What do Income Tax Returns, Demonetization, and Fast Tag have in common?

It may help to read last Thursday’s post before you start reading this one.

Why are there such long lines at all the toll plazas across India at the moment? You may give  a lot of answers, and if you have recently passed through a toll plaza yourself, your answer may well be unprintable.

Here’s mine though: you are, currently, assumed guilty until proven innocent.

All cars must wait in line, pay cash/have the RFID tag scanned, and for each car, once the payment is done, the barrier is raised, and you may pass through. The barrier stays put until the verification is done: that’s another way of saying guilty until proven innocent.

But the cool thing, to me, about implementing Fast Tag, is that once a certain percentage of vehicles in India is equipped with Fast Tags, the barriers can stay up. We will transition to a regime in which all vehicles are assumed to be innocent.

Now, as we learnt the previous week, with a large sample, there will  be problems. In the new systems, in which vehicles just pass through because we assume all of them have Fast Tag implemented, there will be exceptions. There will be vehicles that don’t, in fact, have Fast Tag implemented, and so they may end up not paying the toll.

But the vast majority will have Fast Tag, and don’t have to pay with money and waiting time. The government will miss out on catching a few bad apples, but a lot of Indians will save a lot of time. On balance, everybody wins.

And of course, given technology, it should be possible to have notifications sent to those vehicles that pass through without paying. Yes, I know it seems a long way off right now, but the point is that as a statistician, we move to a world where we assume all vehicles are innocent until proven guilty, rather than the other way around.

Fast Tag implementation, when fully functional, will get the null hypothesis right.

And pre-filled income tax returns, sent to us by the government, with minimum of audits and notices, is exactly the same story. The government assumes innocence until proven otherwise, leading to a system in which every tax-paying Indian is assumed to be an honest tax-payer until proven otherwise. We already have a system that is closer to this ideal than was the case earlier, and hopefully, it will become better still with time.

And now that we’re on a roll, that’s the problem with demonetization, if you were to ask a statistician! All notes were presumed guilty, until proven innocent.

Here’s the point: if you are a student of statistics, struggling with the formation of the null, and wondering what the point is anyways*, the example from last Thursday and the three noted above should help make the topic more relatable.

And to the extent that it does, statistics becomes more relatable, more understandable and – dare I say it – fun!

 

*Trust me, we’ve all been there

 

Links for 4th June, 2019

  1. ““Alexa, are you recording everything you hear?” It is a question more people are asking, though Amazon’s voice assistant denies the charges. “I only record and send audio back to the Amazon cloud when you say the wake word,” she insists, before referring questioners to Amazon’s privacy policy. Apple’s voice assistant, Siri, gives a similar answer. But as smart speakers from Amazon, Apple, Google and other technology giants proliferate (global sales more than doubled last year, to 86.2m) concerns that they might be digitally snooping have become more widespread. And now that these devices are acquiring other senses beyond hearing—the latest models have cameras, and future ones may use “lidar” sensors to see shapes and detect human gestures (see article)—the scope for infringing privacy is increasing. So how worried should you be that your speaker is spying on you?”
    ..
    ..
    The article doesn’t answer the question it frames in as direct a fashion as readers might wish, but read this to understand that there is (as with everything else in life) a benefit to this technology, as also a cost.
    ..
    ..
  2. “Many voters may have felt that others, more wealthier than them, were also being hurt by demonetization, and hence supported the adventurist move.The results of the second round of the YouGov-Mint Millennial Survey conducted in early 2019 suggest that even today and, despite all the evidence to the contrary, many urban youths who support the ruling party consider demonetization to be a great success of the government.”
    ..
    ..
    Can you drive in reverse in a tunnel, Professor Hirschman? Livemint does a three year review of demonetization, and it is worth reading for a variety of reasons.
    ..
    ..
  3. “Not all New York City views are created equal.Direct Central Park views may be the most valuable amenity in Manhattan real estate, but in a market filled with soaring new developments — some of which wind up blocking the views of other buildings — even a partial glimpse of a river, park or the city skyline can also command a hefty premium.”
    ..
    ..
    This article is proof that microeconomics can be fun. But beyond that, it is also worth going through the article to take in the photographs. New York looks gorgeous!
    ..
    ..
  4. “What Microsoft figured out is that it made far more sense for both Microsoft and their customers to pay on a subscription basis: companies would pay a set price on a monthly or annual basis, and receive access to the latest-and-greatest software. This wasn’t a complete panacea — updating software was still a significant undertaking — but at least the incentive to avoid upgrades was removed.There were also subtle advantages from a balance sheet perspective: now companies were paying for software in a rough approximation to their usage over time — an operational expense — as opposed to a fixed-cost basis. This improved their return-on-invested-capital (ROIC) measurements, if nothing else. And, for Microsoft, revenue became much more predictable.”
    ..
    ..
    Ben Thompson helps one understand Microsoft, SaaS, Slack, Zoom and a simple way to understand what makes new businesses potentially attractive – be sure to read through the entire article to reach the four quadrant diagram at the end. Entirely worth your time.
    ..
    ..
  5. “When it was finally time to deploy, with no hint from the U.S. or China or Brazil or India that anyone would send out a countering air force to simply knock the planes out of the sky, the three billionaires went back to the island and sent the aerosols tumbling through the stratosphere. There was no ceremony, no champagne, no photographs. This was nothing to be celebrated.”
    ..
    ..
    My phrase-I-learned-today: Solar Radiation Management.