Robin Hanson on MS Dhoni (well, kind of)

Does adding the phrase “well, kind of” make a clickbait-ish title less clickbait-ish? Asking for a friend.

My favorite book to read about cricket when I was growing up was a book called “Cricket Skills and Techniques: A Comprehensive Guide to Coaching and Playing“, written by Douglas Wright. The only reason it was my favorite is because that’s the only book on cricket coaching that we had at home. Don’t ask me how we ended up having that copy at home, because nobody at home played (or coached) cricket. Still, in those bad old days of no cable television, let alone the internet, I must have read that book dozens of times.

Written in 1971, it was as stodgy about the “how to play cricket” approach as it is possible to be. The whole “back and across”, bat coming down straight, “flick on the legside only when the ball is outside of the leg stump” approach. It’s been years, but I really do doubt if the word “lofted” was used even once in the entire book.

Think of it this way: if Suryakumar Yadav were to occupy one end of the spectrum, the batting techniques in this book would lie at the other.

Would somebody steeped in thinking about batting like this ever have selected MS Dhoni to be a batsman for India, let alone the captain of the Indian Test Cricket team?

Robin Hanson says that academia suffers from the same problem:

I conclude that each typical academic journal not only sees itself as covering a limited topic area, it also sees itself as being willing to consider only a limited range of concepts and argument types. Furthermore, these limits are quite strongly selective; the vast majority of statements that ordinary people actually generate on such topics, even when they are trying to talk seriously, are seen as unsuitable.

There is, in other words, A Correct Way to do research. Just like there is A Correct Way to hold the bat, and A Correct Way to hit the ball. And deviations from ACW are not to be acknowledged, let alone tolerated.

And the point that Robin Hanson is making is that if an academic journal be thought of as the Indian cricket team, and a paper within it as MS Dhoni, well, that paper would never have been published – let alone be thought of as one of the best papers ever to have been published.

And the question that needs to be asked, of course, is how many Dhonis have been left out in the cold when it comes to academic research?

Hanson’s blog post goes a bit deeper, and asks why this should be so. Why are the gatekeepers in academia so very khadoos? Because, he posits, they think it to be the rational approach. They claim, he says, that:

To make progress on our topics, our discipline’s concepts and methods are quite sufficient. Sure others might in principle use other concepts and methods to draw relevant conclusions on our topics more easily than do we, but the chance of that usually seems so low that we just habitually ignore all purported candidates of this sort. There are just not usually clues that could plausibly indicate such a scenario well enough to get us to consider including heterodox articles in our journals, or to consider citing them in our articles. The enormous costs to us of evaluating the quality of such heterodox contributions completely swamps any value they might have to offer.

You might miss out on the odd Dhoni if you are a dyed-in-the-wool traditionalist, in other words, but that’s fine, because you will have to evaluate a million Dhoni look-alikes who simply aren’t anywhere near as good. But just looking at the few who are the best and in the traditional mould is enough to find the absolute best in the country. So why bother with all those ugly hoikers of the ball? Stick to what we know!

This “leaves money on the table”, of course. Many unorthodox cricketers (academic papers) could be unearthed if only we broadened our methods of evaluation a little bit.

For me this issue highlights the great potential of innovations in how we evaluate contributions. Today, a reviewer typically takes an hour or two to review a dense 4-8K word research paper, where anyone in a discipline needs to be qualified to evaluate any article in that discipline (again, really sub-discipline). In this case, yes, everyone in a discipline must know well the same concepts and methods, and so each discipline can’t accept many such concepts and methods.
But, it should be possible to instead have different people review different aspects of a paper, so that the concepts and methods of a paper don’t have to be limited to just one sub-discipline. Some academic reviewers could specialize in evaluating the concepts and methods of ordinary conversation, to make those available to paper authors. And it should be possible to get quick less-expert less-formal evaluations from betting markets, with bettor incentives tied to much-rarer more expert and expensive evaluations. Using such methods, academic journals should be able to consider submissions using a much wider range of concepts and methods.

And well, we did broaden our methods of evaluation in cricket! We did find Suryakumar Yadav, and dozens, if not hundreds, of wonderful (and unconventional) cricketers. How did we do this? As Amit Varma has pointed out so many times, by getting the correct incentives in place – by having a tournament called the IPL, in other words. Scouts for teams in the IPL are looking for people who will get the results that are needed, techniques be damned (and yes, I know Dhoni made his debut three years before 2008. The point still stands, I’d argue).

How should we get the Indian Publishing League going? Robin Hanson (and I!) would like to know:

Note, however, that such innovations have long been possible, and I have personally seen such proposals enthusiastically rejected. Turns out disciplinary authorities who have risen to the top of their fields via their mastery and control over acceptable concepts and methods may not be eager to invite competition for their prestigious positions from a wider range of people using strange concepts and methods. And as long as no parties near the academic world are able to defy the power of their prestige, this is how things will remain.

Understanding Risk and Return

You actually don’t need to learn risk and return if you are an Indian, because it is built into our culture.

One reason why IAS type jobs are so very revered by all Indian parents is because they’re so very risk averse. And when I say “they” I mean both Indian parents and IAS type jobs. The biggest draw of being an IAS office is that “naukri pakki hai“. Sure, being an IAS officer will mean that you can’t become the next Zuckerberg, but again, “naukri pakki hai“.

That’s our cultural fascination with the whole engineer/doctor trope too – these used to be educational options that would guarantee you jobs. It didn’t matter if you wanted to do these jobs or not – that wasn’t the point. What mattered is that you stood a fairly decent chance of getting jobs if you had an engineering/medical degree. I should know – I am an engineering dropout.

Given what our economy went through in the 70’s, 80’s and at least the early 90’s, it is an entirely understandable societal response. Screw everything else, land up a job first.

The point I am trying to make is that we, as a nation, were risk-averse. The returns from doing something that you wanted to, whether psychic or financial, weren’t the point. It was about minimizing risk. For all I know, most of us still are risk-averse. The MBA degree isn’t about being an entrepreneur, it is in fact the exact opposite – it is about landing a job.

This risk-aversion spills over into other areas of life as well. Fixed deposits over mutual funds, mutual funds over stocks, and gold and land above all else are also about risk-aversion. Mind you, there is nothing wrong about being risk-averse. Or right, for that matter. At the end of the day, your risk appetite is a function of a whole variety of things, not all of which can (or should) be viewed from the lens of economic theory.

But the one thing that economic theory (well, finance, really) can tell you is the following. If you want risk aversion, you can’t get high returns at the same time. High returns come with high risk, and that’s just the way it is.

Source: Investopedia

This takes us back to our discussion on hedging:

A hedger is somebody who ain’t worried about missing out on a high-paying job later. A hedger prizes certainty. A hedger mitigates risk. The price you pay for mitigating risk – the opportunity cost of risk mitigation – is that you lose the potential upside.

Read the whole post if you haven’t already, but the basic point is that the opportunity cost of safety is low returns. And it cuts both ways: the opportunity cost of aiming for high returns is high risk. A batsman aiming to hit a six is an example of high risk, high returns, and a batsman aiming to defend well is an example of low risk, low returns.

Now, you’ll often hear finance folks talk about barbell portfolios:

Taleb presents the barbell strategy as a bimodal attitude of exposing oneself to extreme outcomes: one extremely risk averse and another very risk loving, while ignoring the middle. The objective of the strategy is to limit downside and to get exposure to extreme upside outcomes. The possible outcomes are more certain, and the risk of exposure to “black swan” events is much smaller.

But rather than think about it in terms of financial theory, think about it in terms of MS Dhoni’s innings. He’d perfected the portfolio of shots he’d play in his limited overs innings, and it was a pretty good barbell portfolio. Extremely risk averse at the beginning, and god didn’t we all love the fireworks at the end?

The point is, don’t expect to get high returns when you’re minimizing risk, and vice-versa. But also, don’t try to have the same attitude (completely risk-averse, or completely risk-loving) for every single asset in your portfolio. Minimize risks with most, and go all out on the ones that remain. Nassim Nicholas Taleb and MS Dhoni are telling you the same thing.

And of course, as a student, you should always be asking yourself, where else is this applicable?