- “Perhaps the most typical thing about Bergstrom’s gambling was that for him, as for so many others, the money seemed to signify something else. Gamblers often describe how, when the chips are on the table, money is transformed into a potent symbol for other psychic forces. In Bergstrom’s case, the action on the craps table seemed, like a love affair, to be a referendum on his self-worth.”
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What are the motivations for gamblers? How do they view money? Is it the means to an end, is it a metaphor, is it symbolic? How might the lessons one gleans from reading something like this be applied elsewhere? For these reasons, a lovely read.
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.. - “Virat Kohli, Mahendra Singh Dhoni, Rohit Sharma, Suresh Raina, Dinesh Karthik, KL Rahul, Kedar Jadhav and Ambati Rayudu are all collectors if you go by their IPL batting. I had mentioned in the copy (which later got edited out) that it is worrisome that the Indian batting lineup ahead of the World Cup has a sort of sameness to it.Fortunately, while they all bat the same way in T20 cricket, they are all different kinds of beasts when it comes to One Day Internationals.”
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Beware of relying too much upon data, but that being said, the cricket fans among you might want to subscribe to this newsletter, which analyses cricketing data to come up with interesting ideas about the upcoming world cup.
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.. - “Well, you know what Graham understood, I think, better than probably anyone who had written about investing before him is that there’s a big difference between what people should do and what they can do. Another way to think about this is that distinction between what’s optimal, and what’s practical. And we pretty much know how people should invest. Investing is – as Warren Buffett likes to say “It’s simple, but it’s not easy.” And dieting is simple, but not easy. In fact, a lot of things in life are simple, but not easy. And investing is a very good example. I mean, if all you do is diversify, keep your costs low, and minimize trading. That’s pretty much it. It’s like eat less, exercise more. Investing is just about as simple, but it’s not easy. And so Graham understood that people are their own worst enemy, because when they should be cautious, they tend to take on risk.”
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David Perell interviews Jason Zweig, and it is an interview worth reading, and perhaps even re-reading. I have linked here to the transcript, but if you prefer listening, you should be able to find out the link to the podcast.
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.. - “Any time a central bank – unless it has a completely sealed closed economy – raises or cuts interest rates, it is taking currency and interest rate risk vs. the major reserve currencies, even if it is not directly buying or selling foreign currency.”
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A short, clear and concise article about the RBI’s rupee-dollar swap.
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.. - “Diets have changed most dramatically in Africa, where 18 countries have diets that have changed by more than 25 percent. Sugar consumption in Congo, for example, has increased 858 percent since 1961.”
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A truly excellent visualization – worth seeing for a multitude of reasons: data about nutrition, visualization techniques being just two of them. And that statistic about sugar consumption in Congo is just breathtaking.
Tag: statistics
Links for 20th May, 2019
- “The debate could have been depoliticized if the CSO was more sensitive to criticisms, and had made proactive disclosures on the error estimates of different sub-sectors of GDP, with explanations for why output estimates for some sectors were more reliable than that of others. In fact, the first national account estimates presented by Mahalanobis after India’s independence carefully noted the data gaps and limitations of the estimates, as well as the error margins associated with each sectoral estimate. Providing such error estimates would also have drawn wider attention to data gaps, and could have helped MoSPI garner the requisite resources to fill those gaps.”
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An article entirely worth reading if you are interested in India’s statistical organizations – from independence until today, the tale has been one of slow and painful deterioration.
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.. - “In short, Indian agriculture has undergone a phenomenal change over the last decade that it is no more dependent on just foodgrain or one sector. In fact, it has emerged as a versatile sector that still provides employment to over 50 per cent of the country’s population (per 2011 census) and keeps the economy ticking in rural areas despite the vagaries of weather.”
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A useful place to get a good summary of Indian agriculture over the last decade or so. But I would argue that the key point is that there are far too many people employed in this sector – and that is the real problem.
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.. - “The four main factors they identify are as follows. First, there are historical institutions such as slavery and colonial rule. Second, the impact of cultural norms linked to religion, trust, family ties and beliefs. Third, there are geographical factors such as the terrain, temperature shocks and the frequency of floods. Fourth, historical accidents, such as the way national boundaries are drawn, also have an impact. These four factors together play an important role in the development trajectory of a country through time. The question is, what can be done to overcome these constraints in case they are a barrier to development? Can anything be done at all?”
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Using cricket to learn about development economics. Or is it the other way around? Exactly the kind of article the world sees far too little of!
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.. - “The state legislators who are passing these bills know they will be challenged in court. They also know they will probably lose. But their sights appear to be set higher than their state jurisdictions: With a solidly conservative majority on the Supreme Court, anti-abortion advocates are eager to seed the challenge that could one day take down Roe v. Wade, the 1973 opinion that legalized abortion up to the point of fetal viability. At the very least, they hope the Supreme Court will undercut Roe and subsequent decisions that reaffirmed abortion rights, the idea being that each legal challenge makes it a little harder to obtain an abortion in the United States.”
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Have you heard of Roe vs. Wade? Might you be curious to learn about what exactly culture has to do with economics, as we discussed in the link above? A useful, if unfortunate example is this article.
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.. - “What concerns health practitioners is the high transmissibility of the bug. “We studied the fungus in January, 2017, when we found it had colonized the skin of a patient who was referred to the Trauma Care ICU from another hospital. But within four days, it (bug) had spread to all the other patients admitted in the unit. All nine of them,” said professor Arunaloke Chakrabarti from Post Graduate Institute of Medical Education and Research (PGIMER), Chandigarh.”
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Just in case your Monday wasn’t depressing enough. Be afraid – be very afraid.
Links for 17th May, 2019
- “Despite the 73rd and 74th Constitutional amendments, except in a few states, there has been little progress at decentralization—to both rural and urban local bodies. Most state governments have been reluctant to devolve the functions, funds and functionaries for delivering public services at the local level. The functions assigned are unclear, funds uncertain and inadequate, and decision-making functionaries are mostly drawn from the state bureaucracy. Local bodies do not even have powers to determine the base and rate structure of the taxes assigned to them. The states have not cared to create institutions and systems mandated in the Constitution, including the appointment of the State Finance Commissions, and even when they are appointed, states have not found it obligatory to place their reports in the legislature. In fact, the local bodies are not clear about delivering local public goods, with the prominent agenda of implementing central schemes obscuring their functions.”
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M. Govinda Rao pulls no punches in pointing out how and why decentralization hasn’t (and likely will not) taken place in India. This is a conversation more people need to be having in India – and in particular, to aid meaningful urbanization.
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.. - “I love this paper because it is ruthless. The authors know exactly what they are doing, and they are clearly enjoying every second of it. They explain that given what we now know about polygenicity, the highest-effect-size depression genes require samples of about 34,000 people to detect, and so any study with fewer than 34,000 people that says anything about specific genes is almost definitely a false positive; they go on to show that the median sample size for previous studies in this area was 345.”
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Slate Star Codex helps us understand the importance of learning (and applying!) statistics. The website is more than worth following, by the way.
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.. - “Sucking the life out of a mango is one of those primal pleasures that makes life feel worthwhile. The process is both elaborate and rewarding. The foreplay that loosens up the pulp inside, the careful incision at the top that allows access without a juice overrun, and then the sustained act of sucking every bit juice from the helpless peel. Senses detach themselves from the body and attach themselves to the mango, and even mobile phones stop ringing. The world momentarily rests in our mouths as we slurp, suck and slaver at the rapidly disappearing pulp. The mango is manhandled vigorously till only the gutli remains which is scraped off till it has nothing left to confess. As is evident, there is no elegant way to eat this kind of mango, no delicate and dignified method that approximates any form of refinement, which is just as well, for the only way to enjoy a mango is messily.”
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An excellent column about an excellent fruit – there isn’t that much more to say! I completely agree with the bit about serving aamras front and center, rather than as an afterthought, by the way.
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.. - “Welcome to the 4th Annual Top Economics Blogs list. For the 2019 edition, we’ve added many newcomers, as well as favorites which continue to provide quality insight year after year. Like lists in previous years (2018, 2017, 2016), the new 2019 list features a broad range of quality blogs in practically every economic discipline. Whether you are interested in general economics or prefer more specific topics such as finance, healthcare economics, or environmental economics; there is something here for you. You will also find blogs which focus on microeconomics, macroeconomics, and the economics of specific geographical regions.Whether you are a student, economics professional, or just someone with a general interest in how economic issues affect the world around you, you’re certain to find the perfect blog for your specific needs.”
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The most comprehensive answer to that most perennial of questions: what should I read?
Bonus! If you’re wondering how to keep up with all of this, this might help.
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.. - “India should do the same with our state capitals. The Union government can create fiscal and other incentives to encourage state governments to shift their capitals to brown- or green-field locations. Mumbai, Bengaluru, Hyderabad, Chennai, Jaipur or Lucknow, for instance, will continue to thrive even if the state government offices move out. Their respective states will benefit from a new urban engine powered by government.”
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I have been sceptical about the feasibility of doing something like this – my reading of urbanization has always been that it more of an organic process – cities grow (or not) of their own accord, and rarely as a planned endeavor. But maybe I’m wrong?
Links for 1st May, 2019
- “As McKinsey points out, governments, businesses and individuals will all have to embrace change and figure out the best ways to move towards digitisation — including on such basics as land records and business transparency (which could improve access to bank credit). There are also many aspects of this wave of digitisation that are not to the good—including the impact of toxic social media, the loss of privacy, and so on. The rules for this new world will have to be framed carefully to prevent business capture as well as political misuse, and to protect citizens from predatory action. What is required is to minimise the costs as much as to maximise the benefits. Still, the over-riding message is clear: The prospects of digitisation are so overwhelmingly advantageous, if not also inevitable, that those who become laggards in adapting to the new reality are the ones that will be left behind.”
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T N Ninan (author of the excellent The Turn of the Tortoise) writes about the potential of “digital” India while reviewing a McKinsey report about the same topic. The scope, details and aspects of such a topic simply cannot be dealt with in a single post – but with that in mind, this is worth reading.
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.. - “The Right to Education Act in 2009 guaranteed access to free primary education for all children in India ages 6-14. This paper investigates whether national trends in educational data changed around the time of this law using household surveys and administrative data. We document four trends: (1) School-going increases after the passage of RTE, (2) Test scores decline dramatically after 2010, (3) School infrastructure appears to be improving both before and after RTE, and (4) The number of students who have to repeat a grade falls precipitously after RTE is enacted, in line with the official provisions of the law.”
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That is the abstract of this paper. Also, have you read this book? Also, have you listened to this podcast? Also, keep an eye out for this Sunday’s video.
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.. - “China’s TFP surged in the 1980s following the agricultural and ownership reforms, in the 1990s following the state enterprise reforms and the creation of a modern housing market, and in the 2000s as China prepared for and was then able to exploit WTO membership.The key takeaway is that China’s one-party system deservedly has won plaudits when it has been most ambitious with regard to economic reforms and experimentation with market mechanisms. But this is not the case, for example, before the 1980s and again since 2012, when reforms were suppressed or stifled and inputs were boosted, but without any improvements.”
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An interview that remains interesting throughout if you are a student of economics, or China and especially the intersection set. Troubling times ahead for the Chinese economy, it would seem – and on account of a variety of short term reasons, and one very important long term one – TFP.
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.. - “That was when he saw the light. Two small, black, rectangular boxes were stacked next to an outlet on the far side of the guest room, both facing the bed. From afar, they looked like phone chargers. But when Vest got closer, he realized they were cameras, and they were recording.”
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Airbnb, technology, privacy and customer relations. A great way to learn that There Is No Such Thing As A Free Lunch.
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.. - “In 1960, 13.4% of the population age 20-74 was obese (as measured by having a Body Mass Index above 30). In 2016, 40% of the population was obese.
In 1970, 37.1% of those age 18 and older were cigarette smokers. By 2017, this has fallen to 14.1%.”
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Just two out of many, many interesting tidbits about America today, and America back then.
Links for 30th April, 2019
- “On average that means each MP represented 1.85 million people. Now it is 2.4 million. There can’t be anything more absurd in the world.”
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A very short takeaway from a very interesting article, about an issue that not too many people have thought about – remapping India’s parliament. This is going to be rather complicated.
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.. - “Bayes classifiers seem natural, and in many applications they are. But an interesting insight is that some classification problems may have hugely different costs of type I and II errors, in which case an NP classification approach may be entirely natural, not clumsy. (Consider, for example, deciding whether to convict someone of a crime that carries the death penalty. Many people would view the cost of a false declaration of “guilty” as much greater than the cost of a false “innocent”.) ”
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Stats nerds only – but if you are one, a fairly interesting set of papers awaits you at the bottom of this link.
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.. - “At the end of the book, Fukuyama, when discussing the contemporary China, writes that “good enough” rule of law is often sufficient for fast economic growth. Moreover, technology is much more important than property rights. Fukuyama points out that in a Malthusian world, no property rights will provide you with an economic surplus; but technological development will (p. 249).”
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Reading this article should hopefully encourage you to read a little bit more about Hayek, Mancur Olson (which I myself have just started to do, courtesy prodding from a friend), and Fukuyama himself.
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.. - “There is one key idea of the book. If you wish to have a functional political order that enables economic growth and gives people freedom from arbitrariness of the sovereign or from oppression by their peers, you need three components: (i) a strong state, (ii) rule of law, and (iii) accountability.”
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Do not diss either the excerpt, or the post, or the book it reviews. The link is in fact the first one from the article linked to in 3 above – but the post is important enough to merit a separate link.
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.. - “Thus, I agree with McCloskey that truly “thinking like an economist” is a very rare outcome in a principles course, and unless you are comfortable as a teacher with setting a goal that involves near-universal failure, it’s not a useful goal for instructors. But it also seems true to me that the series of topics in a conventional principles of economics course, and how they build on each other, does for many students combine to form a comprehensible narrative by the end of the class. The students are not thinking like economists. But they have some respect and understanding for how economist think.”
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Gokhale Institute this August embarks upon an attempt to disprove this lovely article. Wish us luck.
Links for 5th April, 2019
- “And almost invariably, I see the same colleague in our communal kitchen, who asks with delight, “Joe, what are you having for lunch today?” The types of bean and cheese rotate, as does the fruit—which depends on the season—but I do not inform my co-worker of these variations when I laugh off her very clever and funny question.”
In an article about the comforts of routine and habit when it comes to food, I found this excerpt to be pleasingly meta. You know who should especially read this article? Statisticians – especially aspiring statisticians.
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.. - “Take his celebrated work with David Card on the minimum wage. They looked at how relative hiring patterns changed when one state raised its minimum wage and one right on its border did not. Not much except the minimum wage differed between the two situations, so it was about as close to a controlled experiment as economists will ever get. Alan was a pioneer in the exploitation of such natural experiments. After Alan showed what kind of evidence can be marshaled to study a labor-market intervention, economists have raised their standard of what constitutes convincing evidence. What followed has been called a “credibility revolution” in empirical economics.”
Unless you are a student of economics, it is unlikely that you will have heard of Alan Krueger. More’s the pity – for as the title of this article will tell you, his work likely has already affected you, no matter where in the world you are reading this.
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.. - “The issue, Statistical Inference in the 21st Century: A World Beyond P<0.05, calls for an end to the practice of using a probability value (p-value) of less than 0.05 as strong evidence against a null hypothesis or a value greater than 0.05 as strong evidence favoring a null hypothesis. Instead, p-values should be reported as continuous quantities and described in language stating what the value means in the scientific context.”
Statistics is harder, and more confusing than you think. Yet another example is this article – each of the quotes in the article make for thoughtful reading.
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.. - “…Section 230 has proved an “awesome benefit” for the tech platforms. It has encouraged astonishing innovation and accelerated the growth of some of the richest companies on the planet. But it has also allowed billions of people to post anything they like online with almost no constraint. Some of that content is inspirational, much of it trivial, and a small sliver grotesque and harmful. Social networks do not discriminate.”
The FT on whether Facebook and its ilk are publishers or postmen. The import of section 230 is quite staggering, and I’d like to read the book mentioned in the article for that reason.
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.. - “We ran similar regressions controlling for industry and found that — even after controlling for industry — elite MBAs did not produce positive statistically significant alpha. Elite MBAs did perform relatively well as CEOs in healthcare and consumer staples, but relatively poorly in energy and materials businesses, though those results were not statistically significant. Our study is not the only one to come to this conclusion. A study by economists at the University of Hawaii asked similar questions and found that firm performance is not predicted by the educational background of the CEOs.”
A regression based exercise (which of course comes with its own set of problems) on whether education (type and quality) and experience matters for CEO performance. Short answer: it doesn’t. I was tempted to excerpt the concluding paragraph, but I’ll leave it to the reader to discover.
Links for 14th March, 2019
- “It is an example of the paradox of India’s state capacity that it can execute well-defined tasks like elections, census, disaster relief etc with unparalleled proficiency and do the simplest things like running mid-day meal kitchens in the most appalling manner.”
The always excellent Gulzar Natarajan on the paradox that is Indian bureaucracy. Given the remarkable efficiency with which we run our elections – and read the article to find out just how efficient it really is – why not other stuff in India? I do not have a clue. Will headline converge to core, or will core converge to headline? - “While a Chinese depreciation would be a negative to shock to the world, China’s apparent willingness to use fiscal tools to restart its economy should be helpful to the world, at least directionally.*”
The asterisk is at least as important as the excerpt, because the nature of the fiscal stimulus will matter more than the extent of it in the long run – but an update on what is fast becoming a mini-series – the state of China’s economy. - “A key problem is that there are no interpretations of these concepts that are at once simple, intuitive, correct, and foolproof. Instead, correct use and interpretation of these statistics requires an attention to detail which seems to tax the patience of working scientists. This high cognitive demand has led to an epidemic of shortcut definitions and interpretations that are simply wrong, sometimes disastrously so – and yet these misinterpretations dominate much of the scientific literature.”
I don’t know if I’ve fully understood p-values, and I don’t know if I do a good job of teaching them – to the extent that I understand them myself. And occasionally reading, and re-reading this blog post is therefore a useful thing to do. Assuming it is correct in the first place! - “…boosting an intermediate range of labor-intensive, low-skilled economic activities. Tourism and non-traditional agriculture are the prime examples of such labor-absorbing sectors. Public employment (in construction and service delivery), long scorned by development experts, is another area that may require attention. But government efforts can go much further.”
Buried in this article are a whole range of papers waiting to be written – but that’s for academicians to salivate over. The article is a wonderful summary of what good jobs are, why they are difficult to come by today, and what can be done to make sure that they do come by. - “I suppose it’s worth trying to measure economic growth, but don’t take the findings too seriously.”
Words to live by, and I mean that. Trying to measure economic growth is, ultimately, an un-solvable problem. Conversely, any estimate that we have is always going to be off the mark. Think through the implications (and the implications of the implications!)
EconForEverybody 