Month: April 2008

The met department and randomness

Ok. Nothing unusual about the title of this post. There is intuitively a lot of randomness where the met department is concerned. This post is about an editorial in the Business Standard.

Now, the Indian Met department used a new process for forecasting the monsoons last year. Now, this process yielded good results in the north-east and north-west in terms of forecast accuracy. In the center and south, however, it was a disaster. The process had predicted a small shortfall in rain in these two regions, and it turned out the rains here were more than a quarter more than normal!

So what does the met do now? They decide to discard the process for the center and south. And will continue to use it for the north-west and north-east. Even if you know a little bit about randomness and testing, and I assume that the people at the met department should definitely be well-versed in this, you will know that they have done is ridiculous. How can you form an opinion about something by looking at just one data point? Wouldn’t there have been a good chance that this an anomalous result? Now, what will the met do if the method fails for the north-east and north-west also? Will they completely abandon this new method?

I find the system that the met department is using no more intelligent than the one that I use to classify my shirts as “lucky” or “unlucky” (and trust me that isn’t very intelligent; I just use 1/2 data points and quickly derive an opinion).

God help us, if the met department is like this. The sooner weather derivatives (rainfall, temperature, etc.) get launched (or have they already been launched? I know they are now legal in india) the better for us. At least in that case we will get the wisdom of crowds to forecast the monsoon.

Being a jack of many trades

Earlier today, I had written that bosses are unlikely to trust employees who they think have the option of easily quitting their jobs. I had made the point back then that you shouldn’t take a job for which you are over-qualified.

Thinking about it, it strikes me that if you are versatile, you face a similar kind of problem. Suppose you have the necessary skill sets to do say four different kinds of jobs, and are doing one, irrespective of where you go, your boss will think there is a good chance you might take flight to one of the other jobs. Now, if the potential bosses think like this during the interview itself, there is a good chance that none of them is willing to hire you!

From the point of view of long-term stability, what most bosses are looking for is for focussed and committed employees. And unless your “skills vector” points broadly in the same direction of the required skills for the job, the cross product will be big enough to cause concerns over stability in the mind of the interviewer.

One option, of course, is to focus on one particular direction and forget your other skills, so that the component of your skills vector in this particular direction will dwarf the components in other directions, thus reducing the cross product when compared to the job profile skills vector. But what do you do if, at a particular point of time in your career, you are a jack-of-several-trades – like I am at this point of time? You need to be able to do something now before you are able to improve in a component.

You might appreciate the following analogy if you understand contract bridge. What do you do with a hand where in each of the four suits, both you and your partner are reasonably strong, while there is no single strong suit? You need to choose a trump, and may end up choosing the longest of suits. But due to this choice, you may not be able to use your high cards in the other suits to the fullest extent.

Bridge offers a way out for this, by allowing you to bid for a no trump contract. The challenge here is to find the equivalent of a no trump contract in the job market.

Speaking to Baada about this, we somehow thought this too might fit in with the seminal studs and fighters framework. It is likely (not guaranteed, but likely) that a stud boss may just look at the magnitude of the skills vector and the unique direction it points to and say “OK if i train this guy in my direction, i’m sure he’ll grow quickly along that and will be useful to me”. My little experience says that fighters are more likely to look for “proven track record in chosen field” and “focus” and would thus not be too appreciative of a big cross product.

simple writing, high thinking…

In an op-ed in yesterday’s Business Standard, Deepak Lal writes

Hume believed that all ideas are based either on logic or sense experience, and that our inductive inferences based on constant conjunction of particular temporal sequences do not give us secure grounds from observing instances to inferring a general rule.

Totally haemoglobin-in-the-atmosphere level stuff. I mean, it may be ok (or even necessary) to use such complicated and unreadable language in an academic journal. But in an op-ed of a newspaper? Even if it is a business newspaper whose readers are more informed in general?

I think there is a conspiracy by academics to prevent “normal people” from understanding concepts that are simple and intuitive.

option to escape

From The Logic of Life – “your option to escape means you cannot be relied upon”.

Harford makes this point while he is talking about “acting white”. That black kids who work hard at acads are discouraged by family and peers because they are now getting an option to exit the misery. It’s the old story of the crabs in the jar. That nothing will escape despite the lid being open.

From a job perspective, this factor might not help people who are seen as being over-qualified for their job. The boss won’t trust them. The boss knows it’s easier for these guys to move out when they want to. So unless they manage to project an extremely strong degree of commitment, it would be difficult for the boss to invest in them.

And two years back, when I left A T Kearney, I had thought I should get into something where I’m overqualified thinking it might help me be seen in a better relative light and thus grow…

Tim Harford

I first came across Tim Harford when Tyler Cowen linked to his blog some six-seven months back. He used to blog fairly prolifically back then, and I used to enjoy reading it. In the matter of a couple of months, he had upstaged Tyler to become my favourite econ-blogger (that position currently belongs to Arnold Kling of EconLog). I wasn’t long before I bought “The Undercover Economist“.

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Now it’s the turn of the economists

To fear the engineers that is. It seems like TCA Srinivasa Raghavan had an extremely tight deadline with respect to his analysis of the Raghuram Rajan Report. So, instead of taking on the report, he decides to go after the chief author instead. And he doesn’t even do a good job of this. He goes after the chief author’s educational background (Raghuram is a BTech (elec) from IITD). And proceeds to say that the invasion of engineers into economics has in a way ruined the subject.

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touring

i think i’m going to have some free time in the first week of may. i used to have this plan of randomly touring karnataka. and despite the heat, i think this would be a good time to do it. also, given that it’s election time, I think i can get lots more insights from my proposed tour.

i hope i can get someone to sponsor this trip. in return i’ll blog about it for them, and write maybe three articles per day about my travels and insights. Hell, I’ll be doing a grassroot level election coverage for them! So I’ll definitely be adding valoo.

i wonder how to approach this problem. can someone please suggest?

Tracking your portfolio

Another amazing insight from fooled by randomness. The essence of this is that if you are a passive investor, the more often you track your portfolio, the more your headache. Suppose you have invested in a portfolio where the expected annual return is R%, and the volatility is V%. The insight is that the more often you track your portfolio, the likelihood of the portfolio delivering a positive return between two observations falls extremely quickly.

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Accountants and Engineers

I’m currently reading Nassim Nicholas Taleb’s Fooled by randomness. Have read some fifty pages so far. Like his later book The Black Swan, this too contains totally awesome fundaes. And contrary to reports that I’ve heard, it’s extremely easy reading. Either it’s because of my familiarity with derivatives or because I’m just coming off Chaos by James Gleick, which I found extremely difficult to read, and struggled to finish.

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BJP in Bangalore North – Karnataka elections coverage part four

Looking around the whitefield-krishnarajapuram area, one gets the feeling that the BJP is strong in these parts. The area is dotted with advertisements by the party, and the local party office is also quite prominent. No other party has any sort of visible presence here, and considering that this area is semi-urban and has a large number of Reddys (that I figure out by the names of the leaders, etc.) I would classify this area as a BJP stronghold.

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