Theory is one thing, implementation is a whole other story

In a paper written earlier this year, I and my co-author, Murali Neelakantan argued for unifying India’s (many) healthcare markets. Part of our proposal touched upon the need to unify a crucial aspect of these markets: procurement.

Furthermore, to ensure cost eff iciency and streamlined operations, the government will act as a monopsony buyer, procuring medical goods and services for all empanelled hospitals. This centralised approach will enable economies of scale, reduce costs, and guarantee steady demand for healthcare providers. By taking on the responsibility of procuring medical supplies, the government can negotiate better prices and allocation of resources within the healthcare system. We recognise that the healthcare requirements will vary across the country and even across states but we argue that there can be central procurement nevertheless. The local hospital or health authority will purchase based on the price notified by the central procurement agency.

It is one thing to say this as a theorist. As any public policy analyst will tell you, it is quite another to actually implement a scheme such as this. There will be teething troubles, there will be glitches. There will be leakages and pilferages. There will be stumbling blocks and unforeseen issues. Why, where will you start even, leave alone the question of actually making the whole thing work!

All good questions, of course. Entirely valid points. But we did point out that at least one state in India has already taken steps in this direction. Tamil Nadu already does centralized procurement of medicines, among other things worth emulating:

Another instance of successful healthcare reform at the state level can be found in Tamil Nadu, where the state government has implemented a range of innovative measures to improve the accessibility and affordability of healthcare services. These initiatives include the Tamil Nadu Medical Services Corporation (TNMSC), which centralises the procurement and distribution of drugs and medical equipment, resulting in more efficient and cost-effective processes (Parthasarathi and Sinha 2016).

But then, about two weeks ago, came news of a most excellent paper, written by CS Pramesh et al. Allow me to quote the abstract in its entirety:

In health systems with little public funding and decentralized procurement processes, the pricing and quality of anti-cancer medicines directly affects access to effective anti-cancer therapy. Factors such as differential pricing, volume-dependent negotiation and reliance on low-priced generics without any evaluation of their quality can lead to supply and demand lags, high out-of-pocket expenditures for patients and poor treatment outcomes. While pooled procurement of medicines can help address some of these challenges, monitoring of the procurement process requires considerable administrative investment. Group negotiation to fix prices, issuing of uniform contracts with standardized terms and conditions, and procurement by individual hospitals also reduce costs and improve quality without significant investment. The National Cancer Grid, a network of more than 250 cancer centres in India, piloted pooled procurement to improve negotiability of high-value oncology and supportive care medicines. A total of 40 drugs were included in this pilot. The pooled demand for the drugs from 23 centres was equivalent to 15.6 billion Indian rupees (197 million United States dollars (US$)) based on maximum retail prices. The process included technical and financial evaluation followed by contracts between individual centres and the selected vendors. Savings of 13.2 billion Indian Rupees (US$ 166.7million) were made compared to the maximum retail prices. The savings ranged from 23% to 99% (median: 82%) and were more with generics than innovator and newly patented medicines. This study reveals the advantages of group negotiation in pooled procurement for high-value medicines, an approach that can be applied to other health systems. (Emphasis added)

There is an important difference between what was attempted here and what we are suggesting in our paper. Our paper talks of centralized procurement, while this paper speaks of implementing a pooled procurement approach. As they go on to say in their paper, “…centralized procurement systems require considerable administrative and managerial resources. A pooled procurement approach that is less resource-intensive and sustainable without significant investment is the WHO-suggested group contracting approach”.

But note that they did not give up on centralized procurement – they thought it easier to begin with pooled procurement, before tackling the much bigger beast that is centralized procurement. (Also note that there is academic research on how centralized procurement can be of benefit, especially in developing nations.)

And they’re quite right, of course. Beginning at a relatively smaller scale and then attempting more ambitious targets is unglamorous, perhaps – but it is also a much more sensible way of doing things. These four paragraphs in particular make for fascinating reading in terms of actually working through the nitty-gritty of implementing pooled procurement. And if you are going to spend time reading those four paragraphs later, please also do spend time on Fig.2.

What were the key takeaways?

  1. Considerable savings, both on generic drugs, as well as on innovator drugs.
    “This outcome suggests that the concentration of demand significantly strengthened our negotiating power, while the centralized negotiation approach, combined with larger purchase quantities, allowed us to secure substantial price discounts.”
  2. Opportunity costs matter!
    “The potential impact of cost savings is huge, in not only improving the affordability of care and decreasing out-of-pocket costs for patients, but allowing for the re-allocation of drug procurement funds towards other initiatives to deliver high-quality care”
  3. Enforcement of quality standards became easier, because of pooled procurement.
    “These savings are notable because they were achieved without compromising on quality, due to strict standards imposed on both the drugs and the companies.”
  4. Pooled procurement helps individual patients across India, regardless of region-wise differences.
  5. Lower treatment abandonment rates (yay!), and therefore higher survival rates (double yay!).
  6. Lesser financial burden on the patients!

And to end, the paragraph that I hope will launch a thousand studies, and eventually, the implementation of centralized procurement of drugs and consumables in India:

Based on the success of our piloting of pooled procurement in the network, conducting such negotiations may be relevant at a larger scale for oncology drugs, such as through the national health authority, as that will enhance the bargaining power as well as have far-reaching impact on access and affordability across the entire national network. Negotiation on a national level could also address the challenges of vendor monopoly or patented drugs supplied by a single vendor. Furthermore, to determine the final price for innovator and single vendor drugs, a comprehensive evaluation of the available literature on efficacy and safety data is crucial. If a drug meets the threshold for significant clinical benefits, cost-effectiveness assessment using adaptive health technology can provide guidance for negotiating prices.

Ajay Shah and Nitin Pai on Higher Education in India

The IIT JEE (Indian Institute of Technology joint entrance exam) is revered as the arbiter of merit. With industrialised coaching classes, it is less clear how the JEE selects the right people to attend an IIT. Simplistic measurement of marks in an exam is not how the entry barriers into most sensible institutions work. The high-powered incentive — attending an IIT — is damaging the learning process. We propose a two-part mechanism: A broad exam that filters for sound capability, and then randomised allocation. The overall impact of such a mechanism would be positive. Test preparation has corroded Indian education. Across India, children no longer attend just high school. They are enrolled in coaching classes. Here, it is not necessary to study the subject and understand concepts. All they need to learn is the finite list of multiple-choice questions (MCQs) that are likely to be asked in entrance examinations.

Two of my favorite columnists writing about a topic that I am most passionate about – the conduct of examinations in India. What’s not to like, and how can I possibly not write about it?

  1. As Nitin and Ajay mention, “test prep is not education”. Indeed. Test prep is just that: test prep. You can get very good at test prep, but that doesn’t mean that you will be educated.
  2. They have their own definition of education, and while I don’t disagree with it one bit, I have a shorter one.
    Education is about learning to ask (and then answer) really good questions.
    My problem with our education system, and with exam test prep, is that we simply don’t teach our students the art of asking really good questions.
  3. “The tendrils of curiosity, dissent, imagination, creativity, and risk-taking are likely to be crushed in these years. We are creating followers, not leaders.”
    If I nodded any harder, I could probably power a wind turbine all by myself.
  4. “Upgrading high-school syllabi and implementing the National Education Policy 2020 are sometimes proposed as the answer. This is insufficient because they do not fundamentally change students’ and their parents’ incentives. Real change will come only if a seat in an elite academic institution is no longer seen as the sole objective of going to school.”
    Two first-pass responses to this issue would be to either increase supply or reduce demand. That is, increase the supply of high quality education seats (easier said than done), or reduce the demand for them (not gonna happen). Therefore their solution: lottery system.
    “The price of an IIT lottery ticket can be reduced to zero. Seats can be randomly allocated to applicants who meet basic requirements. Specifically, we could envision a first-level exam, which is not about the things that Google knows. Out of that the top 200,000 ranks are shortlisted. At the second stage, a random list of 20,000 would be chosen to attend the IITs. Such an approach, we contend, outperforms the current method on several important dimensions.”
  5. It takes away the incentive of the mad entrance test world that we live in, sure. But I worry that “universities and engineering colleges around the country will feel customer pressure to upgrade their standards because they will now encounter candidates with higher expectations and ambitions” won’t necessarily work out in practice. Students enrolled in an institute have *massive* switching costs, and colleges know this all too well. Trust me on this one: they don’t feel no customer pressure.
  6. My biggest problem with their solution isn’t with their solution per se, but with the fact that it ultimately boils down to whether we can scale up the supply of high quality higher education in our country quickly enough. I happen to think the answer is no, and I hope to god I’m wrong.

Gulzar Natarajan on Industrial Policy for Large Investments

…the idea of attracting large manufacturers in ecosystem creating industries might be a promising strategy to adopt. An example is the Indian government’s push for Apple.

Industrial policy – what it is, what its benefits are, and what its limitations are – has been the focus of many an op-ed in the recent past. That, to me, is a signal to avoid reading most of them. But not because the topic itself isn’t important! On the contrary, industrial policy is the topic to learn more about if you are a student of the manufacturing sector in the Indian economy.

Why do I say so? Many reasons, but Gulzar Natarajan offers as good a summary as any I’ve read in the lead-up to the excerpt I’ve pasted above.

But in this post, Gulzar Natarajan points to a specific aspect of industrial policy:

Conventional wisdom would have it governments should not pick winners. India’s courting of Apple and mobile phones success is a good example that questions this wisdom. Mobile phones and Apple/Foxconn (and Samsung) are winners. Just as electric vehicles and Tesla, or semiconductor chips and Samsung/TSMC could be. Solar and wind power generation equipment manufacturers and defense manufacturers are another two examples. The same can be said of contract manufacturers Pou ChenFeng Tay, Hong Fu, Apache, etc in footwear, and Toray, etc in apparel. The facilities of these companies will be large enough to create a manufacturing ecosystem that has transformational impacts in its town or region. In fact, there’s a strong case that instead of spreading resources thin by targeting economy-wide measures like concessions and input subsidies, an outcomes-focused industrial policy for a government would be to identify a few winners (sectors and large brands or contract manufacturers) and court them. Success would be measured by the ability to get one of them to actually make a meaningful enough investment.

By the way, as regards footwear, here are my notes from an earlier Gulzar Natarajan post on the topic.

But to come back to the point being made in this post, he is making the point that one way to do industrial policy is not by targeting an entire sector, but rather by picking “winners”. By the way, for students looking to answer the question “but what should I be working on?”, he has an answer.

But what of the risks with such a strategy? He identifies four of them:

  1. You need to pick the “right” kind of winner, which is easier said than done.
  2. It could well lead to crony capitalism.
  3. This can be countered with effective state capacity, and we don’t have it.
  4. It could crowd out the focus on small and medium enterprises.

I would add a fifth, and it is my biggest worry with such a policy: what if the winner ends up being a dud? Do we have the capacity to be ruthless and play hardball? To me, it is this that was, and remains, the key differentiator between East Asia of the 60’s and India today.

An Update on India’s Ports

Mihir Sharma, in Restart, about a decade or so ago:

When the manufacturers’ trucks arrive at the port in Mumbai, it isn’t just that the warehouses there are too crowded, it is that there aren’t enough officials to oversee the docks’ smooth operations. Sometimes, it takes four or five days just to assign a truck a spot to unload—not because there aren’t any spots, but because the port authorities are busy doing other stuff. Other stuff that may be as important, mind you. The simple ‘reduce paperwork’ prescription hardly works here. Central coordination of where a truck sets down its load, and whether it’s close to the place where its container will be loaded on, is pretty essential. It isn’t a red-tape problem; it’s a capacity-constraint problem. Things are so bad that in 2013 India’s largest port was—Colombo. Yes, that’s right; that year, the Sri Lankan capital sent more Indian exports abroad than Mumbai did.

Sharma, Mihir. Restart: The Last Chance for the Indian Economy . Random House Publishers India Pvt. Ltd.. Kindle Edition. (Emphasis added)

Before we proceed, a slightly technical question. How did Mihir figure out which of the exports from Colombo’s ports were of Indian origin? I don’t know, and I would like to. If anybody can help, please do reach out, thank you.

Right, so ports in India – not the best. Which is why this made for encouraging reading:

The average turnaround time at major ports has fallen from 127 hours in 2010-11 to 53 hours as of 2021-22. It was nearly 200 hours in the early 1990s as seen in chart 1 (click image for interactive chart).

The entire report is worth at least a quick glance, and is available here. I found this table to be particularly interesting:

Basic Port Statistics of India, 2021-22 (pp XXIII)

Turn arounds took 12 days in Calcutta’s case in 1990-91. JNPT is the most efficient today, but note that it also is one of our newest ports.

If you are looking for international comparisons, this table migh help: (pp 82)
  1. This is median time, not average, but I’m still curious about why the difference should be so large (0.93 days for India in this table versus 53 hours, so a little more than 2 days in the chart above). Probably a combination of median v average and the fact that the UNCTAD table is for container ships, while Basic Port Statistics is for all ships – but that’s a guess on my part. If anybody knows for sure, please do tell.
  2. We’re doing better than the UAE, Germany, Singapore and Hong Kong in terms of turnaround times [Median time in port (days)]. Whatay!
  3. Virtually all ports show a decline in efficiency – the annual change is an increase for almost all ports in this table. I’m guessing this the world stumbling back to normalcy post the pandemic.
  4. The number of arrivals in Chinese ports is roughly eight times that of India

Bottomline: there certainly seems to be good progress, but we have a long ways to go.

Unifying India’s Healthcare Markets

When I teach introductory macro, I like to begin by telling my students that a good framework to keep in mind is these three questions:

  1. What does the world look like?
  2. Why does the world look the way it does?
  3. What can we do to make it better?

This is regardless of the class I’m teaching. If it is undergraduate students, we spend a lot of time on these questions, without getting as much into the intricacies as I would in, say, a Masters programme. But I find the framework to be a very powerful one, precisely because it is so simple.

Another advantage is that the framework can be used to analyze slices of the economy.

Health, for example. Only for the Indian economy, for example.

  1. What does the market for healthcare in India look like?
  2. Why does it look the way it does?
  3. What can we do to make it better?

About three years ago, I learnt that the answer to these questions wasn’t simple at all.

Think about the first of these questions. What do we mean when we say “the market”, for example? Is it the same market if you are a government employee as opposed to a private citizen? Is it the same market if you are a state government employee as opposed to a central government employee? Is it the same market if you are a rich private citizen as opposed to a poor private citizen?

What do we mean when we say “the same market”? Well, can all these categories access the same services, from the same service providers, at the same prices? If not, why not?

Of course, when you ask these questions, you are in Second Question territory. Why are these markets different? What was the reasoning behind making them different? Has that purpose been served, or not? If it has, can we unify these markets? If it has not, should we not be asking why not? Should we not be thinking about how to reform or unify these markets?

Of course, when you ask these questions, you are in Third Question territory. If you agree that the healthcare market in India isn’t perfect just yet, then you should be thinking about ways to make it better. But better might mean different things to different people! Some people might say hey, if only government got the hell out of this market, outcomes would be so much better. Other folks might say hey, if only government stayed in this market, but with the following tweaks, outcomes would be so much better.

Trouble is, both sides of the argument have a point. Some markets do, indeed, function better with minimum government. But that is only under certain conditions. And some markets do, indeed, function better with more government. But that too, is only under certain conditions.

The trick is in getting everybody to agree on what these conditions are, and to get everybody to agree about to what extent they’re applicable for a given economy at a given point of time. I doubt that we will ever get everybody to agree about everything for all countries for the foreseeable future. But then again, if we did, life would be pretty boring, and people like me would be out of a job.

By the way, I asked ChatGPT these questions. Here are its answers.

But for our country (India), and for the circumstances that India finds herself in today, Murali Neelakantan and I have answers to the first and the second questions. And we have a proposal for the third. These answers can be found in a paper that we’ve written, called Unifying India’s Healthcare Markets. Please go through the paper, and I hope you find stuff to disagree with. I also hope you’ll tell us why you disagree with it, and how we might go about resolving these disagreements.

Because you see, our hope is to not win an argument with you. It is to learn how to best answer the third question. Because what could possibly more important for India?

So please, read the paper, and let us know what you think – especially if you disagree with us.

Respectful disagreements are underrated!

As always, thank you for reading.

Too Much Government in Healthcare

This is a continuation of yesterday’s post, and in this post, I seek to come up with the best libertarian arguments for why healthcare markets should have as little government as possible.

Three questions for you to consider:

  1. When patients receive a healthcare service, how much should they pay for it?
  2. When doctors and other providers deliver a healthcare service, how much payment should they receive?
  3. How should these amounts be determined?

These questions aren’t mine. They’re taken from John C. Goodman’s book, “Priceless: Curing the Healthcare Crisis“. These are excellent questions, and as an economist, I do not find them remotely objectionable. Were I to analyze (or teach somebody how to analyze) a market for a good or service, this would be a very good place to begin.

You may be tempted to ask questions about externalities, moral hazard etc., and how these affect the provisioning and pricing within these markets, but I would argue that this really is the third question at play. In other words, I find this list fairly comprehensive.

What are the author’s own answers to these questions?

  1. Patients should pay a price for care equal to its marginal social cost.
  2. Providers should receive a price equal to the marginal social value their care creates
  3. Wherever possible, these prices should be determined in competitive markets.

Again, as an economist, I find this unobjectionable. Note that our concerns about different forms of market failures are accounted for by using the phrase “wherever possible”. Presumably, if markets are not competitive, price determination should happen by other means.

As an Indian economist, I need to ask what happens if patients are unable to pay a price for care equal to its marginal social cost. And I also need to ask what these other means for price determination might be, in case the market for healthcare isn’t competitive. Note that I don’t mean either of these as criticisms of what has been said. I simply wish to state that different countries will have different constraints and features, and at least in the case of India, I think both of these are truly important and relevant questions.

John Cochrane has a nice paper in which he answers the first of these questions:

“What about the homeless guy with a heart attack?”
Let’s not confuse the issue with charity. The goal here is to fix health insurance for the vast majority of
Americans –people who have jobs, people who buy houses, cars, and cell phones, people who buy
insurance for their houses and life insurance for their families.
Yes, we will also need charity care for those who fall through the cracks, the victims of awful disasters,
the very poor, and the mentally ill. This will be provided by government and by private charity. It has to
be good enough to fulfill the responsibilities of a compassionate society, and just bad enough that few will choose it if they are capable of making choices. I wish it could be better, but that’s the best that is
possible. For people who are simply poor, but competent, vouchers to buy health insurance or to refill
health savings accounts make plenty of sense

Cochrane, J. H. (2013). After the ACA: Freeing the market for health care. Available at SSRN 2213027. (pp 23-24)

In other words, government intervention is necessary, unless the provisioning is entirely and always possible via private charity. At least in India’s case, I feel fairly safe in assuming that private charity is simply not going to be enough, now or in the foreseeable future.

As regards the second question: why isn’t the market for healthcare competitive?

I ran a simple Google search for “Assumptions of Competitive Markets“, and clicked on this link. Pick any other link that you prefer, but I would assume that the list won’t change all that much.

Competitive markets will have price takers, identical goods, a large number of buyers and sellers, easy entry and exit, and complete information. Some other websites may talk about zero search costs and zero transaction costs, but you can argue that this comes under complete information.

Is the market for healthcare in India competitive? Ask yourself which of these assumptions are met in the context of healthcare in India.

Where we lie on the spectrum between “hell yes” and “gawd no” may differ, but I think it is safe to say that most of us will be closer to “gawd no”. If your answer differs from this, I would love to know why.

But long story short, here would be my summarization of the libertarian approach to healthcare in the abstract:

As long as markets are competitive, and most people are above a certain income threshold, healthcare is best served by having as little government intervention in regulation and provisioning of healthcare as possible.

If that is not an acceptable statement for a libertarian approach to healthcare, please let me know how and why you would rephrase it.

If, on the other hand, it is an acceptable statement, then I have follow-up questions:

  1. If markets are not competitive, are we better off trying to make them competitive, or are we better off provisioning healthcare with government intervention? I ask this question specifically in an Indian context, but feel free to think about other nations while answering as well.
    Why does this matter? Because of opportunity costs. A resource that is spent on making markets competitive is a resource not spent on the provisioning of healthcare. Given the amount of poverty in India, this is an important question to think about.
  2. What is a good income threshold to keep in mind, and how do we know the answer is mostly correct?
  3. How many people need to be above this threshold for government to mostly withdraw from regulation and provisioning of healthcare?
  4. What does “as little government intervention as possible” mean? What should the government move out of first (regulation or provisioning), and why? Also, how?

I look forward to your answers!

What’s Your Fifth Postulate?

It had long been sought in vain, he said, to demonstrate the axiom known as Euclid’s fifth postulate and this search was the start of the crisis. Euclid’s postulate of parallels, which states that through a given point there’s not more than one parallel line to a given straight line, we usually learn in tenth-grade geometry. It is one of the basic building blocks out of which the entire mathematics of geometry is constructed.
All the other axioms seemed so obvious as to be unquestionable, but this one did not. Yet you couldn’t get rid of it without destroying huge portions of the mathematics, and no one seemed able to reduce it to anything more elementary. What vast effort had been wasted in that chimeric hope was truly unimaginable, Poincaré said.
Finally, in the first quarter of the nineteenth century, and almost at the same time, a Hungarian and a Russian—Bolyai and Lobachevski—established irrefutably that a proof of Euclid’s fifth postulate is impossible. They did this by reasoning that if there were any way to reduce Euclid’s postulate to other, surer axioms, another effect would also be noticeable: a reversal of Euclid’s postulate would create logical contradictions in the geometry. So they reversed Euclid’s postulate.
Lobachevski assumes at the start that through a given point can be drawn two parallels to a given straight. And he retains besides all Euclid’s other axioms. From these hypotheses he deduces a series of theorems among which it’s impossible to find any contradiction, and he constructs a geometry whose faultless logic is inferior in nothing to that of the Euclidian geometry.

Pirsig, Robert M.. Zen and the Art of Motorcycle Maintenance (pp. 234-235). HarperCollins. Kindle Edition.

Apologies for the long quote, but I remain fascinated by this excerpt. Must be more than twenty years ago that I first read it, but it still boggles my mind that we don’t teach students in school that the sum of all angles in a triangle can be equal to, less than or more than one hundred and eighty degrees.

Now, these alternate geometries aren’t “wrong”. They simply become possible once you get it into your head that Euclid’s fifth postulate need not be true. That “through a given point there’s not more than one parallel line to a given straight line” isn’t written in stone.

And once you imagine a world in which the fifth postulate doesn’t hold, you can build up a perfectly reasonable, entirely consistent, completely non-contradictory alternate geometry. A completely different geometry from the one that we did battle with in school, but an entirely valid one.

A different point of view, in other words, and a whole other reality that emerges once you broaden your mind enough to accept it.

As Mark Twain put it, ““It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

Euclid, you could argue, knew for sure that parallel lines don’t meet. And that got him into trouble, in the sense that he couldn’t then imagine the worlds that Bolyai and Reimann constructed.

Which brings me to my question of the day: What are your blind spots? Or put another way, which are your fifth postulates?

What do you know for sure that just ain’t so?

Are markets always and everywhere efficient?

Is your favorite political leader superman (or superwoman)?

Are governments necessarily better than markets?

Are your political opponents always wrong simply because they are your opponents?

I can go on and on, but the point is to ask yourself some hard, uncomfortable questions. What do you think you know for sure that just ain’t so? The more you choose to not ask yourself this question, the more you’re setting yourself up for trouble.

Here are some of mine:

  1. Second helpings are a good idea, third helpings are even better.
  2. Caste is a stupid concept
  3. The Pune Municipal Corporation will never build a footpath in my neighboorhood.
  4. All politicians (past, present and future) are driven by votes and the desire to acquire and retain power.

I have more, of course, this is a very incomplete list. I’m always willing to listen to arguments, and especially so when it comes to my axioms, but know that you will have to work extra hard to convince me about turning my back to any one of these. You probably won’t succeed, and this means that I, like Euclid, have trouble imagining a world in which my axioms might not hold.

And if I can’t imagine a world in which they don’t hold, I find it impossible to analyze it, empathize with it, or help better it.

Difficult as it may seem, all of us owe it to ourselves to imagine worlds different from the ones that we have constructed in our own heads. Learn to try and let go of your fifth postulates, and a good place to begin is by asking ourselves what these might be.

All the best!

A chat with Pi about blended learning in Indian higher education

Arnold Kling:

I tried Personal Intelligence (Pi) from Inflection AI. As a chatbot companion, it charms you by offering encouraging reactions to what you tell it. After commenting on what you have to say, it always asks an interesting question. Think of it as a very skillful and probing interviewer. Yes, it’s only software playing a game with you, but it plays it well.
To get an idea of where a conversation with Pi can go, see part of my chat with Pi. The excerpt I posted starts with its message after I’d told it about my Marginal Revolution is Dead post. I predict that you’ll be impressed by it.

I did go and see Arnold’s chat with Pi, and yup, I was impressed.

Impressed enough to have a conversation with Pi myself. What topic would you guess I chose? The one closest to my heart in a professional context, of course:

I am convinced that classroom education in higher education in India is inefficient, takes too much time, leads to sub-optimal learning and rote memorization for examinations. This is because of a lot of different factors, most of which are interlinked with each other in many different ways. But long story short, young people in India, even in the very best universities, do not learn as well as they could. And since best practices trickle down to other universities, we end up creating a culture of learnng that is sub-optimal at all levels.

If you, like me, are convinced that classroom learning is overrated, please do go and read my conversation with Pi. If you, unlike me, are not convinced that classroom learning is overrated, definitely go and read my conversation with Pi, and please do tell me where I’m wrong.

Three points that I would like to highlight:

  1. Far too much of student’s time is spent in passive listening (and that for hours on end). Reduce it dramatically, and even the bit that remains should be online. If your choice is between packing a hundred and fifty students into a classroom like sardines or allowing students to learn online, go online. Is online bad? Well it’s not perfect, sure. But relative to what alternative? If the alternative is the sardines-in-a-can approach, then why not?
  2. To me, the job of a professor in higher education is to mentor, not to teach. This is not a binary variable, and the truth lies somewhere in the middle, but more mentoring than classroom teaching, that much is for sure. So if anything, the workload for a professor will go up in my proposal, not down. But more personalized teaching/mentoring. Leave the large scale classroom to online education. What else is it for?
  3. AI in education is coming. You may not like it, you may resist it and you may say (as a professor) “but what are we here for then?”. But read the rest of Arnold’s post and ask yourself if the median professor in your university is better or worse than AI tutoring. Then ask yourself how many students this professor can mentor/tutor. Again, AI in education is coming. But the answer to the question “but what are we here for?” lies in learning to think of ourselves as complements to AI. Ask what AI can’t yet provide, and provide that. What the “that” will be changes based on a variety of factors, but in my specific case, I would think it is working on projects with students. And that is what I am focussing on this year.

I sent my conversation with Pi to two friends of mine, who gave me extremely thoughtful responses.

Samrudha Surana highlighted the fact that I should also be thinking about the question “what is college for?”. Different students want different things from the same course. Some may wish to become professors, while many more may wish to join the corporate world. This is as it should be: higher education is not a replication machine, whose sole job is to produce more professors over time. But we need both (future professors and future employees in the corporate world), and people trained in many other professions besides. Blended learning, and AI’s introduction allows for more customization, and that is a good thing.

He also pointed out that we should carefully think through how the online courses will be chosen by the students, and to what end. What he means by this is how much of a say a student should have in choosing their course(s), and how much of it should be the decision of the professor. Not just the choice of the courses, but also the choice of the project/assignment/paper for which the course is being taken. He favors more autonomy for the student, and while I’m inclined to agree, the magnitude will be tricky to set as a rule. In general, a higher degree of autonomy in later semesters, I would think.

Much more discussions are needed in our classrooms. Much, much more. We professors need to be challenged in class, our assumptions and claims scrutinized, our premises questioned and our conclusions critiqued. Learning is best achieved through Socratic discourse (in my opinion). But our classrooms are more about proclamations by the professor rather than any of the above. Smaller class sizes will help, as will more seminars, discussion groups and workshops. That matters, and is rendered more probable under such an arrangement.

Undergraduate courses, finally, might involve much more of classroom learning in the initial semesters. Although under the new four year undergraduate programme (and the likelihood of them more or less replacing Masters programmes altogether), even here you would want to shift to more of blended learning towards the end of the degree.

We need to teach students in higher education better, of that I am convinced. What I have suggested here is worth further discussion, I’m fairly sure. Whether you agree with me or otherwise (and I hope it is otherwise), please tell me why 🙂

Caste, Cricket and Classical Economics

… among other things, I should note.

All of what you read in the title of today’s post is from a nice little write-up on the People’s Archive of Rural India (PARI) website.

The shiny red ball at the centre of a game of cricket, is made by highly skilled craftsmen in Meerut district who work long hours tanning, greasing, cutting, stitching, shaping, lacquering and stamping it. Despite the glamour surrounding the game, this continues to be a caste-based occupation

My takeaways:

  1. The prices of cricket balls ranges from Rs. 250 to Rs. 3500. Three and a half thousand, for one ball?!
  2. Three ingredients go into the making of a cricket ball: Alum-tanned hide, cork and cotton thread. But note that ““People do not have a problem with leather in the form of a cricket ball, but they do when it comes to working with it,” he adds.”
  3. Making cricket balls, like so many other professions in our country, is associated with a specific caste.
  4. Move aside, pin factories: “Line se kaam hove hai aur ek karigar ek hi kaam kare hai [The tasks are sequential and a craftsperson specialises only in one task],” he explains.
  5. Pig bristles are used instead of needles to stitch the balls, and therefore Muslims don’t take up this profession.
  6. Why is Meerut big on making cricket balls? Partition, migration and specialization.
  7. The author, Shruti Sharma, is a PhD scholar working on “the social history of sports goods manufacturing in India“. What a lovely topic!
  8. What questions do you have after having read either this post or the article by Shruti? Here are mine:
    • How do they make ’em in Sialkot?
    • How do they make ’em in, say, Australia?
    • Are there quality standards for cricket ball manufacturing? Of course there are.
      There are standards that specify the “construction details, dimension, quality and performance of cricket balls”. And they’re updated. You can read ’em, if you like, but it will cost you one hundred and forty two pounds.
    • What else has Shruti written? This lovely metaphor, from an essay written by her: “The two sides of the ball divided by a seam is a metaphor for the simultaneous embedding in and distancing from the social norms and relations concealed in the ball in its commodified form. The shiny side – nurtured and maintained – symbolizes the aesthetic spectacle that cricket is in a stadium and on television. This aesthetic fuses play with nationalist fervor. The rough side of the ball becomes a signifier of the spaces where cricket is produced – socially, spatially, and temporally distant from the aesthetic site of play.”
  9. Rabbit holes are underrated. When you read an article, go down one, and see where else it can take you!

Incentives Matter, Labor Regulations Edition

Paul Graham tweeted something interesting about a month ago:

Anything that the French can do, we can too, of course:

To the extent that the labor regulations impose significant costs on an individual firm, we can expect an incentive for firms to stay below the relevant threshold, all else being equal.
The specific regulations that have been pointed to by analysts as being especially onerous from the perspective of firm owners include Chapter VB of the Industrial Disputes Act (IDA) and Section 9A of the IDA and the Industrial Employment (Standing Orders) Act (see, for example, the arguments of Panagariya 2008; see also Anant et al. 2006 for a comprehensive discussion of Indian labor regulations). The first of these makes it necessary for firms employing more than 50–100 workers to obtain the permission of
state governments in order to retrench or lay off workers—permission that some argue is rarely forthcoming and thereby ends up raising the effective cost of labor usage in production. The second regulation pertains to terms and conditions of work and applies to firms employing over 10 workers (20 if the production process does not use electricity) that are legally mandated to operate in the registered sector of manufacturing. While these two regulations seek to make labor contracts complete, fair, and legally binding, they can constrain firms from making quick adjustments to changing conditions, especially in view of weaknesses in collective bargaining mechanisms

Hasan, R., & Jandoc, K. R. (2010). The distribution of firm size in India: What can survey data tell us?. Asian Development Bank Economics Working Paper Series, (213).

“…they can constrain firms from making quick adjustments to changing conditions” simply means “it becomes expensive for firms to comply with these regulations”.

How do firms respond to these incentives? Here’s one of my favorite charts of all time:

Hasan, R., & Jandoc, K. R. (2010). The distribution of firm size in India: What can survey data tell us?. Asian Development Bank Economics Working Paper Series, (213).

The darker shade of grey is China, while the lighter one is India. This data is as of 2010, of course, and I hope that an updated chart will tell a better story.

But as a person who loves teaching principles of economics, the power of incentives comes across very nicely in both the chart about France, and alas, so also the chart about India.