economics – Page 3 – Pertinent Observations

Active aggression and passive aggression

For the record I’m most often actively aggressive. I believe passive aggression is a waste of energy since not only do you end up fighting but you also end up trying to second guess the other party, which leads to suboptimal outcomes. This post is a justification of that.

Let’s say you and I are trying to decide the price of something I want to sell you. There are two ways we can go about it. One way is for us to have a negotiation. I can name my asking price. You call your bid. And if the two meet, well and good. Most often they won’t meet. So one of us will have to budge. We start budging slowly, in steps, until a time when the bid and ask are close together. And then we have a deal.

In most situations (except exceptional cases where there are very few buyers and sellers – read the first chapter of my book. This is within the Kindle sample), this will lead to an efficient outcome. Even if the final price were a little too close to the bid or to the ask, both parties know that under the circumstances they couldn’t get better. And the transaction takes place and the parties move on.

The other situation is where one party publicly states that they are unwilling to negotiate and will do the deal if and only if the counterparty comes up with a good enough offer. If the offer is not good enough, there is no deal. This is similar to the ultimatum game popular in behavioural economics. In this case you are also required to guess (and you have exactly one guess) what the counterparty’s hurdle rate is.

When there is a liquid market, there is no issue with this kind of a game – you simply have your own hurdle rate and you bid that. And irrespective of whether it gets accepted or not, you get the optimal outcome – since the market is liquid, it is likely that your quote will get accepted somewhere.

In a highly illiquid market, with only one buyer and one seller, the ultimatum setup can lead to highly suboptimal outcomes. I mean if you’re desperate to do the sale, you might bring your price “all the way to zero” to ensure you do the deal, but the thing is that irrespective of whether you get a deal or not, you are bound to feel disappointed.

If your ask got accepted, you start wondering if you could’ve charged more. If you didn’t get your deal, you start wondering if reducing a price “just a little” would have gotten the deal done. It is endless headache, something that’s not there when there is an active negotiation process.

Now to build the analogy – instead of a sale, think of the situation when you have a disagreement with someone and need to resolve it. You can either confront them about it and solve it “using negotiation” or you can be passive aggressive, letting them know you’re “not happy”. Notice that in this case the disagreement is with one specific party, the market is as illiquid as it can get – no negotiations with any third party will have any impact (ignore snitching here).

When you express your disagreement and you talk/fight it out, you know that irrespective of the outcome (whether it was resolved or not), you have done what you could. Either it has been resolved, which has happened with you telling what exactly your position is, or you have given it all to explain yourself and things remain bad (in this case, whatever happened there would have been “no deal” or an “unhappy deal”).

And that is why active aggression is always better than passive aggression. By expressing your disagreement, even if that means you’re being aggressive, you are stating the exact extent of the problem and the solution will be to your satisfaction. When you’re passive aggressive, nobody is the winner.

PS: I realise that by writing this post I’m violating this own advice, since this post itself can be seen as a form of passive aggression! Mea culpa.

Magnus Carlsen’s Endowment

Game 12 of the ongoing Chess World Championship match between Magnus Carlsen and Fabiano Caruana ended in an unexpected draw after only 31 moves, when Carlsen, in a clearly better position and clearly ahead on time, made an unexpected draw offer.

The match will now go into a series of tie-breaks, played with ever-shortening time controls, as the world looks for a winner. Given the players’ historical record, Carlsen is the favourite for the rapid playoffs. And he knows it, since starting in game 11, he seemed to play towards taking it into the playoffs.

Yesterday’s Game 12 was a strange one. It started off with a sharp Sicilian Pelikan like games 8 and 10, and then between moves 15 and 20, players repeated the position twice. Now, the rules of chess state that if the same position appears three times on the board, the game is declared a draw. And there was this move where Caruana had the chance to repeat a position for the third time, thus drawing the game.

He spent nearly half an hour on the move, and at the end of it, he decided to deviate. In other words, no quick draw. My suspicion is that this unnerved Carlsen, who decided to then take a draw at the earliest available opportunity available to him (the rules of the match state that a draw cannot be agreed before move 30. Carlsen made his offer on move 31).

In behavioural economics, Endowment Effect refers to the bias where you place a higher value on something you own than on something you don’t own. This has several implications, all of which can lead to potentially irrational behaviour. The best example is “throwing good money after bad” – if you have made an investment that has lost money, rather than cutting your losses, you double down on the investment in the hope that you’ll recoup your losses.

Another implication is that even when it is rational to sell something you own, you hold on because of the irrationally high value you place on it. The endowment effect also has an impact in pricing and negotiations – you don’t mind that “convenience charge” that the travel aggregator adds on just before you enter your credit card details, for you have already mentally “bought” the ticket, and this convenience charge is only a minor inconvenience. Once you are convinced that you need to do a business deal, you don’t mind if the price moves away from you in small marginal steps – once you’ve made the decision that you have to do the deal, these moves away are only minor, and well within the higher value you’ve placed on the deal.

So where does this fit in to Carlsen’s draw offer yesterday? It was clear from the outset that Carlsen was playing for a draw. When the position was repeated twice, it raised Carlsen’s hope that the game would be a draw, and he assumed that he was getting the draw he wanted. When Caruana refused to repeat position, and did so after a really long think, Carlsen suddenly realised that he wasn’t getting the draw he thought he was getting.

It was as if the draw was Carlsen’s and it had now been taken away from him, so now he needed to somehow get it. Carlsen played well after that, and Caruana played badly, and the engines clearly showed that Carlsen had an advantage when the game crossed move 30.

However, having “accepted” a draw earlier in the game (by repeating moves twice), Carlsen wanted to lock in the draw, rather than play on in an inferior mental state and risk a loss (which would also result in the loss of the Championship). And hence, despite the significantly superior position, he made the draw offer, which Caruana was only happy to accept (given his worse situation).

Advertising Agencies: From Brokers to Dealers

The Ken, where I bought a year long subscription today, has a brilliant piece on the ad agency business (paywalled) in India. More specifically, the piece is on pricing in the industry and how it is moving from a commissions only basis to a more mixed model.

Advertising agencies perform a dual role for their clients. Apart from advising them on advertising strategy and helping them create the campaigns, they are also in charge of execution and buying the advertising slots – either in print or television or hoardings (we’ll leave online out since the structure there is more complicated).

As far as the latter business (acquisition of slots to place the ad – commonly known as “buying”) is concerned, typically agencies have operated on a commission basis. The fees charged has been to the extent of about 2.5% of the value of the inventory bought.

In financial markets parlance, advertising agencies have traditionally operated as brokers, buying inventory on behalf of their clients and then charging a fee for it. The thrust of Ashish Mishra’s piece in ate Ken is that agencies are moving away from this model – and instead becoming what is known in financial markets as “dealers”.

Dealers, also known as market makers, make their money by taking the other side of the trade from the client. So if a client wants to buy IBM stock, the dealer is always available to sell it to her.

The dealer makes money by buying low and selling high – buying from people who want to sell and selling to people who want to buy. Their income is in the spread, and it is risky business, since they bear the risk of not being able to offload inventory they have had to buy. They hedge this risk by pricing – the harder they think it is to offload inventory, the wider they set the spreads.

Similarly, going by the Ken story, what ad agencies are nowadays doing is to buy inventory from media companies, and then selling it on to the clients, and making money on the spread. And clients aren’t taking too well to this new situation, subjecting the dealers ad agencies to audits.

From a market design perspective, there is nothing wrong in what the ad agencies are doing. The problem is due to their transition from brokers to dealers, and their clients not coming to terms with the fact that dealers don’t normally have a fiduciary responsibility towards their clients (unlike brokers who represent their clients). There are also local monopoly issues.

The main service that a dealer performs is to take the other side of the trade. The usual mechanism is that the dealer quotes the prices (both buy and sell) and then the client has the option to trade. If the client feels the dealer is ripping her off, she has a chance to not do the deal.

And in this kind of a situation, the price at which the dealer obtained the inventory is moot – all that matters to the deal is the price that the dealer is willing to sell to the client at, and the price that competing dealers might be charging.

So when clients of ad agencies demand that they get the inventory at the same price at which the agencies got it from the media, they are effectively asking for “retail goods at wholesale rates” and refusing to respect the risk that the dealers might have taken in acquiring the inventories (remember the ad agencies run the risk of inventories going unsold if they price them too high).

The reason for the little turmoil in the ad agency industry is that it is an industry in transition – where the agencies are moving from being brokers to being dealers, and clients are in the process of coming to terms with it.

And from one quote in the article (paywalled, again), it seems like the industry might as well move completely to a dealer model from the current broker model.

Clients who are aware are now questioning the point of paying a commission to an agency. “The client’s rationale is that is that it is my money that is being spent. And on that you are already making money as rebate, discount, incentive and reselling inventory to me at a margin, so why do I need to pay you any agency commissions? Some clients have lost trust in their agencies owing to lack of transparency,” says Sodhani.

Finally, there is the issue of monopoly. Dealers work best when there is competition – the clients need to have an option to walk away from the dealers’ exorbitant prices. And this is a bit problematic in the advertising world since agencies act as their clients’ brokers elsewhere in the chain – planning, creating ads, etc.

However the financial industry has dealt with this problem where most large banks function as both brokers and dealers. It’s only a matter of time before the advertising world goes down that path as well.

PS: you can read more about brokers and dealers and marketplaces and platforms in my book Between the Buyer and the Seller

Why Real Estate Prices are High

World over, high housing prices seem to be a problem. They’ve always been an issue in India. They are an issue in the US, where millennials are not able to afford houses to live in. In the UK as well, rising housing prices mean that today’s young are unable to buy up houses. The global phenomenon that is driving all this is the drive towards increasingly large cities.

Going by first principles, there are two major components that determine the cost of a house (note that I said cost and not price) – the cost of the land and the cost of construction. It can be safely assumed that the latter hasn’t increased at a rate dramatically higher than inflation over the years.

Yes, there are bubbles and busts in prices of commodities such as steel and cement. Houses nowadays are being built largely to better specifications and quality than earlier homes. In places like the US, modern houses are bigger. But all this is balanced by technological innovation which makes stuff cheaper. So on an average, the increase in construction costs over the years is not dramatic.

That implies that the massive increase in price of housing the world over is driven by increasing costs of land. Some scaremongers will try to tell you that this is due to there being too many human beings in the world, and we are soon headed for a Malthusian collapse. However, the land needed for housing is small, compared to say agriculture, so regular transfer of land from agriculture to housing should take care of this. So why are land prices increasing so much?

It has to do with the distribution. During most of the 20th century, manufacturing being the base of the economy meant that a lot of smaller cities and towns flourished. These cities and towns were either located conveniently enough to tap raw materials or markets for industrial goods, or were helped by the fact that land requirements for industries meant that big cities would get expensive very soon for industries, driving development to smaller cities and towns.

As the share of populations in manufacturing falls, and more people move into services, the larger cities gain at the expense of smaller cities and towns. This means the distribution of demand has changed massively over the last 30 years or so. Rather than demand being more or less uniform over cities, nowadays most of the housing demand is spread over a few small cities.

And these cities aren’t able to keep up. Supply in some cities such as San Francisco and Mumbai, are constrained by regulations on how much can be built. Other cities such as Bangalore or Houston have expanded radially, but housing in the far suburbs is much less attractive than closer to town (due to increased transport costs), and there is only so much supply in “convenient areas” of towns.

This changing pattern of urbanisation is leading to rapid increase in the prices of housing in places that people want to live in. And so millennials are being priced out, unable to buy homes. The distribution of jobs across cities means they don’t have the luxury of “settling down” in smaller cities and towns where housing is still affordable. And until the larger cities hit their limits of growth and businesses start moving to smaller cities (thus creating newer hubs), this housing shortage will exist.

Carbon taxes and mental health

The beautiful thing about mid-term elections in the USA is that apart from the “main elections” for senators, congresspersons and governors, there were also votes on “auxiliary issues” – referenda, basically, on issues such as legalisation of marijuana.

One such issue that went to the polls was in Washington State, where there was a proposal for imposition of carbon taxes, which sought to tax carbon dioxide emissions at $15 a tonne. The voters rejected the proposal, with the proposal getting only 44% of the polled votes in favour.

The defeat meant that another attempt at pricing in environmental costs, which could have offered significant benefits to ordinary people in terms of superior mental health, went down the drain.

Chapter 11 of Jordan Peterson’s 12 Rules for Life is both the best and the worst chapter of the book. It is the best for the reasons I’ve mentioned in this blog post earlier – about its discussions of risk, and about relationships and marriage in the United States. It is the worst because Peterson unnecessarily lengthens the chapter by using it to put forward his own views on several controversial issues – such as political correctness and masculinity – issues which only have a tenuous relationship with the meat of the chapter, and which only give an opportunity for Peterson’s zillion critics to downplay the book.

Among all these unnecessary digressions in Chapter Eleven, one stood out, possibly because of the strength of the argument and my own relationship with it – Peterson bullshits climate change and environmentalism, claiming that it only seeks to worsen the mental health of ordinary people. As a clinical psychologist, he can be trusted to tell us what affects people’s mental health. However, dismissing something just because it affects people negatively is wrong.

The reason environmentalism and climate change play a negative impact on people’s mental health, in my opinion, is that there is no market based pricing in these aspects. From childhood, we are told that we should “not waste water” or “not cut trees”, because activities like this will have an adverse effect on the environment.

Such arguments are always moral, about telling people to think of their descendants and the impact it will have. The reason these arguments are hard to make is because they need to persuade people to act contrary to their self-interest. For example, one may ask me to forego my self-interest of the enjoyment in bursting fireworks in favour of better air quality (which I may not necessarily care about). Someone else might ask me to forego my self-interest of a long shower, because of “water shortages”.

And this imposition of moral arguments that make us undertake activities that violate our self-interset is what imposes a mental cost. We are fundamentally selfish creatures, only indulging in activities that benefit us (either immediately or much later). And when people force us to think outside this self-interest, it comes with the cost of increased mental strain, which is reason enough for Jordan Peterson to bullshit environmentalism itself.

If you think about this, the reason we need to use moral arguments and make people act against their self-interest for environmental causes is because the market system fails in these cases. If we were able to put a price on environmental costs of activities, and make entities that indulge in such activities pay these costs, then the moral argument could be replaced by a price argument, and our natural self-interest maximising selves would get aligned with what is good for the world.

And while narrowly concerned with the issue of climate change and global warming, carbon taxes are one way to internalise the externality of environmental damage of our activities. And by putting a price on it, it means that we don’t need to think in terms of our everyday activities and thus saves us a “mental cost”. And this can lead to superior overall mental health.

In that sense, the rejection of the carbon tax proposal in Washington State is a regressive move.

Murray Gell-Mann Amnesia and the Vodnoy Paradox

I’ve written about the Murray Gell-Mann amnesia here before. The idea there is that you trust whatever is printed in the newspaper, except for the section which is your domain of expertise. And despite the newspaper falling short in this section, you read the rest of the newspaper as if everything there is “correct”.

Yesterday I came across a similar idea when it comes to big government – what University of Nebraska economist Arthur M Diamond calls as a “Vodnoy Paradox” after his optomerist – it’s basically about big government advocates who advocate big government in all fields except for the one they’re expert in.

Government regulations sound plausible in areas where we know little and have thought less. But usually those who know an area well can tell us of the unexpected harmful consequences of seemingly plausible and well-intentioned regulations. As a result, the same person often advocates government regulations in areas in which they are ignorant and opposes them in areas where they have knowledge. I call this the “Vodnoy Paradox.”

In the field they’re expert in they know that regulation doesn’t work, or is misguided, yet they support regulation in all other fields. Isn’t this just Murray Gell-Mann Amnesia in a different context? (quote via David Henderson of Econlog)

How markets work

A long time back, there was this picture that was making the rounds on Twitter and (more prominently) LinkedIn. It featured three boys of varying heights trying to look over a fence to see a ball game.

Here is what it looked like:

Source: http://www.freshshropshire.org.uk/about-us/equality-and-diversity/equality-of-opportunity/

These pictures were used to illustrate that equality of outcomes is not the equality of opportunity, or some such things, and to make a case for “justice”.

As it must be very clear, the allocation of blocks on the right is more efficient than the allocation of the blocks on the left – the tallest guy simply doesn’t need any blocks, while the shortest guy needs two.

And if you think about it, you don’t need any top-down “justice” to allocate the blocks in the right manner. All it takes is a bit of logical thinking and markets – and not even efficiently.

Think about how this scenario might play out at the ball park. The three boys go to see the ball game, and see three blocks at the fence. Each of them climbs a block, and we get the situation on the left.

Shortest boy realises he can’t see and starts crying. There are many ways in which this story can play out from here onward:

Tallest boy realises that he doesn’t really need that extra block, and steps down and gives it to the shortest guy, giving the picture on the right.
Tallest boy continues to stand on his block. Shortest boy realises that the tallest boy doesn’t need it, and requests him for the block. Assuming tallest boy likes him, he will give him the block.
Tallest boy continues on the block. Shortest boy requests for it, but tallest boy refuses saying “this is my block why should I give it to you?”. Shortest boy negotiates. Tells tallest boy he’ll give him a chocolate or some such in return for the block. And gets the block.
Tallest boy doesn’t want chocolate or anything else the shortest boy offers. In fact he might want to settle a score with the shortest boy and refuses to give the block. In this case, the shortest boy realises there is no point being there and not watching the ball game, and makes an exit. In some cases, the middle boy might negotiate with the tallest boy on his behalf, leading to the transfer of the block. In other situations, the shortest boy simply goes away.

Notice that in none of these situations (all of them reasonably “spontaneous”) does the picture on the left happen. In other words, it’s simply unrealistic. And you don’t need any top down notion of “justice” to enable the blocks to be distributed in a “fair” manner.

Pertinent observations on liquidity in startup markets

“Liquidity” was one of those words Wall Street people threw around when they wanted the conversation to end, and for brains to go dead, and for all questioning to cease

– Michael Lewis in Flash Boys

The quote that begins this blog post is also the quote that begins my book, which was released exactly a year ago. Despite its utility in everyday markets and economics, the concept of liquidity has not been explored too much outside of financial markets. In fact, one reason I wrote my book was that it appeared as if there was a gap in the market for material using the concept of liquidity to analyse everyday markets.

From this perspective, I was pleasantly surprised to come across a bunch of blog posts written by investors and tech analysts and startup fellows about the concept of “liquidity”. Most of these posts I came across by way of this excellent blog post by Andrew Chen of Andreessen Horowitz. It is always good to see others analysing topics in the same way as you are, so I thought I’ll share some insights from these posts here – some quotes, some pertinent observations. This is best done in bullet points. If you want to know more, I urge you to click through and read the blog posts in full. They’re all excellent.

You wonder why some startups make a big deal of how many cities they are in. This is because they usually function as within-city marketplaces, and so they need to be launched one city at a time. Uber famously started operations in San Francisco and remained there for a while.
“The best way to measure liquidity in the marketplace is to track the % of items or services that get sold/booked, and within what period of time. The higher the % and shorter period of time, the more sellers are making money and buyers are becoming loyal customers” – from here
“Where absolute pricing management makes most sense (i.e., where the marketplace operator sets prices) is where there isn’t a proper barometer for what the supply side should be charging and when the software can leverage systems should to optimize for liquidity” – from this excellent post
“In a zero sum game there, it’s most likely the marketplace with the most demand wins”. This was in the context of delivery marketplaces, and why Uber was likely to win that game (though it’s not clear if they’ve “won” it yet)
Trust is critical in building marketplaces. Both sides of the market need to trust the intermediary, and this can make marketplaces fragile. I had a recent incident where I appreciated the value of AirBnB landlord insurance (a lamp at a property I stayed at broke just after my stay, and the landlord wanted compensation). This post talks about how this insurance was critical to AirBnB’s growth
The same post talks about why even early stage businesses often make acquisitions – usually earlier stage businesses. “Marketplaces are normally winner-take-all markets. If we had lost ground to European competitors in 2012, we may have never gotten it back”
Ratings are a critical measure to build trust in a marketplace. And two-way ratings can help establish trust on both sides of the market
During the book launch function last year, there was a question on how marketplaces should build liquidity. I had given an example of the Practo/OpenTable model where you first sell a standalone service to one side of the market and then develop a marketplace. Another method (something I helped put in place for one of my current clients) is for the marketplace itself to become a “proprietary supplier”. The third, as this blog post describes, is about building markets where buyers are also sellers and the other way round (classic financial markets, for example).

For more on liquidity, and how it affects just about every market that you participate in on a daily basis, read my book!

Revenue management and transaction costs

So I just sent off a letter to India. To be precise, it is a document I had to sign and send to my accountant there – who sends regular “letters” any more?

The process at the post office (which, in my suburb, is located inside a large bookstore) was simple. In the first screen of the touch screen kiosk, there was an option for “worldwide < 20 grams”. A conveniently placed scale told me my letter weighed 18 grams, and one touch and one touch of my debit card later, I had my stamp. Within a minute, my letter was in the letterbox.

The story of how we pay the same amount for sending mail over large areas (“worldwide” in my case today) is interesting. Earlier, mail rates were based on distance, but as new roads kept being built in the 19th century America, and distances kept changing, figuring out how much to charge for a letter became “expensive”. A bright fellow figured out that the cost (in terms of time) of figuring out how much to charge for mail was of the same order of magnitude as the cost of the mail itself. And so the flat rate scheme for mail, that is prevalent worldwide today, was born.

Putting it in technical terms, transaction costs trumped price discrimination in this case. Price discrimination is the art (yes, it’s an art) of charging different amounts to different people based on their differential willingness to pay. Uber surge pricing is one example (I have a chapter in my book on this). Airline fares are another common example.

Until the late 18th century (well after mail prices had gone “flat”), price discrimination was rather common everywhere, a concept I have devoted a chapter to in the book. In fact, the initial motivation for fixed price retail was religious – Quakers, who owned many departmental stores in the US North-East, thought “all men are created equal before God” and so it was incorrect to charge different amounts to different people.

Soon other benefits of fixed prices became apparent (faster billing; less training for staff; in fact it was fixed prices that permitted the now prevalent supermarket format), and it took off. The concept is the same as stamps – the transaction cost of figuring out how much to charge whom is higher than the additional revenue you can make with such price differentiation (not counting possible loss of reputation, and fairness issues). Price discrimination at the shop is now confined to high value high margin businesses such as cars.

And it works in other high gross margin businesses such as airlines, hotels and telecom. These are all businesses with high fixed costs and low marginal costs for the suppliers. Low marginal costs has meant that price discrimination ha been termed as “revenue management” in the airline industry.

During the launch function of my book last year, I got asked if Uber’s practice of personalising fares for passengers is fair (I had given a long lecture on how Uber’s surge pricing is a necessary component of keeping average prices low and boosting liquidity in the taxi market). I had answered that a marketplace needs to ensure that its pricing is perceived as being “fair”, else they might lose customers to competitors. But what if all players in a market practice extreme price discrimination?

Thinking about it, transaction costs will take care of price discrimination before businesses and marketplaces start thinking of fairness. Beyond a point (the point varies by industry), the marginal revenues from price discrimination will fall below the transaction cost of executing this discrimination. And that poses a natural limit to how much price discrimination a business can practice.

Vacation Shopping

This is yet another of those questions whose answer seems rather obvious to everyone, and to me in full hindsight, but which has taken me a long time to appreciate

For a long time I never understood why people shop during vacations, when both time and luggage space are precious commodities. With global trade, I reasoned that most clothes should be available at reasonably comparable prices worldwide, and barring some special needs (such as a certain kind of shoes, for example), there was no real need to shop on vacations.

The last day of our trip to Munich in June convinced me otherwise. That was the only day on the trip that the wife was free from work, and we could go out together before our afternoon flight. The only place we ended up going out to turned out to be a clothing store, where the wife freaked out shopping.

It didn’t make sense to me – she was shopping at a chain store which I was pretty certain that I had seen in London as well. So why did she shop while travelling? And she shopped far more than she does in a normal shopping trip in London.

In hindsight, the answer is rather simple – diversity. While the same stores might exist in various countries or cities, each is adapted to local tastes and prevailing fashions. And while everyone watches the same “runways” in Milan and Los Angeles, there is always a subtle difference in prevailing styles in different places. And clothes in the stores in the respective places are tailored (no pun intended) to these styles.

And it can happen that the local prevailing styles are not something that you particularly agree with. For example, for years together in Bangalore I struggled to find plain “non-faded” jeans – most people there seemed to demand faced or torn jeans, and stores responded to serve that demand (interestingly, jeans shopping in my last Bangalore trip was brilliantly simple, so I guess things have changed).

Similarly, the wife finds it hard to appreciate most dresses in the shops in London (and I appreciate why she doesn’t appreciate them – most of the dresses are a bit weird to put it mildly), and as a result hasn’t been able to shop as much in recent times. She had taken to claim that “they don’t seem to be making normal clothes any more”.

But the styles in London aren’t correlated with the styles in Munich (or elsewhere), with the result that in that one chain store in Munich, she found more nice dresses than she had in some 20 shopping trips over a year in London.

Fashion suffers from the “tyranny of the majority“. It makes eminent sense for retailers to only stock those styles and models that have a reasonably high demand (or be compensated for stocking low-demand items with a high enough margin – I have a chapter on this in my book). So if your styles don’t match with those of people around you, you are out of luck. But when you travel, you have the chance to align yourself to another majority. And if that alignment happens, you’re in luck!

PS: On a separate note, I’m quite disappointed with the quality of clothes in London. Across brands, they seem to wear much faster than those bought in continental Europe or even in India.