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

Scott Alexander, Bryan Caplan and Nitin Pai on fighting crime (feat. Matt Levine)

The basic idea is that coming down hard on a small number of high-profile crimes can have disproportionate effects in terms of curbing crime

It all started with the pseudonymous blogger Scott Alexander, in what seemed like a justification of outrage. Or maybe it started earlier – with a post by Bryan Caplan deploring outrage. Caplan was commenting about the propensity of people to jump on to bandwagons deploring seemingly minor crimes while not caring enough about worse crimes that were not in the public spotlight already. Caplan had then written:

I can understand why people would have strong negative feelings about the greater evil, but not the lesser evil. But I can’t understand why people would have strong negative feelings about the lesser evil, but care little about the greater evil. Or why they would have strong negative feelings about one evil, but yawn in the face of a comparable evil.

Now, while “Alexander”‘s response seems to justify outrage (and I’m no fan of online outrage), he did so with an interesting analogy, on how to curb crime when the police has limited resources. He writes:

[…] the police chief publicly commits that from now on, he’s going to prioritize solving muggings over solving burglaries, even if the burglaries are equally bad or worse. He’ll put an absurd amount of effort into solving even the smallest mugging; this is the hill he’s going to die on.

Suppose you’re a mugger, deciding whether or not to commit the first new mugging in town. If you’re the first guy to violate the no-mugging taboo, every police officer in town is going to be on your case; you’re nearly certain to get caught. You give up and do honest work. Every other mugger in town faces the same choice and makes the same decision. In theory a well-coordinated group of muggers could all start mugging on the same day and break the system, but muggers aren’t really that well-coordinated.

The police chief’s public commitment solves mugging without devoting a single officer’s time to the problem, allowing all officers to concentrate on burglaries. A worst-crime-first enforcement regime has 60 crimes per day and solves 10; a mugging-first regime has 30 crimes per day and solves 10.

And then it is again Caplan’s turn to respond. I’m bad at detecting satire, so I’m not sure if he is being serious (I don’t think he is). But he proposes a “sure fire way to end all crime”:

Step 1: Credibly announce that all levels of government will mercilessly prosecute the firstcrime committed in the nation each day.

Step 2: There is no Step 2.

But then, I’m sure that Nitin Pai is being serious in proposing a similar method to curb the spate of violent crime in India based on WhatsApp forwards. In his piece for the Quint, he writes:

the Home Ministry ought to use its considerable powers to tackle the problem. It’s not hard either. One well-advertised arrest, prosecution and sentencing will deter the cowards that comprise lynch mobs. Three high profile arrests and prosecutions – and see how quickly lynchings stop. The smallest police station in the remotest village can stop lynchings if the local sub-inspector has received clear political messages against it.

Finally, the reason why I figured Caplan’s “solution” is satire is because of this passage from Matt Levine’s excellent Money Stuff newsletter (likely it’s behind a Bloomberg paywall, but it’s free if you subscribe by email). Commenting about high frequency trading, Levine writes:

But the answer in actual U.S. market structure is, come on, there is no such thing as “the same time.” Do you know how many nanoseconds there are every single second? (A billion.) The odds that each of us would hit the “Buy” button at the exact same nanosecond are infinitesimal. So if I put in my order to buy the stock at 10:45:06.543210876 a.m., and you put in yours at 10:45:06.543210987 a.m., then I got there first and I win.

Is this a good answer? It has a simple appeal. It just gets rid of the question “who gets the stock if we put our orders in at the same time?” It replaces an economic question about how to allocate the stock with an empirical question of who got there first.

So the problem with fighting the first crime of the day, or year, or whatever, is that a criminal will know fully well, given a reasonably high enough crime rate, that the probability of his crime being recorded as the first in the year or day or whatever is less than one. And the higher the crime rate, the lower the probability that his crime will be recognised as the first one. And so there is a high chance he can get away with it.

And that is where Nitin’s idea scores. Rather than going after the “first crime”, pick a few crimes arbitrarily and “go after them like hell”. Since in this case most of the people who are forwarding dangerous forwards are “ordinary people”, this will likely shake them up, and we’ll see less of these dangerous forwards.

Cross posted from Pragati Express

Jordan Peterson’s Chapter Eleven

So I read Jordan Peterson’s 12 Rules For Life last month. It took a bit of an effort, and there were a couple of occasions when I did wonder if I should abandon the book. However, my stated aim of reading at least 50 books this year made me soldier on, and in the end I’m glad I finished it. Especially for Chapter Eleven of the book (Do not bother children when they are skateboarding).

Now, this is a long chapter, and Peterson spends considerable time rambling about various controversies he has got involved in over the last few years – such as his stand on political correctness, or his stand on environmentalism (in fact, he has an interesting take on the latter – that environmentalism and climate change worries have an adverse impact on mental health of people, so I didn’t mind reading him on that!).

The chapter is about risk – one thought (which has also been expressed by Nassim Nicholas Taleb in one of his books – which one I can’t remember), is that people have a “natural level of risk”. And if you, for whatever reason, prevent them from taking that risk, they will find other ways to take risk, perhaps indulging in riskier activities.

And in order to explain why we are fundamentally wired to take risk, Peterson talks about gender, and relationships. He talks about friend-zoning, for example:

Girls aren’t attracted to boys who are their friends, even though they might like them, whatever that means. They are attracted to boys who win status contests with other boys.

And winning these status contests involves taking risk! Peterson goes on about relationships, about the crisis in the United States nowadays where women are more educated than men (on average), and then choose to remain single rather than “marrying down”.

This is the bit which really caught my attention – the apparent contradiction between the desire for women to do well, and this desire resulting in their not being able to find partners for themselves. And there are no easy solutions here. The desire for a woman to “marry up” is biological, and nobody can be faulted for being ambitious and wanting to do well for themselves in life.

Now, it is easy to go all ad hominem about this argument, calling Peterson a chauvinist and a traditionalist (as his opponents, mostly on the political left, have done), but the problem he mentions is real, and as the father of a (rather young) daughter, it hit hard for me – obviously I want her to do really well in life and make a mark professionally; but I also want her to propagate my genes, and do a good job of that.

I’m hopeful that as the daughter of Marriage Broker Auntie, she’ll be able to sort things out. But them, she may not want to listen to her mother – at least in these matters!

There were other places where the book was really inspirational. Chapter Twelve had a simple message – that there are times when you go through shit, and a way to get through them is to appreciate the smaller joys of life. In fact, Peterson is at his best when he talks about clinical psychology – which is the topic of his everyday research.

He does a fantastic job in Chapter One as well, and I may not be exaggerating by saying that the chapter was thought-provoking enough to make me analyse how I might have ended up with depression, and then make a conscious effort to avoid those actions that either betrayed depression, or made me feel more depressed. And that makes me get why people contribute so much to him on Patreon. Some of his advice can indeed be life changing.

However, I have no plans to pay him anything more than the £9.99 I paid Amazon for the book. And that is partly because the psychology parts of the book are indeed brilliant, he frequently goes on long rambling thoughts on religion (Christianity in particular, since that is the religion most familiar to him) and philosophy. And in those parts (there’s an especially long sequence between chapters 7 to 10 of the book), the book gets incredibly laboured and boring.

I recommend you read the book. The clinical psychology parts of it are nothing short of brilliant. There’s a lot of religion and psychology you will need to go through as well, and I hope you find more insight there than I managed to!

Here are the notes and highlights I made from the book.

 

The Anti-Two Pizza Rule

So Amazon supposedly has a “two pizza rule” to limit the size of meetings – the convention is that two pizzas should be sufficient to feed all participants in any meeting. While pizza is not necessarily served at most meetings, the rule effectively implies that a meeting can’t have more than seven or eight people.

The point of the rule is not hard to see – a meeting that has too many people will inevitably have people who are not contributing, and it’s a waste of their time. Limiting meeting size also means cutting total time employees spend in meetings, meaning they can get more shit done.

While this is indeed a noble “rule” in a corporate setting, it just doesn’t work for parties. In fact, after having analysed lots of parties I’ve either hosted or attended over the years, and after an especially disastrous party not so long ago (I’ve waited a random amount of time since that party before writing this so as to not offend the hosts), I hereby propose the “anti two pizza rule” for parties.

While five to eight people is a good number for a meeting, having enough people contributing but no deadweight, the range doesn’t do well at all for more social gatherings. The problem is that with this number, it is not clear if the gathering should remain in one group, or split into multiple groups.

When you have a “one pizza party” (5-6 people or less), you have one tight group (no pun intended) and assuming that people will get along with each other, you’re likely to have a good time.

When you have a “three pizza party” (more than 10 people), it’s intuitive for the gathering to breakup into multiple groups, and if things go well, these groups will be fluid and everyone will have a good time. Such a gathering also allows people to test waters with multiple co-attendees and then settle on the mini-group that they’ll end up spending most time with.

A two-pizza party (6-10 people), on the other hand, falls between the two stools. One group means there will be people left out of the conversation without respite. In such a small gathering, it is also not easy to break out of the main group and start your own group (again, seating arrangement matters). And so while some attendees (the “core group”) might end up having fun, the party doesn’t really work for most participating parties.

So, the next time you’re hosting a party, do yourself and your guests a favour and ensure that you don’t end up with between 6 and 10 people at the party. Either less or more is fine!

You might want to read this other post I’ve written on coordinating guest lists for birthday parties.

Generalist and specialist managers

A really long time ago, I’d written this blog post about “comparative advantage” versus “competitive advantage” employees. A competitive advantage employee is better at a particular kind of task or skill compared to the rest of the team, and he is valued for that kind of skill.

A comparative advantage employee, on the other hand, is “dominated” by at least one other person in the team – in the sense that someone else is better than this person at everything required for the job. In that sense, the value that the comparative advantage employee adds is by taking load off his colleagues, and allowing them to do more (and focus on the more productive parts of their jobs).

Thinking about it now, I realise that a similar classification exists from the manager’s perspective as well. And this is broadly correlated with whether the manager manages a “generalist” or a “specialist” team.

A specialist manager manages a team all of whose members work on and excels at one specialist task. This task could come from any part of the organisation – it could be sales or a particular kind of operations, or some financial activity or whatever. The defining feature of this kind of task is that it is usually repetitive and needs to be done in high volumes. Such tasks also offer high “returns to experience”.

The average employee of a specialist team is usually a “comparative advantage” employee. In most cases, such an employee is likely to be “dominated” by the manager, and the value he adds is by taking the load off the manager and allowing him to do more. Over the course of time, he becomes good enough at the job to become a manager himself, and the cycle continues – he will manage a team of people who are mostly inferior to him in the job.

Due to managers dominating direct reports, such teams end up being largely hierarchical, and there can be a tendency for the manager to micro-manage – if you are better at the task than the person actually doing it, you can do worse than giving specific instructions.

Generalist managers, on the other hand, manage teams that involve at least a few competitive advantage employees. What this implies is that there is a set of people who are better than the manager at certain parts of the business. The manager’s role in such a team is more of a facilitator, in terms of bringing the team together and coordinating in a way that they can maximise the team’s effectiveness.

Generalist managers seldom micromanage, since usually their team members know better (literally). They are also usually open-minded, since extracting full value from the team means recognising each member’s strengths (and consequently their own weaknesses). They learn the art of asking questions and verifying insights and work of the team in a cheap manner (remember from complexity theory that the complexity of verifying a solution can be much lower than the complexity of finding a solution).

Regular readers of the blog might have anticipated this paragraph – the trouble comes when a generalist manager has to manage a specialist team or the other way round.

A generalist manager managing a specialist team may not offer as much as he can to the team based on his experience. He might be too hands-off and team members used to more handholding and direction might feel lost. And so on.

A specialist manager managing a generalist team can be more damaging – not appreciating that some members might know more about some parts of the business might limit the performance of the team (since what the team can do is limited by what the manager knows). Also too much micromanagement on employees who know better about some parts of the business than the manager can result in disillusionment and ultimately backfire on the manager.

I wonder if this has something to do with the Peter Principle!

Shorting private markets

This is one of those things I’ll file in the “why didn’t I think of it before?” category.

The basic idea is that if you think there is a startup bubble, and that private companies (as a class) are being overvalued by investors, there exists a rather simple way to short the market – basically start your own company and sell equity to these investors!

The basic problem with shorting a market such as those for shares of privately held startups is that the shares are owned by a small set of investors, none of whom are likely to lend you stock that you can sell and buy back later. More importantly, markets in privately held stock can be incredibly illiquid, and it may take a long time indeed before the stocks move to what you think is their “right” level.

So what do you do? I’ll simply let the always excellent Matt Levine to provide the answer here:

We have talked a few times in the past about the difficulty of shorting unicorns: Investors can buy shares in the big venture-backed private tech companies, but they can’t sell those shares short, which arguably leads to those shares being overvalued as enthusiasts join in but skeptics are excluded. As I once said, though, “the way to profit from a bubble is by selling into it, and that people sometimes focus too narrowly on short-selling into it”: If you think that unicorns as a category are overvalued, the way to profit from that is not so much by shorting Uber as it is by founding your own dumb startup, raising a lot of money from overenthusiastic venture capitalists, paying yourself a big salary, and walking away whistling when the bubble collapses.

Same here! If you are skeptical of the ICO trend, the right thing to do is not to short all the new tokens that are coming to market. It’s to build your own token, do an initial coin offering, and walk off with the proceeds. For the sake of your own conscience, you can just go ahead and say that that’s what you’re doing, right in the ICO white paper. No one seems to mind.

Seriously! Why didn’t I think of this?

Giving up your seat

So the wife has done a kind of sociological analysis of who offers seats to baby-carrying people on the London Metro. Based on the data points she’s collected over the last three months we’ve been in London, she concludes that people who are most willing to give up their seats are those who have been beneficiaries of similar actions in the past – basically a social capital kind of argument.

I don’t have such an overarching thesis on who gives up seats, but one major observation based on my collection of data points. Most of my train rides with Berry have been between Ealing Broadway, the station closest to where we live, and St. Paul’s in Central London, close to Berry’s nursery and Pinky’s office.

The Central Line, which I take for this journey, is typically crowded in both directions, since most of my trips are during peak office commute hours. However, my experience in terms of people offering me a seat (I’ve never asked for it) has been very different in terms of where I’ve boarded.

What I’ve found is that people have been far more willing to give up their seats when I’ve boarded at St. Paul’s (or anywhere else in the city), than at Ealing. In fact, in about 30-40 train rides originating in Ealing when I’ve been carrying Berry, I only recall one occasion when someone has offered me their seat. On the other hand, it’s rare for me to board at St Paul’s and NOT have someone offer me their seat.

I have one major hypothesis on why it happens – on what goes into getting a seat, and a sense of entitlement. Essentially, Ealing Broadway is a terminus for the tube, and thus an originating station for journeys into town. And I’ve seen people work hard in order to get a seat.

So you have people who leave multiple trains in order to find one where they can find a seat. They get to the station well in advance of a train leaving so that they can get a place to sit. And having invested so much effort in occupying the seat, they feel entitled to the seat, and don’t want to give it up so easily.

On the other hand, St. Paul’s is right in the middle of the Central Line, and people who have seats when the train arrives there are typically those who got them somewhere along the way. Now, while there exist strategies to figure out where a seat might fall empty, and grabbing it, finding a seat in a non-empty train after you’ve boarded is more a matter of luck.

So if you think you got your seat by sheer luck, you feel less entitled to it, and are more than happy to give it up for someone who might have need it more!

Feel free to draw your own analogies!