arbit – Page 35 – Pertinent Observations

Get togethers and going Dutch

So the wife has written a fairly insightful blog post about why South Indians from the previous generation don’t meet often “without an occasion”. The basic idea is that that generation never learnt how to split bills, or go Dutch. I had a few anecdotes that would add data points to this, hence this blog post.

I had mentioned in an earlier blogpost that my parents used to work at KEB. I remember going to their offices occasionally (I’d visit my mother more often than my father), and though I was rather young then, I remember that my mother and her colleagues had a policy that they would pay for their afternoon tea by rotation.

It was a rather informal practice (don’t think they kept formal track of who paid when), but I don’t remember a single occasion (ok my age was in single digits, and I don’t have too many data points, but I trust my long-term memory) when more than one person paid for the same round of tea.

During a conversation about splitting bills (this was when I was older, and had started going out with friends), I remember my parents having bitched about two of their colleagues, who used to unfailingly split their tea bills. Back in those days, tea in the subsidised KEB canteen cost 35 paise (one paisa is one-hundredth of a rupee), which made it hard to split (since there were no half-paisa coins). So it seems these two worthies had an arrangement where they would alternately contribute seventeen and eighteen paise respectively (story from the early 80s, so one, two and three paisa coins were quite common back then). And my parents looked down upon them, that they couldn’t be so trusting to not “lend” a full half-cup of tea to the other person!

The other data point is the choice of words – my parents referred to the practice of going Dutch as “military style” and that phrase was uttered with a sneer. So when I would tell them that my friends and I had split the bill when we went out, my mother would say “oh military style-aa?”. It was as if civil people (pun intended) never split the bills and were willing to spend for each other occasionally.

This is one of those classic counterproductive things – while it might be noble to pay for each other once in a while, going out only when someone is willing to pay for you (or vice versa) puts a cap on the number of times when you can meet. Of course you need to adjust for the fact that this generation grew up in relative poverty compared to us, and that old frugal habits (of not going out too often) are hard to shake off!

Senior Assistants

A year or two before I was born, my parents both took and passed this exam called “SAS” (no clue what it stands for), following which they were both promoted to officer grade (they used to work for the erstwhile Karnataka Electricity Board (KEB) back then).

Many of their colleagues elected to not take up this exam (or perhaps took and flunked it) and didn’t get promoted for the rest of their careers, remaining “senior assistants”. While they didn’t “progress” in their careers, they didn’t do all that badly financially, with their pay scale growing more or less at the same rate as it would have had they become officers.

This examination-based division into officers and “staff” was not limited to KEB, of course. It was (and is) prevalent across all public sector units. If you passed the exam, you had a chance at career progression, though that also typically meant harder work and longer hours. It wasn’t necessary for everyone to be ambitious, though, since they could choose to remain at a non-officer grade where things were chiller.

While there might have been noble intentions for this bifurcation (making the pyramid thin at a low enough level, for example, and also addressing lumpy/bursty recruitment), the problem with the practice was that it created a rather large cadre of rather unambitious workers.

Given that it is not easy to sack someone from a PSU job (unless there has been gross misbehaviour), the only way to incentivise PSU employees to work is by showing them carrots. While tenure or seniority based promotions have put paid to such incentives, it is still reason enough to keep a section of the officers motivated. For Senior Assistants who have hit a wall on that front, it is simply not available.

Given the shape of the pyramid and the lack of carrots for Senior Assistants (and equivalent) what this policy has created is a large army of government/PSU officials who lack any motivation or incentive to do their job effectively.

With most government departments being monopolies, this is a problem only for the taxpayers and public (and not so much for the departments themselves). Where this hits PSUs hardest is where they compete with the private sectors, in banks, for example.

I’ve maintained that one of the advantages of PSU banks is that the staff there are much more experienced, so if you have a non-standard thing to do, you would rather go there than to a private bank that might throw the rule book at you.

The problem, though, is that while some staff might be motivated enough to use their experience and help you out, not all of them might be that way, for most of the clerical staff belong to the aforementioned “Senior Assistant” category, with no explicit incentive to keep them going. The same is the case with non-customer facing staff as well.

I understand that various other careers can also have “career-limiting moves” (after which you don’t get promoted) but the problem with the Indian PSU system is that such moves happen pretty early on in the career, which creates a lot of deadweight for the system to carry.

I delivered an NED Talk

When we finally implemented the NED Talks a year back, we took a policy decision that we wouldn’t be speaking ourselves, and instead remain content with organising, producing and anchoring the event.

With a year of NED talks (where we collected over fifty NED fellows over six episodes) done, there were the interesting situation today where the Takshashila Institution, which I’m associated with an many of whose fellows have delivered NED Talks, organised an NED Talks-like event (they acknowledged it as such) as part of their year-ending bash.

So they requested me to speak at the event and I agreed to talk about the Ramayana and its connection with the current civil war in Syria. I essentially paraphrased what I’d written in this post on this blog, and argued that Europe and the US should back Russia in supporting Bashar al-Assad’s forces.

The event was streamed live on Youtube, and you can find my talk here:

See and enjoy (my talk starts around the 15 minute mark).

PS: I had consumed two glasses of wine before this talk which “lubricated” things and enabled me to talk without feeling self-conscious. I must say this method works fairly well for short talks.

Bayes and serial correlation in disagreements

People who have been in a long-term relationship are likely to recognise that fights between a couple are not Markovian – in that the likelihood of fighting today is not independent of the likelihood of having fought yesterday.

In fact, if you had fought in a particular time period, it increases the likelihood that you’ll fight in the next time period. As a consequence, what you are likely to find is that there are times when you go days, or weeks, or even months, together in a perennial state of disagreement, while you’ll also have long periods of peace and bliss.

While this serial correlation can be disconcerting at times, and make you wonder whether you are in a relationship with the right person, it is not hard to understand why this happens. Once again, our old friend Reverend Thomas Bayes comes to the rescue here.

This is an extremely simplified model, but will serve the purpose of this post. Each half of a couple beliefs that the other (better?) half can exist in one of two states – “nice” and “jerk”. In fact, it’s unlikely anyone will completely exist in one of these states – they’re likely to exist in a superposition of these states.

So let’s say that the probability of your partner being a jerk is $P(J)$ , which makes the probability of him/her being “nice” at $P(N) = 1- P(J)$ . Now when he/she does or says something (let’s call this event $E$ ), you implicitly do a Bayesian updation of these probabilities.

For every word/action of your partner, you can estimate the probabilities in the two cases of your partner being jerk, and nice. After every action E by the partner, you update your priors about them with the new information.

So the new probability of him being a jerk (given event E) will be given by
$P(J|E) = \frac{P(J).P(E|J)}{P(J).P(E|J) + P(N).P(E|N)}$ (the standard Bayesian formula).

Now notice that the new probability of the partner being a jerk is dependent upon the prior probability. So when $P(J)$ is already high, it is highly likely that whatever action the partner does will not move the needle significantly. And the longer $P(J)$ stays high, the higher the probability that you’ll lapse into a fight again. Hence the prolonged periods of fighting, and serial correlation.

This equation also explains why attempts to resolve a fight quickly can backfire. When you are fighting, the normal reaction to resolve it is by committing actions that indicate that you are actually nice. The problem is that the equation above has both $P(E|N)$ and $P(E|J)$ in it.

So, in order to resolve a fight, you should not only commit actions that you would do when you are perceived nice, but also actions that you would NOT do if you are a jerk. In other words, the easiest way to pull $P(J)$ down in the above equation is to commit $E$ with high $P(E|N)$ and low $P(E|J)$ .

What complicates things is that if you use one such weapon too many times, the partner will will begin to see through you, and up her $P(E|J)$ for this event. So you need to keep coming up with new tricks to defuse fights.

In short, that serial correlation exists in relationship fights is a given, and there is little you can do to prevent it. So if you go through a long period of continuous disagreement with your partner, keep in mind that such things are par for the course, and don’t do something drastic like breaking up.

The Chamrajpet model of leadership

When you are doing a group assignment (assuming you’re in college) and you get assigned your share of the work, the assumption is that the allocation of work across team members has been fair. Good group leaders try to ensure this, and also to split work according to the relative interests and strengths of different team members.

Except that there are times when team members get the sneaking suspicion that the group leader is pulling a fast one on them, by following the “Chamrajpet model” of leadership. To understand what the Chamrajpet model is, watch this video, from the beginning of the Kannada movie Gowri Ganesha (the video below has the full movie. Watch it if you can. It’s fantastic).

For those who couldn’t understand, Lambodar (played by Anant Nag) needs to get to Chamrajpet but doesn’t have the money. He befriends two guys (who also want to get to Chamrajpet) and convinces them to share an auto rickshaw with him. He convinces each of them that the “other” guy is his (Lambodar’s) friend, and that they should split the fare equally. This way, he collects the full fare (and a bit more ) from them put together.

It is a fairly common occurrence in group assignments for one of your teammates to tell you “you do part 1. This guy and I will do part 2”. There are times when this is a fair allocation (when part 2 requires twice the effort as part 1). If the teammate is a Lambodar, however, he might have pulled a similar allocation with the third teammate (telling him “you do part 1. I’ll do part 1 with this guy”).

In a way, these are the perks that sometimes come with leadership.

The only way you can deal with it is to follow the advice at the end of the movie – “Beware of Lambodars”.

Ladder Theory and Local Optima

According to the Ladder Theory, women have two “ladders”. One is the “good ladder” where they rank and place men they want to fuck. The rest of the men get placed on the “friends ladder”. Men on the other hand have only one ladder (though I beg to disagree).

The question is what your strategy should be if you end up on top of the “wrong” (friends) ladder. On the one hand, you get your “dove“‘s attention and mostly get treated well there. On the other hand, that’s not where you intended to end up.

Far too many people at the top of the friends ladder remain there because they are not bold enough to take a leap. They think it is possible to remain there (so that they “preserve the friendship”) and at the same time make their way into the dove’s good ladder.

Aside 1: The reason they want to hold on to their friendship (though that’s not the reason they got close to the dove) can be explained by “loss aversion” – having got the friendship, they are loathe to let go of it. This leads them to pursuing a risk-free strategy, which is unlikely to give them a big upside.

Aside 2: A popular heuristic in artificial intelligence is Hill Climbing , in which you constantly take the path of maximum gradient. It can occasionally take you to the global maximum, but more often than not leaves you at a “local maximum”. Improvements on hill climbing (such as Simulated Annealing) all involve occasionally taking a step down in search of higher optimum.

Behavioural economics and computer science aside, the best way to analyse the situation when you’re on top of the friends ladder is using finance. Financial theory tells you that it is impossible to get a large risk-free upside (for if you could, enough people would buy that security that the upside won’t be significant any more).

People on top of the friends ladder who want to preserve their friendships while “going for it” are delusional – they want the risk-free returns of the friendship at the same time as the possibility of the grand upside of getting to the right ladder. They should understand that such trades are impossible.

They should also understand that they might be putting too high a price on the friendship thanks to “loss aversion”, and that the only way to escape the current “local optimum” is by risking a downward move. They should remember that the reason they got close to their dove was NOT that they end up on the friends ladder, and should make the leap (stretching the metaphor). They might end up between two stools (or ladders in this case), but that might be a risk well worth taking!

PS: this post is not a result of my efforts alone. My Wife, who is a Marriage Broker Auntie, contributed more than her share of fundaes to this, but since she’s too lazy to write, I’m doing the honours.

Vaastu Shaastra

My apartment has allegedly been built according to the principles of Vaastu Shaastra. I wasn’t particularly particular about this – in fact, I wouldn’t have minded my apartment NOT following the Vaastu Shaastra if that meant I could get it for cheaper. One such apartment wasn’t available, though, (I presume that market is illiquid), so I settled on this one.

There are several aspects to Vaastu Shastra, at least a subset of which has been followed while designing my apartment, but I will focus on one – the position of the master bedroom. Vaastu Shaastra dictates that the master bedroom be in the south-west corner. I can think of a few practical reasons for this, such as not being woken up with the first rays of sun, and getting the South-Westerly monsoon breeze.

The problem, however, is that the Southwest monsoon is now over and the North-East monsoon has begun. And my bedroom is insanely hot. Irrespective of what windows I open, the South-Westerly location means that most of the time the room is deprived of the cool rain-bearing wind blowing over Bangalore from the North-Easterly direction! From a practical standpoint, the design is not great.

While I believe that most of our “traditions” and “customs” have some scientific backing, my problem is with blind implementation – reading the letter of the ancient rule rather than with the spirit.

And with Vaastu Shaastra, based on the wind patterns here, my sense is that it was not designed for Bangalore, and we have just followed the rules here without analysing their merits. The Vaastu Shaastras, I suspect, were developed somewhere up north (in the Swat Valley, perhaps?), where there was no North-East monsoon. Hence these cool rainbearing winds have been completely left out from the calculations.

And our builders, in their infinite wisdom and guided by televangelists, have decided to adopt these Shaastras by the letter without suitably modifying them for local conditions.

Woresht.

PS: Thinking about it, the Vaastu fascination is to cut decision fatigue when it comes to designing residences. It provides automatic formulae to lay out the house, so you can mindlessly design it and not feel bad about not consulting an architect.

Shorts

So I’ve been trying to overcome my self-imposed taboos on online shopping, and trying to buy things online, especially brands and sizes that I already know and items that offline shops don’t stock much of.

As the title of this post might suggest to you I’m trying to buy shorts. I’ve had to decommission several pairs over the last couple of years for a number of reasons – some became too loose, some too tight, others wore out, more are fading away. And the lack of inventory of shorts in my wardrobe means that I end up wearing this one red pair pretty much everywhere.

While the beauty of online shopping is supposed to be that you get massive variety, and the long tail can get served, the problem is that the way sites are designed makes it hard to discover them. Here are two images, one each from Amazon and Jabong.

So I have two basic problems with the shorts that are available for sale online, based on these two sites.

Too long: Check out the Jabong picture here. First of all, Jabong groups shorts and “3/4ths” (when did those abominations even become a thing) in the same category. But they are nice and allow you to specify length. I said “thigh length” and this is what they show me:

I mean, shorts by definition are supposed to be short right? I grew up in an era when Pete Sampras was bossing Wimbledon and shorts of this length were classified as “bermudas”. If you look at the image above, save a couple of “sports shorts” (it’s sad that Jabong doesn’t even allow me to filter those out, since I’m not looking for them), they’re all knee length! Which is too long for a pair of shorts!
Too narrow: Jabong refuses to admit that there is something called “relaxed fit” (even for cargos). Amazon has no fit filters for shorts. And the shorts all look like they’re just truncated pants rather than shorts. The difference between shorts and pants (apart from the extent of leg they cover of course) is that while the latter are narrow, shorts are more relaxed, and shouldn’t stick to your leg! And this is what Amazon shows me (while Amazon has a separate sportswear section, it continues to show sports shorts along with the regular shorts. They even showed boxers. There is no option to specify I want the button-zip-belt kind of “casual wear” shorts):

All of them are way too narrow! Of the radius where they get stuck to the thigh when you sit down leaving you with the potential embarrassment of pulling them down when you get up.

I had ranted during an earlier attempt to buy online about the difficulty of sorting through inventories so I won’t go into that here.

All I have to say here is that it seems like “shorts” don’t mean what they used to, and I’m extremely unhappy about it.

Taking the easy way out

Taking the easy way out is a concept that is much frowned upon, especially in India (though I must confess I don’t have enough exposure to other cultures to have noticed this). When you take the easy way out on something, people assume that you’re cheating – like you’re using a cheat code in a computer game.

For example, purists believe that if one were to get the good karma that one deserves by going to Tirupati, it will accrue if and only if you were to walk up the hill on foot. People who take the easy way out by taking a cab or bus uphill apparently don’t get as much good karma.

During festivals such as Sankranti, people who buy the sugar candies and the eLL (sesame) mixture from a shop are again frowned upon, given they are taking the easy way out rather than preparing them at home. Employing a cook is similarly frowned upon, as is taking an auto rickshaw or a cab rather than a bus.

And to take an example that long-time readers of this blog might appreciate, fighters tend to view studs with derision since the latter seemingly get things done without putting in the same amount of effort as the former.

Ok I might have claimed in the past that my pieces are usually long on analysis and short on rhetoric, but as you can see, this is not one of those pieces. All I’ve done so far is to give examples of something that I don’t agree with.

And the reason I don’t agree with the view that taking the easy way out is wrong is because it is done if and only if it’s optimal. Notice that in all the above examples, there is no free lunch. Taking the easy way out comes at a cost, and reflects a set of trade offs. To take the car up Tirupati costs money, and the opportunity of experiencing the supposedly electric hillsides – and benefits are uncertain anyway in religious matters. Employing a cook or taking an auto are efficient if you value time and convenience, for example.

While I agree that there might be some cases where taking the easy way out might be short-termist (you might be ignoring “tail risks”, for example, which allows you to use an easy pricing model, or by using a calculator you may not develop your long-term arithmetic skills), in most cases it is considered decision.

In other words, there is no problem with taking the easy way out as long as you have fully understood the costs and benefits (including any tail risks) of the method that you’ve chosen to adopt. There is no absolute virtue attached to labour – labour is always a means to get to an end. Once you digest this, you will have no hesitation in taking the easy way out.

Darwin Awards in Investment Banking

Some 20 analysts from Goldman Sachs and 10 from JP Morgan have been dismissed after it emerged that they were cheating during some mandatory tests during their analyst training program.

As the article says, it is not unusual for bankers to assist each other when it comes to tests in mandatory training and compliance, since they are seen as being time consuming and repetitive.

In that sense, that these guys copied or helped each other is not news. What matters, though, is that they got caught in the process. And that is unacceptable for a banker.

If you look at how investment banking has been shaped over the last decade or so, there have apparently been several people who have fudged stuff – from financial results to key rates to benchmarks, and gotten away with it because they haven’t got caught. And they continue to remain successful bankers.

So in the banking culture, fudging is okay, but getting caught isn’t. By getting caught fudging in tests during their training program, these analysts have betrayed the one skill that is necessary for being a successful banker, and for this reason they have been rightly weeded out.

It’s like the Darwin awards, except that for these guys it is only the end of their careers in banking.