Mata Amrita Index needs a new dimension

Some of the hugs look too flimsy for a 10-year reunion

As anyone here who has tried to construct an index will know, any index, however well constructed, will end up being way too simplistic, and abstract away way too much information. This is especially true of indices that are constructed as weighted averages of different quantities, but even indices with more “fundamental” formulae are not immune to this effect.

Some eight years ago, I constructed an index called the “Mata Amrita Index“, which my good friend Sangeet describes as the “best ever probabilistic measure” he’s come across. It’s exactly that – a probabilistic measure.

Quoting from the blog post where I introduced the concept:

The Mata Amrita Index for a person is defined as the likelihood of him or her hugging the next random person he/she meets.

Actually over time I’ve come to prefer what I’d called the “bilateral MAI”, which is the probability that a given pair of people will hug each other the next time they meet. The metric has proved more useful than I had initially imagined, and has in a way helped me track how some friendships are going. So far so good.

But it has a major shortcoming – it utterly fails to capture quality. There are some people, for example, who I don’t hug every time I meet them, but on the random occasions when we do hug, it turns out to be incredibly affectionate and warm. And there are some other people, with whom my bilateral MAI tends to 1, but where the hug is more of a ritual than a genuine expression of affection. We hug every time, but the impact of the hug on how I feel is negligible.

In fact, I’d written about this a couple years back, that when the MAI becomes too high, the quality and the impact of the hug inevitably suffers. Apart from the ritualness of the hug robbing it of the warmth, a high MAI also results in lack of information flow – you know you hug as a rule, so the hug conveys no information.

So, now I want to extend the MAI (all good index builders do this – try to extend it when they realise its inadequacies) to incorporate quality as well. And like any index extension, the problem is to be able to achieve this without making the index too unwieldy. Right now, the index is a probabilistic measure, but not that hard to understand. It’s also easy to adjust your bilateral MAI with someone every time you meet.

How do you think I can suitably modify the MAI to bring in the quality aspect? One measure I can think of is “what proportion of the time when you meet do you hug, and it makes you feel real good?”. As you can see it’s already complicated, but this brings in the quality component. The ritual hug with the high MAI counterparty makes no impact on you, so your modified MAI with that person will be low.

The problem with this Modified MAI (MMAI) is that it is automatically capped by the MAI, given the “AND” condition in its definition. So a person you hug infrequently, but feel incredibly good after each such hug, will have a low MMAI with you – it’s more to do with the low frequency of hugging than the quality.

If you can think of a more elegant measure, do let me know! Whoever said building an index is a simple process!

Letters to my Berry #6

So you turn half today. And I’ll let you write this letter yourself, since over the last week or two you’ve been trying to get to the computer and operate it.

So long, bangalore. We're off to wash our arses in the Thames.

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OK I gave you two minutes, but unlike what you’ve been doing over the last one week, you didn’t try to get to the computer today, so I’ll write this myself.

This last month has been one of big change, as you made your first forin trip. It was a mostly peaceful flight from Bangalore to London, via Dubai. You hardly cried, though you kept screaming in excitement through the flight, and through the layover in Dubai. Whenever someone smiled at you, you’d attempt to talk to them. And it would get a bit embarrassing at times!

Anyway, we got to London, and we had to put you in day care. The first day when I left you at the day care for a one-hour settling in session, I cried. Amma was fine, but I had tears in my eyes, and I don’t know why! And after two settling-in sessions, you started “real day care”, and on the first day it seems you were rather upset, and refused to eat.

So I had to bring you home midway through the day and feed you Cerelac. It was a similar story on the second day – you weren’t upset, but you still wouldn’t eat, so I had to get you home and give you Cerelac. It was only on the third day, that is today, that you finally at ate at the nursery!

The biggest challenge for us after bringing you to London has been to keep you warm, since you refuse to get the concept of warm clothes, and refuse to wear them. And so for the last 10 days you’ve not only got a cold and cough for yourself, but you’ve also transmitted it to both Amma and me 🙁

London has also meant that you’ve started travelling by pram regularly, though after one attempt we stopped taking it on the Underground since it was difficult to negotiate steps. When we have to take the train, I thus carry you in your baby carrier, like a baby Kangaroo!

In the last one month, you’ve also made significant motor improvements. You still can’t sit, but you try to stand now! It seems like you’ve taken after Amma and me in terms of wanting to take the easy way out – you want to stand without working hard for it, and sometimes scream until we hold you up in a standing position.

Your babbles have also increased this month, and we think you said “Appa” a few times in the last one week in the course of the last one week! Maybe I like to imagine that you say it, and maybe you actually call me that! It’s too early to say!

Finally, one note of disappointment – on Monday when you were all crying and upset and refusing to eat at the nursery, I rushed to pick you up, and hoped to see you be very happy when you saw me. As it turned out, you gave me a “K dear, you are here” kind of expression and just came home! Yesterday you actually cried when I came to pick you up!

It seems like you’re becoming a teenager already! And you’re just half!!

Slavedriver sandwich

Something that happened at home earlier today reminded me of my very first full-time job, which I had ended up literally running away from barely two months after I’d started. I like to call this the “slavedriver sandwich”.

The basic problem is this – you need to get someone you normally have no influence over to do something for you, and this something is contrary to what this person needs to do. You somehow need to convince this person to do this – effectively, you need to “slave-drive” her so that what you want done is done.

The problem is that you aren’t even sure that you want this thing to be done. The only reason you are slavedriving the person you’re slavedriving is because someone else (let’s call this person “the boss”) is slavedriving you, and trying to make you get this person to do this.

The boss is very clear on what she wants done, and how she wants it done, but for reasons of her own choosing, doesn’t want to get it done directly. She wants you to do it. And you aren’t convinced that what she needs to be done is the right thing to be done – you agree with the basic principles but think there’s a better way to do it than slavedriving the person you normally have no control over.

Like I remember this time from 2006 when the then boss wanted some data, and I had to convince this client to give us the data. It seemed tractable that the data would be available in a day, and in CSV format. But the boss wanted it the same day, and in Excel format (yeah, I worked for people who considered conversion from CSV to Excel nontrivial). And so I was slavedriven, so that I could slave drive this client, and get the data to the boss in time (never mind that it was I who would ultimately use the data, and I actually preferred CSV!).

In other words, then and now, I was stuck in a “slavedriver sandwich”. Someone slavedriving you to slavedrive someone, and you are wondering what role you have to do in the whole business in the first place. And then you decide that you have nothing to do there, and you should just eliminate the middleman, which is yourself.

In that sense, the problem of 2006 was easy – eliminating the middleman simply meant resigning my job. The current circumstances (which I can’t particularly describe here) doesn’t allow for so elegant a solution! So it goes.

British retail strategy

Right under where I currently live, there’s a Waitrose. Next door, there’s a Tesco Express. And a little down the road, there’s a Sainsbury Local. The day I got here, a week ago, I drove myself nuts trying to figure out which of these stores is the cheapest.

And after one week of random primary research, I think I have the classic economist’s answer – it depends. On what I’m looking to buy that is.

Each of these chains has built a reputation of sourcing excellent products and selling them to customers at a cheap price. The only thing is that each of them does it on a different kind of products. So there is a set of products that Tesco is easily the cheapest at, but the chain compensates for this by selling other products for a higher rate. It is similar with the other chains.

Some research I read a year or two back showed that while Amazon was easily the cheapest retailer in the US for big-ticket purchases, their prices for other less price-sensitive items was not as competitive. In other words, Amazon let go of the margin on high-publicity goods, and made up for it on goods where customers didn’t notice as much.

It’s the same with British retailers – each of their claims of being the cheapest is true, but that applies only to a section of the products. And by sacrificing the margin on these products, they manage to attract a sufficient number of customers to their stores, who also buy other stuff that is not as competitively priced!

Now, it is possible for an intelligent customer to conduct deep research and figure out the cheapest shop for each stock keeping unit. The lack of quick patterns of who is cheap for what, however, means that the cost of such research and visiting multiple shops usually far exceeds the benefits of buying everything from the cheapest source.

I must mention that this approach may not apply in online retail where at the point of browsing a customer is not “stuck” to any particular shop (unlike in offline where a customer is at a physical store location while browsing).

Variable pricing need not be boring at all!

Why Brits talk so much about the weather

One stereotype about British people is that they are always talking about the weather. In the absence of any other topic to talk about, they get back down to talking about the weather.

Having lived here for a day after a half after moving here yesterday, I can offer one explanation about why Brits talk so much about the weather – the high information content. In the last day and half, the weather here has been so volatile that the information content in statements about the weather can be rather high.

Most places in the world have rather predictable weather. Delhi has hot summers and cold winters. It almost always rains in the tropical rain forests. It almost always rains in Mumbai during the monsoon. And so on. And when the weather is predictable, the information content in describing it is rather low.

For example, if there is a 90% chance that it will rain in Mumbai one monsoon day, a statement on the presence or absence of rain contains only 0.47 bits of information/entropy (-0.9 log 0.9 – 0.1 log 0.1). If the probability that a summer day in Delhi will be sunny is 99%, then the information content in talking about the weather is just 0.08 bits.

The thing with London weather, based on my day and half of observation, is that it is wildly volatile. This afternoon, for example, there was a hailstorm. And only a couple of minutes later there was bright sunshine. And then there was another hailstorm. I can see heavy rain from my window as I write this now.

Crow and fox getting married in London

A post shared by Karthik S (@skthewimp) on

So given how crazy and volatile the weather in London is, the information content in talking about the weather is rather high. As I write, there’s sunshine streaming through my window, and heavy rain outside. And I’m chatting with a friend who lives not very far from here, and whatever I tell her about the weather here is “information” to her, since it’s not the same there.

It’s this craziness and high volatility in weather in Britain that makes it worth talking about. The information content in a statement about the weather is always high. And this is not the case elsewhere in the world. And so people elsewhere get annoyed by Brits talking about the weather.

PS: What does it tell you that I’m blogging about the weather a day and half after landing in Britain?


So we moved to London yesterday. The wife has got a job here, and Berry and I have tagged along as “dependants”. My dependant visa allows me to work here, though it has been mentioned rather complicated as “Restricted no doctor/dentist training no sport”. Basically I can do everything else. The five-month old’s visa stamp simply says “work permitted”! Go figure.

This is not the first time I’m living in London. I’d very briefly (for the length of a mid-MBA internship) lived here twelve years ago, and as luck would have it, our cab from the airport to the temporary apartment passed under that office on the way (that employer has moved offices since, I’ve been told).

London welcomed us with some fabulous weather yesterday – I actually considered getting my sunglasses out! Wasn’t too cold (one jacket was enough) and mostly didn’t rain, so despite being sleepless and tired from our journey, we ended up setting out to put beats and meet some friends. While we were waiting at the bus stop, though, it did drizzle a bit, making me reconsider whether we should really go out. Then, my wife reminded me that we weren’t in Bangalore any more, and poor weather is no excuse to put NED.

We took Berry in her stroller yesterday. Walking around with it was peaceful – for the large part, footpaths exist, and though not as smooth as Hema Malini’s cheeks, there are no problems at all with taking the stroller around. It’s not a problem on buses either, but the tube is a real bitch. Most stations don’t have elevators, and you need to carry the strollers up or down stairs. And we haven’t yet figured how to hold it while climbing down escalators, which left little Berry rather scared as she got on for her first tube ride. Henceforth, when a tube ride is involved, we’ll most likely put her in her baby carrier rather than the stroller!

Keeping her warm is a challenge, though. As a good South Indian kid, she refuses to wear any warm clothes and we need to endure significant screaming when we make her wear a warm jacket. We also need to figure out a strategy for the rain. We’ve got this plastic cover for her stroller, but a different strategy is required when carrying her in her carrier (the carrier is also hard to wear when wearing a coat of any kind).

Finally, a note about coffee. Firstly, it isn’t that expensive – a typical coffee at Costa is around £2.25 (I’m still conditioned to thinking GBP/EUR = 1, though I realise I need to add 15% to convert pound prices to Euros, which I’m used to). But the coffee at Costa itself was disappointing.

They promised a Cortado, which is a Spanish concept where very little milk is added to a shot of espresso, giving a rather strong coffee. Costa advertised at their door that they served some three kinds of Cortado (a travesty in itself). And the cortado itself had way too much milk for it to be called a Cortado!

I hope to continue to make pertinent observations, unless I join an employer where continued blogging might seem too dangerous (I’ve worked for those kinds of employers in the past but don’t want to take chances again)! And you might remember that this blog “took off” in terms of the number of posts the first time I was in Britain!

Upside down pricing in payment services

Some Indian banks charge for services that are cheap to execute, and offer for free expensive services 

Last week I enddd up spending some time waiting at a teller counter at a bank. This was due to some mess up with a cheque I had received. During my time at the teller counter I had the opportunity to observe other people at the same counter. 

There were a few people depositing cash into their business accounts. A few others were depositing cheques. What caught my attention, however, was this guy from a nearby business who came to deposit a large number of cheques. 

He had an entire book of challan leaves (banks regularly issue those to business customers), to each of which was stapled a cheque. As I watched, the teller would put a seal on a cheque, its corresponding challan and another seal on the counter foil. This process was repeated for each challan in the book. 

And this process was only to accept the cheques. Later on there would’ve been further effort on behalf of the bank to cash the cheque and actually execute the fund transfer. And then add in the effort of writing out all those cheques, writing out all those challans (they’re hard to print) and then take them to the bank. 

It was a rather laborious process all round, on behalf of all parties involved. Yet, banks mostly execute this function for free for most customers. 

On the other hand, they charge for account to account transfers, and the amount isn’t particularly small. Like this morning I was moving money from one account  to another, a process that took me a minute and that wouldn’t have cost the bank any human minutes. And icici bank decided to charge me for it. 

It seems like banks have their pricing and the valuation of their own effort all wrong. For electronic payments the cost is direct – what the banks have to pay the payments systems and any per use software costs. And this makes it easier to value and charge for such services. 

The effort in transacting through cheques, on the other hand, is not directly measurable (though by no means an impossible exercise). There are back offices that do the job whose cost is easy to measure, but several employees who also do other things spend time processing cheques. And this difficulty in measurement means that most banks just don’t charge for cheques. 

Around 2000 when foreign banks expanded their branch networks in india there was an attempt to charge customers for walking into the branch – customers were encouraged to do their business at ATMs or over the phone, instead. This was in recognition of the costs of customer walkins into branches.  

Banks would do well now to do something similar for cheques as well – despite the cheque truncation system (CTS), the effort involved in organising payments through cheques is massive for the bank. 

There is only one upside to cheques – and this is a downside for customers. Cheques result in money going into limbo. The payer doesn’t know when the funds will leave his account and can’t use the funds. The recipient can’t use it either until he has got it. So for the duration that the amount is “in transit” (and this duration can vary significantly) banks can happily use these funds without them being called. 

It’s possible that the benefit to the banks from this float more than compensates for the pain of processing cheques. If not, cheques have no business existing any more!