micro-influencers aren’t typical celebrities, experts, or public figures. They specialize in a particular vertical and share content about their interests only. Their audiences are hyper-engaged; so, if a brand works with a highly-relevant micro-influencer, it can extend the reach and user engagement significantly.
No surprise: consumers are more likely to buy from someone they know and trust. So if a micro-influencer whom they follow recommends something, they’ll trust this recommendation more than a direct ad from a brand. It’s where word-of-mouth marketing takes the stage.

https://www.ana.net/blogs/show/id/mm-blog-2020-02-micro-influencers-better-content

This, apparently, is different from the market dominated by influencers without prefixes:

The problem is that users don’t trust celebs or experts with more than 100,000 followers anymore. Only 4 percent trust what influencers say online: People understand they post about a brand because it paid them for this ad. Authenticity and relatability are more important than popularity now. So, if you still want to get the most out of your influencer marketing endeavors, make sure to focus on micro-influencers in 2020.

https://www.ana.net/blogs/show/id/mm-blog-2020-02-micro-influencers-better-content

Solve, as they say, for the equilibrium.

Hint: if we should be making sure to “focus on micro-influencers in 2020”, who should we be focusing on in 2021? 2022? 2023?

In plain English, here is what is happening: the incentive to monetize your following goes up with the number of followers you have. Alas, the folks who have reached “influencer” status have monetized their following a little bit too much, to the extent that there has been, it would seem, an erosion of trust.

That erosion is apparently across the board – for all influencers. Not just a particular influencer. And so the conclusion is that we should not trust influencers altogether, but rather trust micro- and nano-influencers. But then advertisers will want to, well, influence micro- and nano-influencers to influence their followers, and down the spiral we go.


I will note two things:

  1. There are a little less than four thousand people who follow this blog, and I can assure you that I have not been paid to hawk any good or service on these pages.
  2. I am not sure if I am a micro or a nano influencer, but if my urging you makes the *slightest* difference, please, go and get yourself vaccinated! 🙂

What is common to online calls from the UAE and football match broadcasts *in* England?

I traveled to the UAE for work a coupe of times in 2018 and 2019. One of the most surprising things during both trips was the realization that online calls were banned in that country. So for example, calling my family back home in India over Whatsapp was not possible. Duo wouldn’t work, and neither would any other app (save for one weird app that I had never heard of before or since – Botim, I think it was called).

The pandemic meant that Zoom, Google Meet and MS Teams now work just fine (duh), but Whatsapp and FaceTime are still a strict no-no.

Why, you ask?

While Microsoft Teams, Zoom and Skype for businesses now enable remote work and learning, WhatsApp and Facetime audio and video calls are still banned, the official said. This means residents have to use the paid services provided by telecom operators in the country.

https://www.khaleejtimes.com/news/whatsapp-calls-in-uae-talks-to-lift-ban-continue

The key sentence is obviously the last one. The regulation is an attempt to get more people to use conventional (have we reached a stage where we ought to wonder if regular phone calls are still “conventional”?) methods, presumably to help those telecom companies recover their investments. That last bit is a surmise on my part, but hey, what else could possibly explain this?


But its not just the UAE, of course. Here’s England:

CRISTIANO RONALDO makes his long-awaited return to Manchester United this Saturday, in a match against Newcastle. Tens of thousands of fans will chant “Viva Ronaldo” from the stands of Old Trafford, but the match will not be televised live in Britain. Instead, fans not lucky enough to be in the stadium will have to turn up the radio or find an illicit online stream from a foreign broadcaster. The rest of the world can watch the game live. Why are British fans not allowed to?
Blame the “blackout rule”. On Saturdays only two matches in the Premier League, English football’s top flight, are shown live, at 12.30pm and 5.30pm.
The measure is supposed to encourage football fans to get off their sofas and support their local teams.

https://www.economist.com/the-economist-explains/2021/09/10/why-cant-english-fans-watch-ronaldos-return-on-tv

I have been watching EPL matches for the past two decades, but have been happily unaware of this rule. I’ve had friends and family both visit and stay in the US, but this rule never came up for discussion. Or at least, I have no memory of speaking/reading about this. But the similarity between the two things we have spoken about is striking, is it not?


In my introductory econ classes, I often speak about STD/ISD booth owners and how they effectively lost their business to those devices that you now carry about in your pockets.

https://upload.wikimedia.org/wikipedia/commons/6/6c/STD_ISD_PCO_India.jpg

I’m yet to meet a student who thinks that there ought to exist regulations that ban us from using our cellphones so as to protect the employment of STD/ISD booth owners.

As a certain French economist might have said, plus ça change, plus c’est la même chose.

A Review of Macroeconomics: An Introduction, by Alex M Thomas

I’m not a fan of recommending a particular textbook to my students in any course that I teach. I’m not a fan of textbooks in general, but that’s a story for another day.

The reason I am against the idea that you should read “a” textbook for a course is because I find the idea that you can learn a subject by reading just one book to be a deeply repugnant one. I’m happy to recommend ten, or more. And students should learn by dipping into all of them!


But if you were to put a gun to my head and tell me that I must absolutely recommend just one macro text for Indian students who are learning macro for the first time, A Review of Macroeconomics: An Introduction, by Alex M Thomas would be it.

Why? For the following reasons:

Rare is the textbook that begins with a disclaimer to the effect that the author did not want to write a textbook. Rarer still is the preface that goes on to say that other textbooks (and more besides!) should also be read. If you are an econ prof, you must have read multiple prefaces by now that dispense advice about how chapters such-to-such, followed by chapters these-to-those ought to be included in an introductory course, but on the other hand chapters extra-but-still-necessary only need be included in an intermediate course.

The preface to this book does no such thing. Read the whole book, it says, and read more besides.

But the second most important part of the preface, and the part that got me hooked to the whole book is that includes a reference to a novel. That in itself is, well, novel. Second, it is an Indian novel. Third, it is a novel that has nothing to do with macroeconomic theory. This is a book that teaches you that macroeconomic theory – that after all, is the job of a textbook – but it is also a book that teaches you what to do with that theory. It teaches you to apply that theory to get a handle on the society that you need to study, and it helps you understand that this society is so much more than the abstractions of economic theory. Use this book to appreciate life better, it seems to say. Or, in the language of us economists, Alex Thomas has written the book as a complement to everything else that you will read and learn about Indian society. Not as a substitute. That is a rare old achievement, and one well worth celebrating.

The most important part?

Finally, this book adopts a problem-setting approach rather than a problem-solving one, as is the case with most economics textbooks. To put it more clearly, this text helps you to identify, conceptualize and discipline a macroeconomic problem. Therefore, this book does not contain exercises in problem solving, but it contains discussions and questions that make you think about the nature of assumptions, the logic of the theory, the limits of the theory, the interface between theory and policy, a little about the gaps between theory and data, and occasionally, the nature of past and present economic thought.

Preface, pp xvi, Macroeconomics An Introduction

There are nine chapters in the book, and I hope Alex Thomas won’t mind me listing them out over here:

  1. What is economics?
  2. Conceptualising the macroeconomy
  3. Money and interest rates
  4. Output and employment levels
  5. Economic growth
  6. Why economic theory matters
  7. The policy objectives of full employment
  8. The policy objective of low inflation
  9. Towards good economics

Say you want to teach a course in macroeconomics to students who have not studied the subject before. Conceptually speaking, here are the questions I would want to answer as an instructor:

What are we studying here, exactly? What are we abstracting from all of reality and of those abstractions, which features matter more than the others? Why are we studying whatever it is that we’re studying? If we (students and the prof) agree on the answers to the first few questions, how do we go about defining and measuring “success”? Why put the word success in inverted quotes?

Chapter 1 | Chapters 2,3,4 | Chapters 5 and 6 | Chapters 7 and 8 | Chapter 9 is how I interpret the layout of the book, in line with the questions above. Personally, I would have wanted to put chapters 5 and 6 right after chapter 1, but after having read the book, I can understand why the book was structured the way it has been. In particular, the four sections of the sixth chapter can only become truly comprehensible after you’ve gone through chapters 2,3,4. If I were to be teaching a course on macro, I would still be tempted to jump from 1 to at least the spirit of chapters 5 and 6, but that’s just my personal preference at play. Growth matters, and helping students appreciate why growth matters can be hugely motivating.


This book deserves a separate section of the review dedicated exclusively to the richness of the text. I challenge you to find me another textbook, from anywhere in the world that can go from talking about Tony Aspromourgo’s chapter on Piero Sraffa on pp 100, to talking about a Telugu novella on pp 102 (Kesava Reddy’s Moogavani Pillanagrovi: Ballad of Ontillu, 2013) to talking about Shrilal Shukla’s Raag Darbari on pp 103! To be clear, the challenge isn’t finding another textbook that talks of these three sources specifically (I can guarantee you that there isn’t another one!), but one that manages to traverse such breadth. Breathtaking stuff, and I never imagined I would use that phrase while reviewing a macro text.

But it’s not just that one series of excerpts. Every chapter is liberally sprinkled with a list of reading recommendations that stand out for their sheer breadth. All of them have been listed out between pages 200-208 in the text, and just these eight pages alone are worth the price of admission. Well, these eight pages and the two that precede it. In those two pages, Alex Thomas lists out all the data sources that have been used in the case of each table from each chapter.

In particular, this book deserves to be praised for raising repeatedly issues of caste, gender and ecology at various points through the text. Growth, but at what cost? Land as a factor of production, sure, but rooted in which society, and with therefore what consequences?

Consider this excerpt from pp 128, for example:

A village economy cannot be understood as a simple departure from the competitive macroeconomy we have discussed thus far. It requires us to understand how village space is divided and demarcated (typically on the basis of caste). The spatial inequality present in a village economy is captured very well by Kota Neelima in her depiction of a poor and indebted farmer’s house in Death of a Moneylender (2016).

The very next paragraph touches upon aspects of religion and its linkages to labor mobility. As always reasonable people can and should argue about how much of an impact these aspects (and other aspects of Indian society) have on the cold austere ivory tower approach that most macroeconomic textbooks adopt. I think it is a very significant impact, and you may not – and that is, of course, absolutely fine. But we are debating the quantum of significance and relevance, not questioning its very existence – and that is very, very welcome indeed.

Indeed, this is a book that ends with an exhortation: if you take one thing away from this book, Alex Thomas seems to be saying, take away an appreciation for the pluralistic approach (pp 196):

If you are a student of economics, you will soon study “statistics for economists’ and ‘mathematics for economists’. In both these methods of economics, there exist multiple concepts, theories and approaches, just like in macroeconomics and microeconomics; pay attention to the fact that these ‘methods of economics themselves both originated and are used within a social context. Moreover, a pluralistic approach to economics by itself is not sufficient when employing economics in the service of public policy; it is important to keep in mind the collective wishes of people as Xaxa’s poem in Section 1.4 pointed out.
I end this book with the hope that you take pluralism as a friend, sometimes a difficult one, in your journey of learning.


The pluralistic approach isn’t just restricted to moving across (and beyond) the social sciences. Even within the domain of macroeconomic theory, Alex Thomas takes the time and trouble to make sure that all views about the macroeconomy are fairly represented. The fifth chapter in particular is notable for this, but that should be taken to be especial praise for that chapter, not a faint damning of the others!

What could have been done better? If this book is intended for people learning about macroeconomics for the first time, I think this books errs on the side of doing a little bit too much. Some sections might be a little bit too involved for a reader who still has to cultivate a taste for macroeconomic theory (and god knows it is very much an acquired taste). And some first time readers might also not appreciate some of the macroeconomic controversies and the role they have played in pushing the field further.

This should beg the obvious question: well, what, exactly, should be cut? Well, not cut exactly, but some of the more involved explanations can be turned into, say, accompanying YouTube explainers (about which more below).

There are also some notable names missing from an introductory text of macroeconomics, but I’m all but certain that this is a case of conscious choice rather than inadvertent omission.

A tip to the students reading this review: help Alex out by coming up with videos that will act as accompaniments to the text. That is, if you are doing the hard work of reading through the text and understanding it, help others by creating content that will act as a complement to the reading of the text. Many students should do this, and in many languages! As Alex says, embrace plurality, both in terms of approach and understanding, but also linguistically speaking.


My biggest problem with the book is a bit of a meta-problem, and I hope I turn out to be wrong in what I am about to say. The biggest requirement, I think, of this book is a teacher who will do it justice. I honestly do not think that this book can be read by a first-time student of macroeconomics without some sort of mentoring and guidance. To be clear, this is not about the book being difficult or inaccessible – I am of the opinion that macroeconomics just is that hard.

But if what I’m saying is correct, then the success of the book is as dependent on the guide/mentor/professor as it is upon both the book and the reader. And that brings me to my answer to whether or not I would recommend that you read this book. It is not, I think, for everybody. But that’s not a criticism of the book, or its contents or the author. It is an acknowledgment of just how hard macroeconomics really is. In fact, Alex Thomas himself says that a year of undergrad studies in economics is recommended before you tackle this book.

But hey, hopefully I turn out to be wrong! Hopefully you can and will read this book and understand it.

And if you are already a serious student of economics (whether formally enrolled in a university or otherwise), then I absolutely and unreservedly recommend this book to you. As a student of Indian macroeconomics, you simply couldn’t do better. Period.


P.S. Alex Thomas will be speaking about his book to the students from the Gokhale Institute on the 17th of September. I don’t think livestreaming is possible, alas, but we will be putting up the recording on our YouTube channel for sure. If you have questions you’d like to ask Alex Thomas, pass them along here in the comments. We’ll try to work them in!

What Year in History? A Fun Way to Understand Development in India

Ajay Shah, Renuka Sane and Ananya Goyal have a very interesting blogpost out, the title of which is “What year in the history of an advanced economy is like India today?”

India has been stepping out from poverty into middle income. It is estimated that the proportion of persons below the PPP$1.90 poverty line has dropped to an estimated 87 million in 2020. In thinking about India’s journey, it is interesting to ask: In the historical journey of advanced economies, What year in the history of the US or UK roughly corresponds to India of 2021? This is a good way to obtain intuition on where India is, in the development journey.

https://blog.theleapjournal.org/2021/08/what-year-in-history-of-advanced.html

It’s a good blogpost, and the section before they get to comparisons about GDP is worth reading in full, because they come up with a good set of warnings about overdoing analysis like this. Read it, but we’ll get down to the fun part right away. As they mention in the blogpost, India today is at about 6800 dollars per person in terms of GDP, adjusted for PPP and inflation. When in its history was the UK at this point? What about the US? Well, the blogpost gives the answers, but I prefer to show you screenshots of my favorite software, Gapminder:

And I won’t show you the United States here, but it’s around the same point – the late 1800’s, in effect. Or put another way, if you want to use a this very simple way of asking how long to go before we reach the same level of per capita GDP as the United States, we have about 140 years to go.


And Gapminder, of course, has the ability to allow you to do this for every single metric that is available on the software. The blogpost written by Ajay Shah, Renuka Sane and Ananya Goyal speaks about asset ownership and women’s labor participation as other things to compare India’s current level of development with America’s past – but you can, of course, take a look at whichever metric you want.

This blogpost reminded me of a chart that The Economist had come up with earlier:

https://www.economist.com/graphic-detail/2011/10/03/chasing-the-dragon

As with many charts from The Economist, it takes a while to get what is going on, but the chart is worth that effort. Here’s a quick explanation to get you started: life expectancy at birth for China is 73. India is at 65. And China was at 65 36 years ago. Once you get this, the other rows in the chart become easy to interpret. Note that this chart was published by The Economist a decade ago.


These sort of analyses are fun, but of course one shouldn’t take them too seriously. There are other things that are at play beyond the data points that are worth taking into account, but are difficult to quantify. And most notable among these is culture.

That is, sure, China was at 65 in terms of life expectancy 36 years ago, but that doesn’t necessarily mean that we will take even approximately the same amount of time to reach 73. Could be lesser, could be more – and that because of changing technology, different culture, different political structures, different – well, a whole host of things.

But this much is true: both the blogpost that I cited and the chart above shows that we have, as the poet put it, miles to go before we sleep.


By the way, a fun exercise if you are a student today is to see if you can recreate The Economist’s chart updated with today’s numbers. Give it a shot, why don’t you?

The Difference Between a Sociological and Psychological Story

I grew up in an age where the television series “Friends” was revered.

People considerably younger than me tell me that Friends is still revered, and there is probably some truth to that hypothesis. Every time I open up Netflix on my TV, Friends is regularly in the Top 10 shows in India.

Don’t worry, this is not about to turn into a snooty ol’ discussion about how Friends could be different/better. But I will say this much: I much preferred the first two to three seasons to the rest of the show. And the reason I preferred the first two or three seasons is because in my opinion, the first two or three seasons were about life happening to those six people in New York. It was observing New York through the eyes of these six people.

It helped that these six people were attractive and young. That helped in generating the kind of appeal that Friends has had for years now. But the reason why the first two or three seasons were, in my opinion, better than the latter ones is because they were sociological observations, using these lives of these six characters as a canvas. The latter seasons? Oftentimes, it seemed as if they were an extended riff on the “We were on a break” theme. In other words, it became a psychological story about what happened to these six people, and what about their psychological make-up made them take the decisions they do.

Not my phrasing (I wish it was). It simply is me applying Zeynep Tufekci’s model to the television series Friends. Here is Zeynep talking about Game of Thrones:

COWEN: TV show Game of Thrones — why does it interest you as a sociologist?

TUFEKCI: It interested me until the last season and a half —

TUFEKCI: — because before that, it was a very, very sociological thing. Here’s the thing. Here’s the difference between a sociological story and a psychological story.

In a sociological story, you can imagine yourself being almost anyone. Instead of terrible, evil characters and good people, where you just identify with the good ones — which is the classic Hollywood narrative, which is also most of human narrative, you have the good one, the bad one — it’s more like a complicated mythology where you can imagine yourself being any one of those characters, even the ones that do the terrible things, you can see yourself doing it.

The second sign of a sociological story, for me, is when nobody has plot armor because it’s the setting that’s carrying the story, with lots of people, but it doesn’t rely on one person dying or not dying. For six seasons, you have a very institutional sociology, very interesting. It’s like The Wire. People can die, but the story is still gripping because it’s sociological.

Here comes season — whichever the last season is — and all of a sudden, Arya can walk through fiery dragons and nothing happens. It just misses her by an inch. I’m like, “All right, you lost the plot here.” Plot armor essentially means you no longer have a solid sociological story.

I watched it with great interest until the end, and in the end, I’m like, “What just happened?” I wasn’t really very clear with the novel world. I learned that the novelist had run out of material, and the Hollywood showrunners were now writing the script. I’m like, “Ah, that’s what happened. They switched to the good-versus-evil story.”

They took a great story that was going to be how power corrupts, which clearly was the story, and in the end, they made the dragon lady snap just because she heard the church bells or something. [laughs] That’s not a good sociological story.

https://conversationswithtyler.com/episodes/zeynep-tufekci/

It’s a really good way (to me, at any rate) to think about why people say Seinfeld is better than Friends. Of course, you may not agree, and that’s obviously fine. But one reason why people say this might be is because Seinfeld is, to go back to my first example, about life happening to these people.

Roger Ebert, my favorite movie critic, often used to say that one shouldn’t ask what a movie is about. One should, instead ask how a movie is about whatever it is about. I can’t find the exact quote right now, but I think he was getting at the same point.


So ok, if you’re a student reading this, you’ve got one way to frame what everybody has felt about Game of Thrones. And you’ve got a way to think differently about Friends. But the large point is this: when you watch a movie, get lost in the plot and its intricacies, sure. But please, also ask yourself what you are learning about the society in which the plot, and the characters are based.

And here’s homework, if you are so inclined. How much of Michael Corleone’s decision making is a function of he being Michael Corleone, and how much of it is a function of he being who he is, in the family that he is from, the society in which he grew up, and his army background?

Or put another way: the really interesting question isn’t whether Michael and Sonny were different. In what ways were they similar, and why?

A fun thing to think about, if you ask me.


Final point: are you, like me, reminded of the Mahabharat when you read this paragraph?

In a sociological story, you can imagine yourself being almost anyone. Instead of terrible, evil characters and good people, where you just identify with the good ones — which is the classic Hollywood narrative, which is also most of human narrative, you have the good one, the bad one — it’s more like a complicated mythology where you can imagine yourself being any one of those characters, even the ones that do the terrible things, you can see yourself doing it.

https://conversationswithtyler.com/episodes/zeynep-tufekci/

Past EFE posts on Zeynep Tufekci here. Past EFE posts on sociology here.

What is a market?

Oddly enough, this is a question that most (not all, but most) economic textbooks don’t answer. Even more oddly, neither do most (again, some, not all) online dictionaries of economics.

I’ll restrict myself to just a couple of sources here, but if you are an economics student, have fun looking up your favorite textbook and let me know if it contains a definition of a market.

The Economist has a website called “Economics A-Z terms”, and the page for all things economics beginning with the letter M doesn’t have a definition of the market. A search on springer.com for “market” yields a lot of results about features and aspects of markets, it doesn’t actually define the term itself. I know Pindyck and Rubinfield have a definition, on the other hand – and this is an excellent textbook, by the way, and there are some others besides. But long story short, it is a topic that seems to have remained curiously undefined. Especially curious considering the fact that we spend such a long time talking about aspects of markets!

The field of law, on the other hand, does define markets, and does so very thoroughly indeed.


But the reason I bring this up today is because of an excellent post by Tim Taylor over on his blog recently, the title of which is “Thomas Sowell: Why “The Market” is a “Misleading Figure of Speech”. The post is a rumination on Thomas Sowell’s take on, well, the market.

“The market” is another such misleading figure of speech. Both the friends and foes of economic decision-making processes refer to “the market” as if it were an institution parallel with, and alternative to, the government as an institution. The government is indeed an institution, but “the market” is nothing more than an option for each individual to choose among numerous existing institutions, or to fashion new arrangements suited to his own situation and tastes.

https://conversableeconomist.wpcomstaging.com/2021/09/03/thomas-sowell-why-the-market-is-a-misleading-figure-of-speech/

So as per Sowell’s take here, the market is what each individual fashions to suit her own needs at a particular point of time. If I’m hungry, for example, I’m in the market for a meal. Now, that could mean that I choose to use Zomato or Swiggy to order food online and have it delivered home. It could also mean I spending some time in my kitchen rustling up a meal for myself. Or it could be I going to a restaurant and having a meal. Or something else altogether, including something that literally doesn’t exist until I invent it!

The market is simply the freedom to choose among many existing or still-to-be-created possibilities. The need for housing can be met through “the market” in a thousand different ways chosen by each person–anything from living in a commune to buying a house, renting rooms, moving in with relatives, living in quarters provided by an employers, etc., etc. The need for food can be met by buying groceries, eating at a restaurant, growing a garden, or letting someone else provide meals in exchange for work, property, or sex. “The market” is no particular set of institutions.

https://conversableeconomist.wpcomstaging.com/2021/09/03/thomas-sowell-why-the-market-is-a-misleading-figure-of-speech/

It’s an interesting take, and as Tim Taylor himself says later on in the post, if the definition of a market is “nothing more than an option for each individual to choose among numerous existing institutions, or to fashion new arrangements suited to his own situation and tastes”, that applies equally to government institutions too.

This is a bit of a nuanced take, but I’d actually go a bit beyond and ask if Sowell’s definition can be taken to mean that government itself is nothing but one of those numerous existing institutions. And whichever society in a particular place came up with some form of government first – well, that society was simply fashioning a new arrangement suited to that society’s own situation and tastes. This gives me the mischievous ability to drive both capitalists and socialists up the wall, for can I not then say that the government is nothing but another form of a market?


But that gentle leg-pulling aside, there is an important distinction between government and markets, as Tim himself points out:

Perhaps instead of thinking about government vs. the market, it’s more useful to think about government as embodying the set of ground-rules under which markets then operate.

https://conversableeconomist.wpcomstaging.com/2021/09/03/thomas-sowell-why-the-market-is-a-misleading-figure-of-speech/

So even if both were to be institutions that serve our needs (and can indeed therefore be thought of as “markets”), some markets are more equal than others. Governments get to embody (and indeed enforce) the set of ground rules under which markets operate.


And not to get all meta on you, but as public choice economists would rush to tell you, there also happens to be a very real market whose sole reason for existence is to influence the market we call government into making rules that suit, well, some forms of markets more than the others.

Yes, that is a long sentence, but an important one!

How to Escape Education’s Death Valley by the Great Sir Ken Robinson

I’m not one for celebrating “days”, but I’ll happily admit being thankful that this video is scheduled for the 5th of September!

Cory Doctrow on Byju’s

This Twitter thread, and its implications deserve deep reflection about Twitter, Cory Doctrow, India, and education in India. And not in that order.

There’s No Say’s Law in Classroom Teaching

Yes, that’s not exactly what he said, but I’m going with the definition we all “know”. And I’m going to repurpose that popular definition for going on a rant about classroom teaching.

Supply does not create its own demand.

That is, the supply of education in the classroom does not create the demand for education in the classroom.


Do you have a memory of staring out the classroom window, having given up on waiting for time to move faster? My congratulations to you if you have never once experienced this emotion across school and college, because it was my only emotion in almost all classes I ever attended. And boredom of an excruciating nature was my only emotion because all classes were tremendously boring.

Some were instructive. Some teachers/professors really knew their stuff. Two professors, who I am lucky enough to still have as mentors, were the best professors I have ever had. But even they didn’t think it was their responsibility to inspire the class to learn more. A Walter Lewin type moment in a class that I attended? It has happened not more than one or two times across over two decades of sitting in classrooms.

And this is, even today, something that enrages me.


David Perell’s latest essay is the inspiration for this rant:

Inspiration is a uniquely human experience because it isn’t motivated by mere survival. It transcends the world of needs and lives in the world of wants. By doing so, inspiration stirs the mind. It’s no coincidence that the etymology of inspire is linked to “the breath of life.” As the sparkle of inspiration enters our bodies, we are animated with a video game style turbo-boost. Though a state of perpetual awe is the natural state for kids (which is why they learn so fast), it’s foreign to most adults. Too often, the wrinkles of age and the weight of responsibility silence the rush of epiphany.
Blinded by age, we can turn to cold rationality, valuing only what we can define and prioritize only what we can measure. When we do, we forget that the wisdom of an inspired spirit exceeds our ability to describe it. The less we insist on a justification for our curiosities, the more we can surrender to the engine of inspiration and let learning happen.

https://perell.com/essay/how-learning-happens/

How do I teach my eight year old daughter to sum up the first n numbers? By asking her to memorize {(n*[n+1])/2} or by telling her Gauss’s story? Do I teach her Marathi and Hindi by asking her to read her textbook, or by introducing to her the shared civilizational wonder that is etymology?

Should I teach my students about how to think about macroeconomics by writing down equations and defining GDP, or should I begin with Gapminder? Should I draw the 2×2 matrix to explain the prisoner’s dilemma, or do I show students Golden Balls on YouTube? Should I tell students what monetary policy is, or do I ask them to play the Fed Chairman game? Should I tell them about demand and supply, or should I introduce to them the wonder that is kiviq.us?

Should students be taught about mass, velocity, friction, acceleration, arcs and circles, or should they be shown this video? How to motivate students at the start of a semester on statistics? Talk about the spice trade, and talk about brewing tea! I can go on and on, but I’ll stop here.


You see, in each of these cases, you don’t have to teach students the underlying concepts. To be clear, you can, and you should. But my point is you don’t have to – they’ll have developed the thirst to figure it out by themselves, because, you see, they can’t help it. Their curiosity has been piqued, or as David Perell puts it, they’ve been inspired.

And that, really, ought to be your job as a teacher or professor. To get students to go “Whoaaaaaa!”

Get that to happen, and then good luck trying to finish the class on time. I teach undergraduates and beyond, and I’m not suggesting that one should stop at inspiring students as a teacher. Papers will have to be read, books will have to be recommended, essays will have to be written – all of that is necessary, and absolutely should happen.

But each of these things are much more likely to be done (and willingly) if only you light the spark first. Reading Mishkin after you’ve played the Fed Chairman game isn’t a chore, it is a joy. Why, even Fudenberg Tirole stands a chance of being somewhat palatable if students have been first exposed to Games Indians Play, The Art of Strategy and The Evolution of Trust.


Every student who leaves college bored to death because of how stultifying classrooms are is a damning indictment of my tribe. We’ve failed to do right by them, and by extension have failed to do right by society.

What is wrong with higher education? A lot!

But David touched upon a raw nerve where I am concerned – the worst thing about those of us working in academia is that we fail to ask ourselves every single day a very important question: how can I inspire young people to want to learn more? Everything else is a distraction, this ought to be the mission.


Arjun Narayan asked Tyler Cowen this question recently:

You have the power to grant 100% more capital (that they deployed in their lifetime) to a person or institution who prematurely ran out of capital too soon. Who do you pick?

https://marginalrevolution.com/marginalrevolution/2021/08/the-capital-life-extension-query.html

Substitute the word “enthusiasm” for “capital”, substitute “students” for “a person or institution” and you have my own personal mission in life. And I promise you, it is my mission because I am very much scratching my own itch.

We should all, at the margin, be learning better.

And the earlier we start, the better society will be.

On The “Death” of Behavioral Economics

I don’t mean to go off on a spree about behavioral economics (although god knows I’m often tempted to!). And my apologies about the clickbait-ish title for today’s post – but it was the title of an essay that I want to speak about today.

Two primary reasons:
Core behavioral economics findings have been failing to replicate for several years, and the core finding of behavioral economics, loss aversion, is on ever more shaky ground.
Its interventions are surprisingly weak in practice.
Because of these two things, I don’t think that behavioral economics will be a respected and widely used field 10-15 years from now.

https://www.thebehavioralscientist.com/articles/the-death-of-behavioral-economics


Is behavioral economics dying? Is it already dead? Did it never have, or need, a separate existence? If you are a student starting out on your journey of discovering (and most probably falling in love with) behavioral economics, how should you think about this question?

Every now and then (and more often than you’d think), it helps to go back to the basics. Here’s a definition of behavioral economics:

Behavioral economics (BE) uses psychological experimentation to develop theories about human decision making and has identified a range of biases as a result of the way people think and feel.

https://www.behavioraleconomics.com/resources/introduction-behavioral-economics/

Read the entire essay by Alain Samson, please. It is a great, very readable introduction to the subject.


So if one were to accept that definition of behavioral economics above, it becomes a “testable” statement. We’ll come back to this point later on in this post, because it is a bit more nuanced, but in effect, if you wish to critique the field, you must ask the following questions:

  1. Do the theories about human decision making, as developed in the field of behavioral economics, really work? Do they make sense? Are they empirically verifiable? Have they been empirically verified, and that multiple times over?
  2. Are these biases that behavioral economics speaks of real? Do they make sense? Are they empirically verifiable? Have they been empirically verified, and that multiple times over?

This essay makes the point that the answer to these questions is no. Not, I hasten to add, all possible questions. But most certainly the question of whether or not loss aversion is real. What is loss aversion?

It is thought that the pain of losing is psychologically about twice as powerful as the pleasure of gaining. People are more willing to take risks (or behave dishonestly; e.g. Schindler & Pfattheicher, 2016) to avoid a loss than to make a gain.

https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/loss-aversion/

In effect, loss aversion says that celebrating upsides ain’t as important to us humans as avoiding downsides. And hey, that’s something all of us can empathize with, right?

But being able to empathize with a statement isn’t the same as saying the effect is real! That’s where testing comes in, and Jason Hreha is saying that the testing didn’t work:

But the biggest replication failures relate to the field’s most important idea: loss aversion.
To be honest, this was a finding that I lost faith in well before the most recent revelations (from 2018-2020). Why? Because I’ve run studies looking at its impact in the real world—especially in marketing campaigns.

https://www.thebehavioralscientist.com/articles/the-death-of-behavioral-economics

Again, read the whole post. It cites papers (this one, and this one) to back up the claim by the author, that loss aversion ain’t real.


Is it “umm, whoops!” time all over again for behavioral economics? Alex Imas to the rescue:

OK, we’ve learnt about loss aversion. What is “framing”?

https://en.wikipedia.org/wiki/Framing_effect_(psychology)#/media/File:Framing_effect_illustration.jpg

How you, well, “frame” a particular issue is what framing is all about. As Alex goes on to say in that Twitter thread, testing for loss aversion is one thing, and testing for loss aversion given the framing is quite another. In other words, it is the framing that may be the problem, rather than the concept of loss aversion itself.

In addition, there’s literature defending loss aversion:


Well, ok, you’ve read a lot today. But, in the immortal words of Go Goa Gone, what have we learnt, and what do we know?

My take: loss aversion is real. I say this for the following reasons:

  1. It makes intuitive sense (to me!)
  2. The original paper was hard to argue with
  3. There is plenty of research to back up the claim

But do we perhaps emphasize behavioral economics a wee bit too much? Well, I don’t know, but giddy enthusiasm for a subject is rarely a good idea. It is always a god idea to ask how one might be wrong. So while I tend to disagree with Jason Hreha, I would very much want to read more critiques of behavioral economics, precisely because the subject is so intuitively appealing.

And in that vein, this excellent NYT article from a while ago:

Behavioral economics should complement, not substitute for, more substantive economic interventions. If traditional economics suggests that we should have a larger price difference between sugar-free and sugared drinks, behavioral economics could suggest whether consumers would respond better to a subsidy on unsweetened drinks or a tax on sugary drinks.
But that’s the most it can do. For all of its insights, behavioral economics alone is not a viable alternative to the kinds of far-reaching policies we need to tackle our nation’s challenges.

https://www.nytimes.com/2010/07/15/opinion/15loewenstein.html?_r=1

Put another way (and regular readers know it was only a matter of time), the truth lies somewhere in the middle.

No, behavioral economics is not dead, is not dying, and is in fact in the pink of health. But one shouldn’t overemphasize the role of behavioral economics either! It is of (immense!) help in reaching outcomes, and often for relatively low costs – but the price mechanism still, well, rules.


P.S. The art of reading critically is a very, very underrated skill. And especially in India, the art of listening critically, as a student, is even more underrated. We’ve been taught to assume that the guy behind the lectern knows best. And we carry that attitude over when it comes to reading stuff as well. As a student, acquire the skill of always questioning what is being told to you, whether in class or otherwise.

“How might this be wrong?” is a question that ought to be front and center when you’re learning. In fact, I’d go so far as to say that it is the best way to learn.

P.P.S And that applies to this essay too! Please, do try and figure out how I might be wrong! 🙂


And because I think this blogpost isn’t long enough already, one final recommendation. Read the conversation between Neela Saldanha and Alex: