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.

Mental health triggers

My ADHD seems to have become much worse over the last couple of days. Like this morning I had this episode where I couldn’t decide whether to go back home to get an umbrella, and thus turned around twice while I was in the middle of crossing a road.

In part, I blame this on having just read a book on ADHD – the second such book I’ve read in the last week (I found this book from the bibliography of previous one). While this book told me the impact of ADHD on relationships, and helped me understand what someone married to someone with ADHD goes through, in the course of doing so it reminded me of all the problems that one faces when you have ADHD.

So in some way, as I read through and “revised” the list of problems that one has with ADHD, all these problems have started surfacing (more likely I have noticed these issues every time they’ve come up). And this has led to a positive feedback loop, and thus much shorter attention spans and massive distractions and even mild addiction (to online chess).

This is not an isolated incident. In the past as well, when I’ve read material related to mental health problems that have affected me as well, the precise problem gets triggered. So when I read some stuff about depression, I’m likely to have a depressive episode after that. Similar with anxiety.

Interestingly, there is no impact when I read something related to a problem that I myself have never faced – like I once started reading Siddhartha Mukherjee’s essay on bipolar disorder and it had no effect whatsoever on me.

It wasn’t always this way. Long back, before I got diagnosed, reading stuff about mental health issues which I later got diagnosed with would make me feel hopeful – hopeful perhaps that there was in fact a diagnosis for what I was going through and it wasn’t simply “laziness” or “ineptitude” on my part that was causing me all that I was going through. But once I got the diagnosis, and figured out lifestyle changes to deal with my issues, reading more has only triggered the respective issue.

I guess the solution for this is simple – unless absolutely necessary (say there is a specific issue for which I seek help on) I shouldn’t read stuff about mental health issues that I might be facing.

I won’t spare you, though – here is an essay about ADHD that I had written three years ago (which I dug up after a conversation on ADHD with a friend yesterday).

 

Social Capital and Caste

Conventional wisdom is that social capitalin India is low because of our historical caste system. By placing people in a rigid hierarchy, and giving some people privileges over others just because of the families they were born into, the caste system prevented people from cooperating as well as they would in a more equitable society – that is what conventional wisdom says.

However, a point that we cannot miss is that despite the caste system placing a hierarchy on people, people from different castes did regularly cooperate and trade with each other. In fact, with caste being tied to hereditary professions, people had little choice but to regularly interact and trade with people from other castes. And this inevitably created social capital.

Putting it differently, the result of the caste system was an unequal but stable society, and this stability led to reasonably good social capital (history might be biased given it was written by people from certain castes, but we don’t see many instances of caste riots or clashes from over 200 years ago). You can think of it as a stable society with “handicaps”, where some people were privileged over others (in fact, there was a hierarchy of privilege), to the extent that it was okay for some people to abuse others in various ways.

Over the last 150 years or so, the caste system has been (rightly) challenged, and we are seeing various movements towards a more equal society. One side effect of this has been that the (unequal) equilibrium that had existed has been disturbed, leading to caste-based antagonism and a fall in social capital.

We are in the process of moving from one (unequal) equilibrium to another (more equal) equilibrium, but until we get there, existing beliefs and biases will continue to be challenged, which means some sets of people will continue to be suspicious of others, and there will be mistrust and thus low social capital.

Originally posted at Pragati Express

Why Indian Classical Music is Superior to Western Classical Music

I’ve been half-watching this atrocious movie called “Thank You“. Rather, the wife has been watching and I’ve been eavesdropping once in a while. Apart from the odd lame joke, it’s a horrible movie, so I wouldn’t recommend you to watch it.

But there’s one scene in that that illustrates that Indian Classical Music is superior to Western Classical Music. So the plot of the movie is that there are three stupid guys who are trying to find a conman who has been messing with them. Despite mostly obvious clues, they fail to identify him.

Until this day when they are all in his office, and one of them finds some sheet music and starts playing the notes on a conveniently located keyboard. This piece of music is something associated with the conman through the movie, and the three stupid guys immediately figure the identity of the conman.

So what does this have to do with Western Classical music? One of the key differences between Indian and Western Classical music is that in the former the performers mug up the notes of the songs – at least the parts where they don’t have to improvise. Once you know a song, you can dispense with the book. It is almost unknown for professionals to look at notes while performing.

Western Classical, on the other hand, spares performers of using up valuable memory space in their heads from remembering music, and has performers read the music from a sheet as they play it. While this has its advantages – notes are never “forgotten”, and all performers are easily in sync, and valuable memory space in the brain is not wasted – there are disadvantages as well.

Like if you have a signature tune, and if you play it often, you are likely to leave the sheet music of the tune lying around in a convenient location – which can then be found by your pursuers who can then identify you. If Akshay Kumar’s signature tune in the movie was Indian classical, he is unlikely to have had sheet music lying around in his office, and thus not got caught!

Now, if this is the way that stupid guys identify a conman, you can imagine how bad the rest of the movie might be. As if it wasn’t absurd enough, they’ve even tried to shoehorn some senti-max social messaging into the movie, making it utterly bizarre.

And once again I must point out that I didn’t really watch the movie – I just occasionally  eavesdropped as the wife watched it!

Notes from Scandinavia

Two weeks back (1st to 4th August), we visited Scandinavia – primarily Copenhagen, but also a day trip to Malmö, to give ourselves the satisfaction of having visited Sweden. A few pertinent observations (check the wife’s pertinent observations from the trip here).

  • True to reputation, we concluded our visit to Sweden without having seen a single Swedish Krona. Admittedly, our only expenses there were in places that you would normally expect to take plastic money – a restaurant, a coffee shop and a memento shop at the railway station, but this fact deserves mention given Sweden’s reputation
  • The same cannot be said of Denmark, though. A friend who used to live there had told us that we don’t need cash there, but on the first afternoon itself we found out otherwise. We hadn’t bothered drawing cash on the way to our apartment, and when the wife started craving Thai food, I found two takeaways close to the apartment but neither accepted Mastercard – they only accepted “Dankort“. The widespread use of Dankort in Copenhagen means that there aren’t too many ATMs around either. And so that day the wife was forced to make do with Cup Noodles.
  • In that sense, payment in Denmark is like the proverbial washerman’s dog . Widespread use of Dankort means few ATMs. And foreigners’ cards don’t work in a lot of places. Oh – when we did find an ATM and withdraw money, the bank (Danske Bank) had the temerity to charge us an ATM withdrawal fee
  • Relative to London at least, Copenhagen is a dense city. Based on my limited data set (from a few random walks around our apartment in the Amager suburb), the dominant form of housing is the short (3-4 storeyed) apartment building. Some of them are pretty old – the one we stayed in was built in the 1930s, and there was no lift
  • The apartment buildings are also pretty close to each other, and given that this summer in Scandinavia has been especially hot, most people kept windows open, which meant that we could see into each other’s houses. People also didn’t seem to be that concerned about privacy – in the building opposite ours (which is a kind of college hostel, I think) we saw a naked couple making out. Also – I kinda don’t write this kind of stuff on my blog nowadays, but that also told us why people like to sunbathe topless. Contact me directly if you want to know more 😛
  • This liberal attitude doesn’t preclude creeps, though. On the other side of our apartment, we saw an old man sitting in the balcony (yes, a lot of houses in Copenhagen actually have balconies, unlike in London; also windows easily open out wide. Again unlike London) with a pair of binoculars, looking towards the hostel. Go figure!
  • Thanks to the heat, we didn’t walk that much. In a way, we did the trip “in reverse”, looking for comfort food on the day we landed and walking around the old town just before heading to the airport on the last day. All the while, we kept wondering how the city would be in winter
  • Berry absolutely hated the Copenhagen metro (she would start screaming as soon as we got into a train), and for good reason. Despite being built only in the last decade, the thing lacks air conditioning, and with  a part of the line overground, there is a massive greenhouse effect. And unlike the ancient London Metro, there are no windows on the trains either
  • The metro is strange otherwise as well. The structure of the stations means the lift takes far far lesser time than the escalators, which are rather complex. The size of the lifts, however, means that most people have to take the elevator. Also I never figured out where to tap in and out at the metro (didn’t affect us since we had taken a 72 hour tourist pass)
  • We went to the beach on the day we went there. And I did my usual “beach thing” – walked into the water until it was up to my knees. Surprisingly there was no one else doing that – they were all either sunbathing (the sun was pretty intense) or swimming. The city authorities had set up “ghats” on one section of the beach from where people could dive in and swim.

There were plenty more pertinent observations i made through the trip, but the delay in documentation means that I’ve forgotten the rest. Overall, it was an interesting place, though I think we would’ve enjoyed the trip better if not for the heat.

A one in billion trillion event

It seems like capital markets quants have given up on the lognormal model for good, for nobody described Facebook’s stock price drop last Thursday as a “one in a billion trillion event”. For that is the approximate probability of it happening, if we were to assume a lognormal model of the market.

Created using Quantmod package. Data from Yahoo.

Without loss of generality, we will use 90 days trailing data to calculate the mean and volatility of stock returns. As of last Thursday (the day of the fall), the daily mean returns for FB was 0.204%, or an annualised return of 51.5% (as you can see, very impressive!). The daily volatility in the stock (using a 90-day lookback period again) was 1.98%, or an annualised volatility of 31.4% . While it is a tad on the higher side, it is okay considering the annual return of 51.5%.

Now, traditional quantitative finance models have all used a lognormal distribution to represent stock prices, which implies that the distribution of stock price returns is normal. Under such an assumption, the likelihood of a 18.9% drop in the value of Facebook (which is what we saw on Thursday) is very small indeed.

In fact, to be precise, when the stock is returning 0.204% per day with a vol of 1.98% per day, the an 18.9% drop is a 9.7 sigma event. In other words, if the distribution of returns were to be normal, Thursday’s drop is 9 sigmas away from normal. Remember that most quality control systems (admittedly in industrial settings, where faults are indeed governed by a nearly normal distribution) are set for a six sigma limit.

Another way to look at Thursday’s 9.7 sigma event is that again under the normal distribution, the likelihood of seeing this kind of a fall in a day is $math ~10^{-21}$. Or one in a billion trillion. In terms of the number of trading days required for such a fall to arrive at random, it is of the order of a billion billion years, which is an order of magnitude higher than the age of the universe!

In fact, when the 1987 stock market crash (black monday) happened, this was the defence the quants gave for losing their banks’ money – that it was an incredibly improbable event. Now, my reading of the papers nowadays is sketchy, and I mostly consume news via twitter, but I haven’t heard a single such defence from quants who lost money in the Facebook crash. In fact, I haven’t come across too many stories of people who lost money in the crash.

Maybe it’s the power of diversification, and maybe indexing, because of which Facebook is now only a small portion of people’s portfolios. A 20% drop in a stock that is even 10% of your portfolio erodes your wealth by 2%, which is tolerable. What possibly caused traders to jump out of windows on Black Monday was that it was a secular drop in the US market then.

Or maybe it’s that the lessons learnt from Black Monday have been internalised, and included in models 30 years hence (remember that concepts such as volatility smiles and skews, and stochastic volatility, were introduced in the wake of the 1987 crash).

That a 20% drop in one of the five biggest stocks in the United States didn’t make for “human stories” or stories about “one in a billion billion event” is itself a story! Or maybe my reading of the papers is heavily biased!

PostScript

Even after the spectacular drop, the Facebook stock at the time of this update is trading at 168.25, a level last seen exactly 3 months ago – on 26th April, following the last quarter results of Facebook. That barely 3 months’ worth of earnings have been wiped out by such a massive crash suggests that the only people to have lost from the crash are traders who wrote out of the money puts.

Denying people their jokes

When I was in Bangalore earlier this year, I was talking to a “US returned” friend about moving back to India, and he mentioned that one of the reasons he moved back is that he didn’t find very good “culture fit” in the US. “The thing that got to me”, he said, “was that I couldn’t even connect with their jokes”.

Living in the UK, that is not that much of a problem for us, since British humour is pretty good, but this anecdote illustrates how important jokes can be for people.

Regular readers of this blog might know that I get damn irritated by the new-found culture of political correctness. While it is not my intention to hurt anybody or their feelings, I feel that political correctness is being overdone nowadays, and that severely restricts what you can say. And that is a problem for people like me who like to say things without thinking.

Reading the odd news report from the US – about the Trump campaign, for example – it’s clear that I’m not alone in having a problem with this newfound political correctness (oh – I can now expect people to attack me for having views similar to Trump’s voters). In some ways the left-right battle in the US can be described as a battle of political correctness, where the “left” likes to be all correct, and expects that everyone else is also always politically correct and not offensive, while the “right” wants to say things as they are.

Anyway, putting together my friend’s anecdote about not getting American jokes, and the culture of political correctness, I can think of one other, possibly major, reason why people are pissed off about the culture of political correctness – it denies people their jokes.

Most popular jokes – may not be the best ones, mind you, but ones that have high memetic fitness – are cracked at the expense of an “other”. This “other” can sometimes be another person – even a public figure, but at other times, it defines a particular community (though not necessarily a certain community). And the joke consists of laughing at this particular other community (broadly speaking).

So you have short people jokes, and black jokes, and Jewish jokes, and Pakistani jokes, and Muslim jokes, and so on. And then you have sexist jokes.

Now put this in the context of political correctness – most jokes that most people have grown up on are now taboo, because they are offensive to one or the other community, and it is not polite to make fun of these communities. So a whole truckload of jokes that people are grown up on can now not be cracked in polite company. And as even the Soviet Union discovered, that can be oppressive.

I recently read this book called Hammer and Tickle – a History of Communism through Communist Jokes (you can find an extract here). This sub-heading accompanying the extract summarises the Soviet attitude towards jokes:

Communism is the only political system to have created its own international brand of comedy. The standard interpretation is that communist jokes were a form of resistance. But they were also a safety valve for the regimes and jokes were told by the rulers as well as the ruled—even Stalin told some good ones

Now if only the “modern Soviets” were to get this!