What does the future look like, and how should you think about the answer to that question?

I came across this tweet a while ago, and found it quite funny:

I have asked this question myself while interviewing candidates, and the reason I ask it is not because I want to get a definitive answer from the student. Prediction is a mostly pointless activity. It is because I want to understand what factors the interviewee includes in her analysis.

And the reason I begin with this in today’s post is because two really and truly excellent pieces worth reading were gifted to us earlier this week.

First, Noah Smith interviewed Patrick Collison.

N.S.: So, what are the three things that excite you most about the 2020s?

It’s hard to restrict to three! But here are the first that jump to mind:

First, the explosive expansion in access to opportunity facilitated by the internet. Sounds prosaic but I think still underestimated. Several billion people recently immigrated to the world’s most vibrant city and the system hasn’t yet equilibrated. When you think about how YouTube is accelerating the dissemination of tacit knowledge, or the number of creative outsiders who can now deploy their talents productively, or the number of brilliant 18 year-olds who can now start companies from their bedrooms, or all the instances of improbable scenius that are springing up… in the landscape of the global commons, the internet is nitrogen fertilizer, and we still have a long way to go — economically, culturally, scientifically, technologically, socially, and everything in between. I challenge anyone to watch this video and not feel optimistic.

Second, progress in biology. I think the 2020s are when we’ll finally start to understand what’s going on with RNA and neurons. Basically, the prevailing idea has been that connections between neurons are how cognition works. (And that’s what neural networks and deep learning are modeled after.) But it looks increasingly likely that stuff that happens inside the neurons — and inside the connections — is an important part of the story. One suggestion is that RNA is actually part of how neurons think and not just an incidental intermediate thing between the genome and proteins. Elsewhere, we’re starting to spend more time investigating how the microbiome and the immune system interact with things like cancer and neurodegenerative conditions, and I’m optimistic about how that might yield significantly improved treatments. With Alzheimer’s, say, we were stuck for a long time on variants of plaque hypotheses (“this bad stuff accumulates and we have to stop it accumulating”)… it’s now getting hard to ignore the fact that the immune system clearly plays a major — and maybe dominant — role. Elsewhere, we’re plausibly on the cusp of effective dengue, AIDS, and malaria vaccines. That’s pretty huge.

Last, energy technology. Batteries (88% cost decline in a decade) and renewables are well-told stories and the second-order effects will be important. (As we banish the internal combustion engine, for example, we’ll reap a significant dividend as a result of the reduction in air pollution.) Electric aircraft will probably happen, at least for shorter distances. Solar electricity is asymptoting to near-free, which in turn unlocks other interesting possibilities. (Could we synthesize hydrocarbons via solar powered atmospheric CO2 concentration — that is, make oil out of air — and thereby render remaining fossil fuel use-cases carbon neutral?) There are a lot of good ideas for making nuclear energy safer and cheaper. France today gets three quarters of its electricity from nuclear power… getting other countries to follow suit would be transformatively helpful in averting climate change.

There’s lots more! New semiconductor technology. Improved ML and everything that that enables. Starlink — cheap and fast internet everywhere! Earth-to-earth travel via space plus flying cars. The idea of urbanism that doesn’t suck seems to be gaining traction. There’s a lot of good stuff on the horizon.

https://noahpinion.substack.com/p/interview-patrick-collison-co-founder

I know I say this every other day, but please – pretty please with a cherry on top – do read the whole thing. And subscribe to Noah Smith’s Substack, and follow him on Twitter, and follow Patrick Collison on Twitter, and read the page titled Advice on his website.((I’ve linked to it before, and I’ll gladly link to it again, it’s that good))

There are many, many, many things to appreciate about Patrick Collison, but the thing that has stayed with me the longest is a tweet of his, that helped me understand how to approach Twitter (and therefore life):

Wonderful advice, and I’ve taken it to heart.

But you need the “No, but” approach in life too. Not so much to disagree with other people, but to constantly ask yourself how you might be wrong, and to think about what needs changing for the better.

And a wonderful essay that speaks about precisely this came out this week as well:

The Decadent Society came out in hardcover about three weeks before Italy’s hospitals were overwhelmed by the coronavirus and lockdowns began to descend across the Western world. So it was probably not the ideal time to bring out a book arguing that our era is defined by drift, stalemate, boredom and repetition, that Francis Fukuyama’s “end of history” is still with us thirty years after he declared its advent, that our society is more likely to glide slowly toward dystopia than to leap forward toward a renaissance or plunge into catastrophe. Surely here was something new, here was history come again, here was the shock, the crisis, the un-simulated Reality, the hinge from one age into the next. Surely the pandemic meant the end of decadence, whatever else it meant.

In the Zoom interviews with which I finished up my book tour, I usually half-conceded the point. Yes, this was a real crisis, death taking off its masque amid the partygoers, stalemate giving way to disaster, Reality Itself suddenly pushing fantasy and simulation aside. But at the same time, nothing about a temporary crisis necessarily alters long-term patterns. Plagues can open new chapters in history, but it all depends on how people respond to them, what kind of responses are possible, and which pre-existing trends they accelerate or blunt. Would our decadent institutions, when tested, crumble, taking us deeper into crisis, closer to collapse? Would the shock of pandemic spark a new era of technological innovation, or midwife a new age of political reform? Or would stagnation reassert itself, or even deepen, in the aftermath?

https://douthat.substack.com/p/the-pandemic-and-the-decadent-society

I haven’t yet read Ross Douthat’s book, but he refers to the four horsemen of the decadent society in his essay: stagnation, sterility, sclerosis, and repetition.((It is fascinating to me how in the excerpt above, he refers to this quartet as drift, stalemate, boredom and repetition. The first three words have changed, and if you ask me, for the better. The fourth is, well, repeated. I would love to ask Ross Douthat if that was deliberate – and if so, well played, sir!))

And this essay is a larger examination of the same question: where do you see the world in the future, but now viewed not through the prism of sunny optimism that imminent technological advances can bring you, but also through the prisms of institutional, cultural and demographic pessimism.

This point, in particular, stood out for me:

Lyman Stone recently calculated that there would be 5.8 million more babies if the U.S. had just maintained its pre-Great Recession birthrates; the pandemic is likely to subtract at least several hundred thousand more, with similar trends in Europe.

Yes, it’s possible to hope that the optimistic economic scenario described above will speed a fertility rebound. It’s possible to look at developments in U.S. family policy and see our political system slowly, slowly coming round to taking those issues seriously. Maybe there’s a big turnaround waiting to happen here: Maybe in a Biden boom there will be a battery-powered minivan in every driveway, piloted by a remote-working parent, and simply stuffed with kids.

But to the extent that the fertility collapse is connected with the struggle to transition to adulthood, the struggle to form stable romantic partnerships, it’s also easy to see how the coronavirus’s negative effects could linger — how a lost period for courtship and marriages, a retreat from physical reality and real-world intimacy in crucial years for both, could reverberate through the next decade and beyond.

https://douthat.substack.com/p/the-pandemic-and-the-decadent-society

I sincerely hope he is wrong about this, and I genuinely think that he is, but is it a point worth thinking about and a factor worth including in your analysis of the future?

Absolutely.

Reading both essays will absolutely not help you get the answer to the question of what the future will look like. Nothing will, because the future will remain resolutely unknowable. But both essays will help you get started on which factors you might want to use in your analysis of the question. And will be very informative about why the people who helped make both essays happen think the way they do.

And therefore I’d recommend that you read them. Multiple times over, preferably.

Is Maggi Soul Maximizing?

I received two thought-provoking responses to yesterday’s essay. One requires a lot of thought in order to respond adequately, and I’ll get to it later this week. The other was fun to think about, and is the title of today’s essay.

There is hardly an Indian who doesn’t love Maggi.((That’s not factually accurate, of course. We are a country of about 1.4 billion. Of course there will be folks who don’t like Maggi. But you know what I mean. Plus, for those of you who do not like Maggi, feel free to substitute your cheap guilty pleasure here. And if you don’t have one, consider mentoring me.))

Why Indians love Maggi is another story altogether. It is, as Krish Ashok points out, a function of primarily two things. First, Maggi creates a flavor bomb in the sachet of spices that it sells along with each packet of Maggi. Second, taste is apparently all more about memory than anything else.((If you have not already, please read Masala Lab, by Krish Ashok))

And when the conditions are just right, a bowl of steaming Maggi is just the thing to have. Why, I have an entire blog post on the subject. But the question is this: when I make myself a bowl of Maggi, am I maximizing soul, or am I minimizing time, cost and effort?

Well, under ideal conditions, both! That is, if I make a bowl of Maggi because I want to have a bowl of Maggi, not only am I maximizing soul, but it is dirt cheap, easy to make and requires minimal effort.

But if I make a bowl of Maggi not because I want to eat it, but because I want something that is either dirt cheap, or easy to make, or requires minimum effort – well, that would not be soul maximization. There’s nothing wrong with cheap, quick and minimal effort – in fact, it is a wonderful thing. Efficiency is a good word.

It is efficiency for its own sake that I have a problem with.

In fact, I would argue that this is a pretty good way of thinking about what I was trying to get at yesterday.

Let me put it another way. Consider these two statements:
1. This is all I have to give. Under these circumstances, which dream is most attainable?
2. This is my dream. Given my circumstances, what do I need to do to attain it?

https://econforeverybodyblog.wordpress.com/2021/03/08/maximizing_soul/

If I eat Maggi because I am craving it, and screw worries about nutrition, then we are very much in Point Number Two territory. But if on the other hand, if I have come back home, bone-tired, in a week in which I had resolved to eat home cooked, nutritious food… and then I make Maggi because – well, we’ve all been there, haven’t we? – that is Point Number One territory.

So is Maggi soul maximizing or not?

Yes, it can be. But we would do well to be truthful to ourselves about the reason we’re making it.((I’m really bad at this, just so we’re clear))

Maximizing Soul

I wrote this essay yesterday, and spent all day on it. I didn’t get anything else done. And in terms of the week coming up, that was an expensive thing to do. But as will become clear after reading this essay, I do not regret it one little bit.

David Perell on The Microwave Economy

David Perell’s latest essay resonated with me, and for multiple reasons. The essay is centered around a point that I have been playing around with for a while: we live in a society that overrates efficiency.

He uses the metaphor of a microwave meal in this essay. Not the kind of microwave meal that Krish Ashok has in mind, but rather the kind of microwave meal that a large number of urban Indians are increasingly familiar with. Cut packet, dump in a bowl, nuke and eat. That kind of microwave meal.

This is a meal robbed of its soul. It is functional, yes. It is, in its own way, nutritious enough. One could argue that it is tasty enough. But there is no romance, originality or effort in it. As Robert Pirsig might have put it, it is bereft of quality.((I am a huge, unabashed fan of Robert Pirsig, and so is David Perell. Pirsig will make numerous appearances in this essay: consider yourselves warned.))

Perell’s essay extends this point about the microwave meal to the economy.((I’d go a step further and say that it is equally applicable to society at large. But I’d rather not go down the rabbit hole of teasing apart the differences between an economy and society in this essay, so I’ll use society from here on in, unless I’m quoting from Perell’s essay.)) Most of what we do in our lives today is centered around the same misunderstanding of convenience that gave birth to the idea of a microwave meal. The result, as Perell puts it, is “an economy that prizes function over form and calls human nature “irrational”—one that over-applies rationality and undervalues the needs of the soul.”

What if, for example, I and my family decided to drive down to Goa for a holiday? Which route should we take? We would do exactly what every right-thinking person in our place would do: look up Google Maps. Whatever route Google Maps suggests is the one we will take. 

Here’s a quote from Zen and the Art of Motorcycle Maintenance, the first of Pirsig’s two books:

“The best ones connect from nowhere to nowhere, and have an alternative that gets you there quicker.”

He wrote this line in the context of learning which roads in America were the best for motorcycle riding, and the next two to three pages are lessons on how to ignore Google Maps. Google Maps wasn’t even on the horizon when the book was written, of course. It is just that Google Maps is the modern day evolution of the idea that Pirsig was battling when it came to choosing roads to ride on. 

That idea being efficiency.

A long, rambling drive through quiet serene countryside might mean an extra day, sure, but isn’t that a price worth paying – at least  worth considering? Pirsig isn’t arguing for never getting there, wherever “there” may be. He is saying the same thing that the poet did, years and years ago. We have lost the desire to stand and stare. The monk said the same thing when he spoke about the journey being as important as the destination. Getting there is important, of course it is. But how you get there is equally important, and we live in a society that doesn’t care about the journey anymore. ((NH4 until Kolhapur and then turn right for Amboli is what we usually do, in case you were wondering.))

Our society over-applies rationality and undervalues the need of the soul. Pirsig knew this, of course. It is why the last part of his sentence speaks about an alternative that gets you there quicker. He knew the coming of Google Maps was just a matter of time.

Perell’s essay is a lament for what might have been: a world that prioritized the soul and not the other way around. There is a lot of truth in it, and I have absolutely no quarrel with Perell’s solution. But his essay helped me concretize something that I have been playing around with in my mind for quite a while, and that is what this essay is about.

Minimization, not Maximization

“We’ve overwhelmingly used our wealth to make the world cheaper instead of more beautiful, more functional instead of more meaningful.” 

That sentence, to me, is the core focus of David Perell’s essay, and I couldn’t agree more. In fact his argument grows even stronger on reflection, because I think the word cheaper is applicable to more than just prices. 

We have also used our wealth, for example, to make the world cheaper in the case of time.

I read more today than I did about ten years ago, but the reading is infinitely more bite-sized in comparison. I much prefer essays to books, blog posts to essays, and tweets to blog posts. ((“Prefer” here is used in the context of what I end up actually consuming of each, as opposed to what I claim to prefer.)) And I suspect I am not the only one. I can make the same argument in the case of sports. We as a society have deliberately and consciously chosen ODI’s over test matches, T20’s over ODI’s, and now of course we have The Hundred. Another argument: of all the hours that you have spent staring at video content across all devices, how many hours were spent in watching movies – as opposed to TV series, documentaries, YouTube videos or TikTok? 

When David Perell says that we have made the world cheaper, what I think he is saying is that we have figured out ways to cheapen the effort that we are willing to put into the act of consuming something. That something could be a meal, but it could also be extended to reading, viewing, or listening as well – and more besides. ((Perell’s essay has a lovely section on the music bit, especially. Do read it.))

The world has also been made cheaper in terms of effort.

I base my buying decisions on the buying decisions that others have made. My PowerPoint templates are standardized ones that Microsoft offers me. My tables in Excel are formatted as per the default mode, or based on the templates made available within the software. What to eat tonight is a function of an algorithm, the title of which is “popular in your area”. Relying upon my own research, or on serendipity is either a lost art, or has become one that is looked down upon.

I teach economics for a living, and the best definition of the subject that I have found comes from a textbook written by Alex Tabarrok and Tyler Cowen:

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

The word “most” in that sentence necessarily implies optimization. And optimization necessarily implies maximizing something, or minimizing something. Getting the most out of life can be thought of in two ways. It could mean living life to the fullest (however you might define this for your own sake). It could also mean getting the most out of life by minimizing time, effort and cost spent on any activity. ((And it could, of course also mean both at the same time. But even in this scenario, which of the two one focuses on the most is going to get us back to the point of this essay.))

Consider an example from my life. I love eating good food. In fact, the point of life, if you ask me, is to have as many good meals as possible. How can we apply the points in the paragraph above to my life?

A good meal on a Sunday, for example, could mean spending all day researching the best version of a recipe for a dish I have in mind, then walking to the market to get the best, freshest ingredients possible, then lovingly preparing them, and then getting the whole dish together, so that friends and family can have a wonderful, relaxed meal together.

I’d call that living life to the fullest. It is all but a guarantee that I get nothing else done on that Sunday, but I have maximized contentment.

On the other hand, I could just order the dish from a restaurant whose version I really like. Or I could decide that this particular dish is too expensive, and just make myself a sandwich instead.

I’d call this getting the most out of life by minimizing time, effort and cost. I haven’t maximized contentment, of course, but I have saved time and effort.

And as you may have guessed, I end up doing the latter far more than the former.

And this for something I really and truly love: eating. We feed our passions, even, by minimizing time, cost and effort, instead of maximizing contentment. Our necessities don’t stand a chance.

That is what we have become: a microwave economy.

The Rajan Economy

Chef Rajan is the chef de cuisine at the JW Marriott in Pune. He has, over the years, become a really good friend. By rights, he ought to be best friends with my doctor. For Chef Rajan has ensured over the past seven years or so that there are far too many inches on my waist. But it is for that very reason, of course, that he and I are such good friends. The man loves to feed people, bless him. 

The Rajan economy is his fiefdom in the JW Marriott. This fiefdom is the 24-hour restaurant in the lobby, called Spice Kitchen. ((His role has changed over the years, of course, and is greatly expanded today. For the purpose of this essay, I will focus on just the one restaurant.)) Procurement, staffing, menu design, day-to-day operations and customer relationship management – Chef Rajan is involved in all of these in one way or the other.

I, my extended family and a lot of other people in Pune are frequent visitors to his restaurant for a variety of reasons. There’s the attention to detail, the friendly customer service, the frequently changing menu and much else besides. But there is one non-negotiable rule that I’ve never broken, and he won’t consider breaking.

There’s never been a question about a discount on the bill.

Chefs who used to be in charge of the restaurant before him have waived off the bill on a couple of occasions – maybe a birthday being celebrated there, maybe some other occasion. Not, let me be clear, because I asked for it. It was their way of deepening the relationship with a customer. And once offered, of course, I was going to take it. Why wouldn’t I?

But ever since Chef Rajan has been in charge of the kitchen (which, if memory serves me right, was in 2015), there has never once been the suggestion of a discount. Not once.

And that has left me even happier as a customer over these past few years.

Because the Rajan economy is not about cost minimization. It is, instead, about maximizing customer delight. ((Which, over the long run, ought to lead to true profit maximization. But this footnote is another essay in the making, so we will leave it at that.)) The Sunday brunches, or brunches on special occasions such as Christmas day, are expensive affairs. ((By Pune’s standards. They are cheap compared to what’s on offer in Bombay.)) But I doubt anybody can walk away from that spread thinking that they did not get their money’s worth. The extent of the spread, its presentation, the quality of the ingredients, the number of times that freshly prepared batches are brought out of the kitchen – all of these speak to the quality of the restaurant. ((Taste is a subjective thing, and so I’ve left it out of the discussion here.))

Chef Rajan’s philosophy at the Spice Kitchen isn’t about cost minimization, it is about maximizing customer delight. Never once have I sat down for a meal at the Spice Kitchen and not been sent a little something that is over and above whatever is on the menu that day. If it is a special occasion, the little something could be quite elaborate. On other days, not so much. But there will always be a little bit more than expected, or a little bit more than is part of the stated deal.

You will pay full price, in other words, but you will get more than you bargained for.

I signed on for an online course conducted by Amit Varma last year, called The Art of Clear Writing. ((Any shortcomings in this essay are down to me, of course, not Amit!)) It was a wonderfully organized course, and was slated to last a couple of months or so. But it is still not over! There is a community that has been formed of present and past students. Talks about writing are organized and a newsletter is in the works. Regular writing prompts are handed out to those who wish to continue practice writing. This writing regularly receives community-based feedback. Again, the price of the course is non-negotiable, but you will get more than you bargained for.

There are two ways to live life and conduct business, when thought about from the framework we have been dancing around in this essay so far. Charge the bare minimum and provide the bare minimum is one of them.

There is an argument to be made to go the Rajan/Amit way instead.

Soul Satisfaction is the Opposite of Cost Minimization

One of my favorite books to read was Anti-Fragile, by Nicholas Nassim Taleb. The key point in the book for me was that there are certain things in the world that don’t do well when exposed to risk. These things we call fragile. There are other things that don’t do badly when exposed to risk. These we call robust. 

Antifragility isn’t about not doing badly when exposed to risk. It is about getting better because of exposure to that risk. Or as he puts it in the book, robustness isn’t the opposite of fragility – it is antifragility.

In a similar vein, I think we have prayed for far too long at the altar of cost efficiency. We have focussed so much on ridding ourselves of inefficiencies in our society that we have killed off the idea of satisfying the soul.

But there is a very good reason for this – our ability to measure everything, everywhere. It may have been a blessing at one point of time, but today, I would call it a curse.

There is this part in a conversation between Tim Ferriss and Seth Godin in which Tim asks Seth about meditation. After Seth’s answer, Tim has a follow-up question about the length of time that Seth spends in meditating, and if Seth has a preference regarding time of day. Seth’s answer is worth quoting in its entirety:

“No. I don’t quantify that stuff. I quantify almost nothing in my life”

Our ability to measure and therefore quantify every single aspect of our lives is increasingly becoming a problem.((I can measure my pulse rate, my O2 levels, my hours of sound sleep, the number of steps I have walked, the number of calories I have consumed, the number of minutes I have spent looking at my phone (and with drilldowns to boot) and a dozen other things with just a smartwatch and my phone. And then tabulate it, analyze it and improve upon it.)) The reason it is a problem is because quantification gives us the satisfaction of having done something about the task ahead of us – whatever that task may be. We have quantified our effort, and analyzing said quantification allows us to become “better” over time.

Let’s use a concrete example: I can measure the amount of time I spend staring at my phone daily. Apps that allow one to do this are freely available on, or even baked right into, all popular mobile operating systems. The reason I want to do this is because I have a lot of work to do in this quarter, and I want to minimize wasted time.

After a week of logging in the data, I can then decide how to either allocate my time on the phone better (more Kindle app, less Facebook), or reduce the number of minutes I spend on the phone daily. 

I might even get good at this. Maybe, after a month, I now spend markedly less time on the phone, and what little time I spend on it, I spend on “good” apps. The problem, however, is that I now have one more thing to do – track, analyze and optimize how I spend my time on the phone. 

That is, because I could measure time spent, I optimized it. The point, however, was to do more work this quarter, not analyze how I am spending my time instead. The quality of the work – what I refer to in this essay as soul satisfaction – is inherently immeasurable. And so we optimize the measurable, and continue to ignore the immeasurable.

It is, unfortunately, the immeasurable that is important.

Now you could, of course, attempt to measure the immeasurable. Chef Rajan, or somebody else at the Marriott could conduct a survey to find out how satisfied the customers are. Amit Varma might circulate a Google Form to find out how satisfied his students are with the course. ((Neither of them have done any such thing.))

But even if this was attempted, the wrong thing would be quantified. ((And it would be imprecisely quantified, but that is a story for another day)) The customer’s satisfaction would be (imperfectly) measured. 

What we really want to measure is how soul-satisfied are the creators with their work, and measuring this is pointless: the creator already knows.

In our rush to find something to measure in order to prove that we are efficient, we measure, analyze and perfect cost, time and effort minimization. And we therefore fail to do what we set out to in the first place: good, high-quality work.

If you will forgive a lengthy extract in an already lengthy essay, David Perell points this out in his essay as well:

As Mumford observed almost a century ago, the world loses its soul when we place too much weight on the ideal of total quantification. By doing so, we stop valuing what we know to be true, but can’t articulate. Rituals lose their significance, possessions lose their meaning, and things are valued only for their apparent utility. To resist the totalizing, but ultimately short-sighted fingers of quantification, many cultures invented words to describe things that exist but can’t be defined. Chinese architecture follows the philosophy of Feng Shui, which describes the invisible — but very real — forces that bind the earth, the universe, and humanity together. Taoist philosophy understands “the thing that cannot be grasped” as a concept that can be internalized only through the actual experience of living. Moving westward, the French novelist Antoine de Saint-Exupéry said: “It is only with the heart that one can see rightly; what is essential is invisible to the eye.” And in Zen and the Art of Motorcycle Maintenance, Robert Pirsig describes how quality can’t be defined empirically because it transcends the limits of language. He insists that quality can only be explained with analogies, summarizing his ideas as such: “When analytic thought, the knife, is applied to experience, something is always killed in the process.” All these examples use different words to capture the same idea.

https://perell.com/essay/the-microwave-economy/

But a headlong rush to measure, analyze and optimize the measurable has resulted in us losing sight of the big picture. We have become a society of optimization through minimization. We’ve become very good at extracting the very last bit of juice out of a lemon. So good, in fact, that we’ve forgotten all about growing more lemons. ((And if I may be permitted to squeeze every last bit out of this analogy: or growing mangoes instead.))

The point was to be as content as possible. We’ve settled instead for being as content as we possibly can be after minimizing costs, time and effort.

Soul Satisfaction Maximization

It is a mouthful, I’ll be the first to admit. And if anybody reading this can coin a better phrase, I’m all for using that one instead. But call it what you will, it is the idea that I am focused on, not its name. We need to move away from minimizing that which we can measure, and try and move towards maximizing that which we can’t.

Cowen and Tabbarok’s definition remains perfectly valid. Economics is indeed about getting the most out of life. All of us are often unclear about what we are optimizing for in life. Is it a fulfilling family life, or is it income, or is it something else? Every economics professor will sooner and later ask her student: “what are you optimizing for?”

I’d suggest a follow-up question: how are you optimizing for it?

And by way of example, let us return to my favorite thing to think about: food.

If, on a Monday night, you are wondering what to cook, don’t think about which recipe can be made as quickly as possible. That would be time, effort and cost minimization.

Choose instead, the recipe you want to make, and cut out everything else in your life that stops you from making that recipe. And if this still doesn’t give you enough time, then try to see if you can eliminate certain steps in the recipe. See if certain steps can be done in advance. See if hacks can be used to accelerate certain processes.

In other words, what you want to maximize is non-negotiable. Don’t give up on your dream. But compromises in order to achieve that dream – well, that is inevitable. 

Let me put it another way. Consider these two statements:

  1. This is all I have to give. Under these circumstances, which dream is most attainable?
  2. This is my dream. Given my circumstances, what do I need to do to attain it?

I argue that we have, as a society, grown far too comfortable with the first idea, and we need to learn to do more of the second.

But whatever you do, don’t microwave a meal. 

A Simpsons based podcast this Sunday

Not a video today, but a podcast. Are the Simpsons still middle class today?

What a lovely, lovely idea, and how brilliantly executed! And you might want to pair it with this excellent newsletter from Navin Kabra.

David Perell on the Microwave economy

I hope to write a longform essay myself about this topic, but this was fascinating on multiple levels:

Please read the entire thread, and the threads in almost all of the tweets that make up the first thread (if you see what I mean). Anything that can tie together a microwave dinner, urbanization, and Robert Pirsig is, as they say, self-recommending.

On Interning

It is hunt-for-an-internship season at our Institute, as I suppose is the case all over the country.

The process is trickier than usual, because of the pandemic, and for that reason I wanted to put up a small outline of my thoughts about internships.

  1. At the start of your career, optimize for learning, rather than branding. This means that in your internship, and your first job, you should optimize for firms where you are likely to learn a lot, rather than firms that are prestigious. Prestigious firms are likely to be more bureaucratic, and more about status. This means that the junior employees aren’t likely to get a lot of crucial, really important work. The pay will be better, the Friday parties will definitely be better, but the opportunity cost will be high as well.
  2. Learning how to document the work you’ve done is a very, very underrated skill, especially in internships. One way to be really and truly remembered at the end of your internship is by handing your mentor a docket of what you did, what you wish you had done, and a documentation of all the processes you learnt about.
  3. Best of all, include a section for the next intern in this team. Include stuff like who to meet in payroll, where is the best chai to be had, who in IT is especially helpful etc, along with the obvious stuff. Not only is paying it forward a good idea in and of itself, but that next intern is automatically a friend for life.
  4. Go for all the chai and sutta beaks that you are invited to, even if you don’t smoke or drink chai. Relaxed conversations with your mentors or seniors is invaluable, and soak in all the info you possibly can.
  5. Learn Excel. Here’s a laundry list to get you started: HLOOKUP, VLOOKUP, INDEX, MATCH, OFFSET, SUM, SUMPRODUCT, COUNTIF (and all the variants). Pivots, filters, data analysis add-in, solver add-in, charts, trace precedents, what-if analysis, data tables, goal seek, data validation. You must know all of this in and out, and be able to know what you can use when. YouTube videos, websites will help, but the best way to learn is to sit with a colleague and ask her to help you out. I cannot emphasize this enough – you need to know Excel. It doesn’t matter which role, which team, which department. You. Must. Know. Excel.
  6. Whatever productivity suite your organization is using, soak yourself in it. GSuite, MS Office or anything else. Know the ins and outs of the email system, the calendar tool and the internal messaging tool. Invest the time to make yourself a ninja in it. Trust me, it is worth the effort.
  7. Seek out a mentor in the organization if one isn’t allotted to you. Set up weekly lunch/tea meetings with the mentor, and have her tell you stories about stressful times in the office.
  8. Continue to learn whatever tools you got access to at the workplace. It could be Tableau, Crystal Ball, R, Jupyter notebooks or anything else. Again, soak yourself in the tool, and start on the path of becoming a ninja in it. This will take time, but it is worth your while.
  9. Learn the big picture. Ask your mentor how whatever project you are working on fits into the larger objectives of the workplace. My very first manager told me something I have never forgotten: every single thing you do in the workplace is either raising revenues for the firm, or is cutting costs for the firm, or is improving speed-to-market. If what you’re doing is achieving neither of these three, then it is a waste of time. Ask, until you are clear about the answer, how your project fits into this simple model.
  10. Lastly, about landing an internship. Do not send out blanket emails to contacts on LinkedIn, or elsewhere. Shortlist not less than ten, but not more than twenty people, and write them a personalized note. These folks should have skillsets you want to possess – it doesn’t matter where they work. The note should include a specific question about this skillset. If they answer – and to such specific notes they usually will – take their advice to heart. Incorporate it into a project you are working on. Send them this project, and ask for feedback. Then ask if they can help you land a gig. All the notes I get on LinkedIn just ask for a gig. That’s a waste of a potential networking opportunity.

Reproducibility and Replicability

I and a colleague conducted a small behavioral economics and experimental economics workshop for our students at the Gokhale Institute. It was a very small, very basic workshop, but one of the things that came up was the reproducibility problem, or as Wikipedia puts it, the replication crisis.

The replication crisis (also called the replicability crisis and the reproducibility crisis) is an ongoing methodological crisis in which it has been found that many scientific studies are difficult or impossible to replicate or reproduce. The replication crisis most severely affects the social sciences and medicine. The phrase was coined in the early 2010s as part of a growing awareness of the problem. The replication crisis represents an important body of research in the field of metascience.

https://en.wikipedia.org/wiki/Replication_crisis

And further on in that same article:

A 2016 poll of 1,500 scientists reported that 70% of them had failed to reproduce at least one other scientist’s experiment (50% had failed to reproduce one of their own experiments).[9] In 2009, 2% of scientists admitted to falsifying studies at least once and 14% admitted to personally knowing someone who did. Misconducts were reported more frequently by medical researchers than others.

https://en.wikipedia.org/wiki/Replication_crisis

The basic idea behind replicability is very simple: you should be able to take the data and the code from the paper you are reading/reviewing, and replicate the results obtained. You don’t have to agree with the choice of method, or with the results or with anything – you should be able to replicate the results, that’s all.

One basic standard of economic research is surely that someone else should be able to reproduce what you have done. They don’t have to agree with what you’ve done. They may think your data is terrible and your methodology is worse. But as a minimal standard, they should be able to reproduce your result, so that the follow-up research can then be in a position to think about what might have been done differently or better. This standard may seem obvious, but during the last 30 years or so, the methods for reproducibility have been transformed.

https://conversableeconomist.blogspot.com/2021/01/the-reproducibility-challenge-with.html

Now (to me, at any rate) this is interesting enough in and of itself, but at the risk of becoming a little meta, reading the rest of Tim Taylor’s post is worth it because it raises so many interesting issues.

The first is a link to a lovely overview of the problem by Lars Vilhuber, published in the Harvard Data Science Review. It is relatively simple to read, and is recommended reading. For example, Vilhuber draws a careful distinction between replicability and reproducibility, and is full of interesting nuggets of information. I’ll list out the major ones (major to me) here. Note that I have simply copy-pasted from the link:

  1. Publication of research articles specifically in economics can be traced back at least to the 1844 publication of the Zeitschrift für die Gesamte Staatswissenschaft (Stigler et al., 1995).
  2. As the first editor of Econometrica, Ragnar Frisch noted, “the original data will, as a rule, be published, unless their volume is excessive […] to stimulate criticism, control, and further studies” (Frisch, 1933)
  3. …only 17.4% of articles in Econometrica in 1989–1990 had empirical content (Stigler et al., 1995)
  4. As Dewald et al. (1986) note: “Many authors cited only general sources such as Survey of Current Business, Federal Reserve Bulletin, or International Financial Statistics, but did not identify the specific issues, tables, and pages from which the data had been extracted.”
  5. Among reproducibility supplements posted alongside articles in the AEA’s journals between 2010 and 2019, Stata is the most popular (72.96% of all supplements), followed by Matlab (22.45%; Vilhuber et al., 2020) (Note: Do check figure 2 at the link. Fascinating stuff.)
  6. It was concluded that “there is no tradition of replication in economics” (McCullough et al., 2006).
  7. The extent of the use of replication exercises in economics classes is anecdotally high, but I am not aware of any study or survey demonstrating this.
  8. The most famous example in economics is, of course, the exchange between Reinhart and Rogoff, and graduate student Thomas Herndon, together with professors Pollin and Ash (Herndon et al., 2014; Reinhart & Rogoff, 2010). (Note to students: this is a fascinating tale. Read up about it!)

There is much more at the link of course, but Tim Taylor’s post does a good job of extracting the key points. I’m noting them here in bullet point fashion, but you really should read the entire thing.

  1. Economic data – our understanding of the phrase needs to change, because a lot of it is in fact not publicly available today.
  2. “Vilhuber writes: “In 1960, 76% of empirical AER [American Economic Review- articles used public-use data. By 2010, 60% used administrative data, presumably none of which is public use …””
  3. Restricted Access Data Environments is a new thing that I discovered while writing this blogpost. “…where accredited researchers can get access to detailed data, but in ways that protect individual privacy. For example, there are now 30 Federal Statistical Data Research Centers around the country, mostly located close to big universities.” We could do with something like this in India. Actually, we would be a lot happier with just dbie working the way it was supposed to, but that’s for another day.
  4. Data that is given by creating a sub-sample, data that is ephemeral (try researching Instagram stories, for example) and data that you need to pay for are all challenging, and relatively recent, developments.
  5. I worked for four years in the analytics industry, so believe me when I say this. Data cleaning is a huge issue.
  6. Tim Taylor writes five paragraphs after this one, but this is a glorious para, worth quoting in full:
    “As a final thought, I’ll point out that academic researchers have mixed incentives when it comes to data. They always want access to new data, because new data is often a reliable pathway to published papers that can build a reputation and a paycheck. They often want access to the data used by rival researchers, to understand and to critique their results. But making access available to details of their own data doesn’t necessarily help them much.”

If there are those amongst you who are considering getting into academia, and are wondering what field to specialize in, reproducibility and replicability are fields worth investigating, precisely because they are relatively underrated today, and are only going to get more important tomorrow.

That’s a good investment to make, no?

A Pro-Classroom Argument

I am, if anything, against how learning is delivered today. Much lesser classroom teaching, much more discussions, much more of arguments, much more of thinking and writing (this ought to turn into a separate post!) is how I would prefer learning takes place.

But, if I had to force myself to think about what about traditional classroom teaching is good…

  1. Traditional classroom teaching, where the teacher talks and the students listen for the most part, allows for a much more systematic completion of the syllabus, and reduces the burden on the teacher. Teaching ought to become easier, and therefore (assumption alert) better.
  2. The teacher is able to focus on one particular aspect for the duration of that one class, and therefore is able to prepare accordingly. Random questions and answers, taking the class off on a tangent is all well and good, but you suffer, inevitably, a loss in depth when you go wide.
  3. A one-to-many mode of teaching ensures that all students have the same notes, and are in agreement about what was taught. Group based discussions (breakout rooms is what we call these things these days) for example, leaves students unaware of what was said in the other groups. Debriefing helps, but never completely.
  4. Do we underrate “sit still and listen” these days? Yes, long classes and having to focus on the voice that drones on is easy to make fun of, but have we collectively lost the art of sitting still and listening? Might we be inculcating the value of sustained concentration by having traditional classes, and might this in fact be a good thing?
  5. If a class is going to be about listening on a one-to-many basis, does this reduce the cognitive load on the student? Freed from all other requirements, classroom teaching might free up the student to learn more, by reducing the amount of effort demanded from her?
  6. Two points about discussions and debates. Doesn’t limiting the scope for discussions and debates in class make it better, by having only genuine doubts and disagreements being raised? Forcing students to take part in a discussion or a debate, when most of them seem to not want to, can end up making them uncomfortable. It can also be a time-consuming affair, and all for points that perhaps were not worth it. On the other hand, leaving only ten minutes or so for discussion at the end will “bubble up” only the most willing, most eager and most well-thought out responses. That is a good thing, right?
  7. Is a classroom really the best place to debate and discuss? Is not the opportunity cost of having to listen to your peers, rather than the person with the most amount of knowledge about the subject (the professor), very high? Students can (and should!) debate issues raised in class – but outside.

I find myself unable to come up with more, but I’m sure there are other arguments to be made for classroom-based, one-teacher-talks-many-students-listen-based model. What am I missing?

Back to College

I am very interested in the future of higher education.

I have learnt much more outside of the classroom than inside, and this was truest when I was a student. I want to stick around in higher education because I want to try and change this for everybody in college today.

Change it through two ways:

  1. Make classes more interesting than they were back in my day. Also make them more interesting than the typical run-of-the-mill classroom experience today. (This is a hard problem, it requires hard work and it does not scale. But learning how to teach better is an invaluable experience.)
  2. Help change college into something more than drab old sit-in-class for six hours a day, six days a week. What a horrible way to learn!

This current semester, I want to try and get as many projects off the ground as possible. This has meant getting some BSc students started on projects of their own, it has meant involving some of them in work I am currently engaged in, and it has meant trying to get some workshops going.

Some of these things will stick, and grow into something much larger than just my involvement. Others will fail. That’s ok. This semester is about trying out new things.

One of these things is a podcast.

I had tried this out in 2019 (link here), completely as a solo effort, but I got only five episodes in. 2020 is a mess I’d rather forget. And now, in 2021, we’re back with another season of Back to College.

What is Back to College?

The idea is simple: speak to people about how they would approach college differently, if they got the chance to do it all over again.

  • What would you do more of, what would you do less of?
  • What technologies that are available today would have been a blessing, and how could they also have been a curse?
  • Is bunking a science or an art? How should you choose which classes to bunk, and which to not – and why?
  • How would you have built out networks better?
  • Would you give exams the same importance with the benefit of hindsight? Why or why not?
  • Which books helped you?
  • How overrated are textbooks, or are they not? Why?
  • What in your current job are you able to do well because of what you learnt in college?
  • What in your current job makes you wish you had been taught differently in college?
  • … and the list goes on and on and on.

We’re beginning with Gokhale alumni, and we’ll add more folks in as we go along. But the idea is to build a repository of interviews for folks to listen to, any time, to get an idea about the careers they want to get into.

And this time around, it ain’t a solo effort. I have the energy of youth on my side! Praneet, Rahul, Vaishnavi, Simran, Shashank, Jay, Anshi, Nivida and Amogh are helping me out on this project, and the hope is that eventually, this will become a completely student run thing.

New episodes will be up every Friday, and we have two out already. Neha Sinha spoke with me about public policy, and Binoy Mascarenhas and I chatted about urbanization. In each case, of course, I touched upon some of the questions above. This Friday will be a conversation I had with Rohith Jyothish on understanding the ‘P’ in GIPE.

Please do give it a listen, and to all the GIPE alumni reading this, please – pretty please! – don’t hesitate to reach out if you think you would like to be on the podcast. We’ll set up a time at your convenience. (Non-GIPE folks, same offer applies to you in about a couple of months. I’ll do another post then).

Thank you, as always, for reading – and now for listening too!

Understanding fiscal deficits

Fiscal deficit is a phrase that is bandied about every year, but not very well understood – both in terms of how to arrive at it, but also in terms of what it means.

In the first part of today’s post, I’ll explain how to arrive at it. In the second part, I’ll rely on a couple of lines from an excellent article written by Rathin Roy a while ago.

I work at the Gokhale Institute of Politics and Economics, Pune. This means that while I continue to be employed at the Institute, a salary will be credited into my bank account every month. I can also choose to augment my income by, say, breaking a fixed deposit, or by taking a loan. The first part is my “recurring” income, while the latter is a one-time income.

I stay in a rented accommodation. This means I have to pay rent every month. I also have to buy groceries, pay for utilities, and pay the salaries of everybody who works at my household. But also, every now and then, I can, say, buy a car. Or a laptop. Or a house. These are not monthly expenses – at least not in my household they aren’t! The first set of expenses are “recurring” expenses, while the latter are one-time expenses.

Taken together, what matters in my household is that I must be able to arrange for ways to meet my monthly expenses. Let’s write down some very simple numbers:

  1. Assume that my recurring expenses are one lakh rupees – one hundred thousand INR. (Groceries, rent, salaries, petrol, eating out etc etc)
  2. Assume that for the month of March, my capital expenses are also one lakh rupees. (Maybe I’ve chosen to buy the latest M1 Macbook. One can dream.)
  3. So, my expenses, all told, are two lakh rupees for the month of March 2021.
  4. Assume that Gokhale pays me seventy thousand rupees as my salary. Assume that I augment this income by teaching courses in a couple of other colleges. Let’s assume that I earn one lakh rupees through this recurring income (salary plus visiting faculty income is one lakh per month)
  5. I have no other sources of income. So: 1+2 are my total expenses, against which my total income is 1 lakh rupees (4).
  6. Let’s say I am unwilling to break into any of my savings to purchase this laptop, and choose to borrow the amount instead. That is, no capital income, only borrowing.

So, in essence, the amount that I need to borrow after all possible sources of income have been thought of, in order to meet my total expenses…

That borrowing is my “fiscal deficit” for the month of March 2021.

Homework: to check if you have understood this, try reading the budget at a glance document, and see if you get how Nirmala Sitharaman and team arrived at the fiscal deficit for the government. Page 3 in the PDF.*

OK, so now we know what the fiscal deficit is, and how to go about arriving at it. But is a high fiscal deficit a good thing or a bad thing, and how does one decide?

Well, it depends on what you are borrowing for! For example, as I often say when I am talking to students, they are and should be running a fiscal deficit in their own, personal lives. They’re spending money (rent, food, movies, college fees) but not earning anything at the moment. The idea is that this money is being spent in order to acquire skills that enable them to earn much more in the future. Much more, in fact, than they spend on acquiring that education – or that, at any rate, is the plan.

But what if they instead spend an equivalent amount of money, but not to acquire an education. They spend this money, instead, on buying a Honda Gold Wing. (Yes, I know education isn’t quite that expensive just yet.)

That would be problematic, because you are taking on debt, but for acquiring a depreciating asset (a bike that gets worse over time) and not an appreciating one (your education and your years of experience get more valuable over time).

Or as Rathin Roy put it in a recent Business Standard column:

If the government is merely borrowing to fund consumption expenditure then this is difficult to justify.

https://www.business-standard.com/article/opinion/political-economy-of-fiscal-responsibility-121010701581_1.html

and a little while later, in the same piece…

For example, the “golden rule,” which states that governments must finance consumption expenditure out of revenue receipts and borrow only for investment.

https://www.business-standard.com/article/opinion/political-economy-of-fiscal-responsibility-121010701581_1.html

There is much, much more to take away from Rathin Roy’s piece, of course (and I’ll write a follow-up piece later this week) – but as a first step towards understanding fiscal deficits, this is more than enough.

*If, for whatever reason, the budget at a glance document is not clear, let me know in the comments below. If more than ten people are interested, happy to arrange a quick video call about it (because, you know, there have been so few of ’em this past year!)