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It’s been a year, almost

A couple of hours back, I renewed my account. It’s been a year since I purchased the noenthuda.com domain, and it definitely feels like it’s been much longer. This blog, however, is yet to celebrate its first birthday – it will do so on the 22nd, on the same day when there will be a Total Solar Eclipse in Central India. We’ll have more elaborate birthday celebrations then. Actually, if you have any good ideas as to how to celebrate the first birthday of noenthuda.com , please mail in.

So it was on the 7th of July last year that I registered noenthuda.com. It took about 15 days after that to decide on my host (I settled on totalchoicehosting), figure out how to organize the site, etc. As you might have noticed, the homepage (noenthuda.com) redirects to this blog (noenthuda.com/blog). The main reason behind this is that I’ve been too lazy to figure out what to do with my main site. I don’t really fancy turning this into a professional site – LinkedIn are there for that. All my writing is here on this blog, so no separate place needed for that.

There is another blog attached to this, called Twisted Shout. You can see a link to this from the right hand column of this site. You might notice that the site is defunct. The last post on that was several months ago. I had been using that site for discussing stuff such as the Petromax Theory, the Goalkeeper Theory and other similarly strong fundaes. Aadisht and Kodhi, my co-authors on that blog, had also planned to script our sitcom “rash driving” on that. Again, there was only a single episode of that and then NED happened.

Some of you might also know that NED is also the name of a quiz team, featuring Kodhi, Aadisht and me. It’s a subset of the erstwhile Sumo Yet So Far, which also featured Swami. It’s been a while since NED quizzed together, the last occasion being the QFI Open quiz in Chennai last summer. Our next collective performance will be at the Landmark Quiz in Chennai next month. Maybe I could have a section of the site dedicated to our quiz team. Maybe I’ll do that once our CV expands.

Then there are the NED talks, which I had announced a few weeks back. These talks will be held as planned, in October this year in Bangalore. I hope to make this a day-long event, in an auditorium. So basically it will be a series of lectures. We are looking for speakers, and listeners. We will also have 1-2 open house sessions so taht everyone can put CP (class participation).

I hereby call for speakers for the inaugural NED talks. The date is not fixed but it will be on some Sunday this October in Bangalore. You will have to give a talk in less than 18 minutes on any topic that remotely relates to NED. For example, I plan to speak on the Studs and Fighters Theory, and how it might impact NED. So if you are interested in speaking, write a short write up on yourself, and what you want to talk about and send it to me at skthewimp AT yahoo DOT com. I think we will need a total of TEN speakers.

In other news, I’ve got proper net access now in Bangalore (BSNL Broadband). So immense peace are there. Normal services should resume shortly.

Work Etc.

There are these days when you wake up and start wondering what the fuck you are upto. You start asking yourself why you are where you are, doing what you are doing. You ask yourself why you are not on that monthlong roadtrip of rural Karnataka, with the hope of maybe producing a shelf of books at the end of it. You ask yourself why you haven’t been doing stuff that you had promised yourself that you would do.

That new guitar has already started rusting, and the left index finger that you had cut the last time you played has long healed. The car mileage grows only in small increments – which approximately represents the distance you go to work. Half the days you cook rice, and mix it with copious quantities of Mother Dairy Dahi, and some pickle that has been sent from home. The other days you go to the same restaurant, sit at the same table and order the same set of items.

You are doing it for the sake of your career, you tell yourself. Career. Tha FUBAR thing. Which you are trying to marginally resurrect and repair by doing what you are doing, and trying to bring back to it some vague sense of recognition. You meet your friends. You hear them shag about their jobs. You hear about all the cool things that they are doing, and about how they are fast moving up the corporate ladder. About how you are a failure in life if you don’t work hard at this stage of life, and if you can’t win the rat race.

You meet friends’ friends. The first thing they ask you is what you do – and you are likely to get judged on that. So you need to make sure that you have a good story to tell about your job, which makes you sound cool. Coming up with formulae to price the movement of sacks of rice is not cool, as I found out. Financial services is usually met with a question asking you to predict the direction of the index. Sales is usually met with “the sun is very hot nowadays, no?”. And IT is met with “are you a Java coder or a C# coder?”.

Occasionally you want to get away from all this. These are the times when you accept that you are doing what you are doing because of the increments it produces in your bank balance. Sometimes you realize that the monthly increments in your bank balance are not enough; and some of those times you console yourself saying that you are doing this in expectation of larger inflows in the future. You consider your job to be an investment – that the dough you are not getting now will get more than compensated for later in your life. 

So when on certain days you wake up and ask yourself why the fuck you are where you are and doing what you are doing, you usually don’t have an answer. In those states of mind, “career”, “development”, “investment”, “corporate” etc. all don’t matter at all. Neither does “net present value of expected future earnings”. Your total costs look inflated. Your benefits look deflated. Every line of thought that runs in your head then tells you that you should go off into the Himalayas. You go to office instead. 

I’ll stop this essay here. In a forthcoming essay I’ll explain about how a job is essentially about costs and benefits, and why they use the word “compensation” to describe your salary. I have occasionally argued in the other direction, but thinking about it again, I think the word “compensation” with reference to salary package does make a lot of sense.

Arranged Scissors 9 – Cost Benefit Analysis

Neha, also known as MotherJane, writes in her blog:

…I do not believe in love. Partners offer solutions to everyday issues like running a house, satisfying needs and filling in the blanks. However they come at a cost – often too high to bother. Still we go ahead and do the trade – its just what we do. In our lives friends become the people we talk and listen to, partners become people we are forced to talk and listen to, so that we can have everything else they offer. If you think about it, your relationship is already transactional. If calling it love makes easier on your conscience, I won’t hold you back.

I was trying to figure out how it all fits in with the arranged scissors process. And every time the answer came out that the Arranged Scissors process is fairly irrational.Mainly because of the short time for decision. A few basic checks are made, obvious misfits are checked for, and things get “done”.

The biggest cost of getting married (which Neha doesn’t mention) is the opportunity cost of the option of getting married to any of the other women in this world apart from your wife. Divorce is messy and expensive (in more ways than one), and hence once you have hitched yourself to someone, this opportunity cost immediately kicks in.

Later in her post, Neha talks about the “friends-with-benefits” model, but the problem with that is that it doesn’t help propagate your genes. It is tough to raise kids in that kind of an environment, and considering that the purpose of life is to procreate (this is the general case; i konw you may be an exception so don’t shout at me for this) the friends-with-benefits model is not stable. The reason the world has settled down into a model of bilateral commitment is to optimize the costs and benefits of propagating genes.

So if you want to propagate your genes (again, I’m not sure if you want to. If you don’t, I’d recommend you to settle down with the FWB model – but then it’s easier to find one stable counterparty rather than several FWBs, so you’d rather get married) you need to get into a bilateral commitment deal. And these deals are mutually exclusive so you need to realize that when you get into one, you will be foregoing the option of getting into any other.

There are several other costs and benefits when it comes to the marriage thing – there will be lifestyle changes, you get “tied down”, you need to take on responsibility, share duties and all that, but in my humble  (and unmarried) opinion, the biggest cost is the opportunity cost.

I say this quite often (and this reminds me, I have a paper to write – which I’ve postponed for nine months now) but I think outside of the financial world, option value is generally underrated (even in finance options are more often than not undervalued since the most common pricing formula ignores fat tails). And in settling for a Common Minimum Programme in the arranged marriage market, people severely underestimate the value of the option value of the rest of the world.

So the next time you want to propose to someone, or want to answer “the question” in the affirmative, make sure you do the following:

  • Make a list of all the people in the world belonging to the opposite sex (gays feel free to generalize this)
  • Evaluate the option of marrying them. Your job will be quite easy because with respect to most people, either you don’t want to marry them or you know that the chance of them marrying you is so infinitesimally small that the option value is negligible
  • I’m sure there will be a number of peopl ewho you prefer to the person you are proposing to/saying yes to. If you think there is a nonzero chance of them saying yes to you, ask them. Rejection is cheaper than a lifetime of guilt
  • Once all the options have been evaluated, and an additional buffer term added to account for all the people you don’t know yet, you know the full value of the opportunity cost. Then add up the other costs and benefits, and then make your decision.

Typically to know the other costs and benefits of the person that you are currently evaluating, you need to know them rather well. Yes, you can draw a sample and estimate the population based on that, but the cost of a type 1 error (error of commission) is very high. So make sure you collect enough data. To collect enough data, make sure you give yourself enough time.

Ok now I don’t know the point of this post. I don’t even konw if it fits into the arranged scissors series, but I think I’ll let it stay. Changing the title is too messy. I think I wrote this to put fundaes about opportunity cost. Maybe I had something else in mind when I thought up this post, but then subsequently forgot the contents and remembered only the outline. In any case, I’ll stop here. Before that I’ll tell you for one last time that you need to keep track of option value, and opportunity cost.

Lazy Post – Statistical Analysis

I call this a lazy post since I didn’t originally write it as a blog post. I had written this as an email to a mailing list, and now thought it might make sense as a blog post. The reference to context: a prominent and well-respected member of the group had written a fairly lengthy argument, and ended it by saying “Maybe this calls for a good regression analysis….” . My reply is here.

I need to mention here that this mail to the group wasn’t responded to (apart from one tangential remark by  Udupa). I don’t know if it simply got lost in the flood of mails on the list today, or if people on the group (in general, a very intelligent lot) don’t care for this kind of stuff, or if, for some reason, this caused discomfort of some sort. Anyway, I begin:

I think I had raised this point before in a similar context. it is about the use and misuse of statistical analysis. i think one lesson that ought to be learnt from the ongoing financial crisis and the events leading up to this is that statistical analysis, when misused, can have dangerous consequences, and this is not just for the people who are misusing the analyses.

there is this popular view that if there is data, then one ought to do statistical analysis, and draw conclusions from that, and make decisions based on these conclusions. unfortunately, in a large number of cases, the analysis ends up being done by someone who is not very proficient with statistics and who is basically applying formulae rather than using a concept. as long as you are using statistics as concepts, and not as formulae, I think you are fine. but you get into the “ok i see a time series here. let me put regression. never mind the significance levels or stationarity or any other such blah blah but i’ll take decisions based on my regression” then you are likely to get into trouble.

i think this is broadly the kind of point that is made by people like Paul Wilmott. that the problem is not with statistical analysis, but  with the way people use statistical analysis.

ok, now that i’m done with my rant, I’m very sceptical about regression yielding any kind of conclusive results here. i think the number of data points we have here is too small to produce any meaningful results. of course i’m saying this without really looking at all the data that you want to might want to include. and i won’t be surprised if a few tens of papers get published on this topic. all based on statistical analyses. and the results all being orthogonal to one another.