Category Archives: fundaes

Good and bad NED

Since I woke up this morning I’ve been “suffering” from a rather heavy bout of NED. But I shouldn’t be saying “suffering”, since I haven’t been suffering at all. I’ve been quite happy all day today, just that I don’t feel like doing anything.

Normally, NED is associated with something negative – when you have no enthu to do something, it implies a feeling of negativity – that you don’t want to do something. Sample this extract from one of my first ever conversations with the person who is now the wife, back from 2007. This was after she had seen me at the Bangalore Landmark Quiz 2007, where we went to the finals and lost. She is not to be confused, of course, with this girl I had seen at the Bangalore Landmark Quiz in 2005 (and whom I’ve never seen subsequently).

Priyanka: Hmmm …
  Tell me about your work!
 me: not now
NED
 Priyanka: okay!
  What about NED?
 me: no enthu i meant
 Priyanka: :P
  Don’t ever use your team name in our conversation again!
me: why not?
  it’s a concept
  not just a team name
 Priyanka: That im not too fond of!
 So your team symbolizes arrogance?
 me: what has arrogance got to do with it?
 Priyanka: Well thats just my take on it. But you tell me why you call yourselves NED?
  QED is so positive!

But what I’ve been going through this morning is not negative at all. I had a wonderful dinner last night (at this place called La Tertulia in Les Corts). It was a very interesting menu, and we finished the dinner with a dessert which was “chocolate 4 ways”. One of the 4 ways was a dark chocolate mousse (it was so awesome I wonder why it’s not more popular – dark chocolate mousse that is). And then I slept wonderfully.

I slept so deeply that when I woke up this morning it took time to recollect who I am and where I am and what I’m doing here and all that. I then dragged myself to a nearby cafe for breakfast, where I had more chocolate – the chocolate croissant there had much more chocolate than a normal chocolate croissant does.

So I’ve been feeling so peaceful and contented and happy that I just don’t feel like doing anything. I have less than three more days in Barcelona on this trip, and I want to go out and explore parts of the city I haven’t seen so far. But then NED is taking over. I’ve been feeling so blissful since this morning that I just don’t feel like going and doing anything! So I’m vegetating, sitting with my laptop and looking at websites on tourist attractions in Barcelona!

I remember being in this state of mind for most of the latter half of 2005. I was on a perennial high, and so high that I would just vegetate and not do anything! Not that it’s a bad thing but the long-term consequences aren’t great!

PS: Going through my blog archives, I find that even in the Bangalore Landmark Quiz in 2007, I had found “a cute chick” sitting in the audience. I didn’t make such a big deal about it, though, and I now don’t remember what she looked like. Going by this and other information I’ve presented in this post I wonder if I’m married to her now.

Good boys don’t get laid

Last night I bought Christian Rudder’s Dataclysm: Who We Are (When We Think No One’s Looking) and started reading it. I’m now about 10% into the book, well past the Kindle sample (I bought the book in entirety after I’d finished the sample). I’m past the first couple of chapters and am now reading a chapter on the contributions of Twitter to linguistics.

Rudder is a co-founder and Chief Data Scientist at the matchmaking website OkCupid, and he draws upon some aggregate data that his website has collected to point out some rather interesting stuff about how people think, view themselves, and the kind of partners they are looking for. One very interesting piece of analysis (which includes a couple of brilliant graphs) shows the preference for the partner’s age among men and women of different ages. So far the book has been absolutely spectacular.

The part of the book that I’ve found most fascinating so far is the one on averages and variances. Rudder looks at the average ratings of a large number of women registered on OkCupid (as rated by men) and tries to correlate their ratings with their success on the site (measured in terms of the number of messages they have received from men on the site wanting to date them). Given the scale of the data that Rudder has access to (rather large), the results are rather stupendous.

What Rudder finds is that for a given level of average rating for a woman, the higher the variance in her rating, the more the number of messages she receives. There are some quirky statistics he quotes (a lot of which has been extracted in this post on Brain Pickings - it was after a friend sent me this post that I got interested and bought the book) which show that women who are consistently rated a 3 (on a scale of 1-5) by men are much less likely to get a message than someone who gets a mix of 1s and 5s.

From this Rudder concludes that negative ratings actually boost a woman’s chances of getting a date – the fact that a number of men have rated someone unattractive means that there is something about her that a lot of men don’t like. This implies that the “competition” for getting her is possibly low, and you might be able to get a “bargain” or an “arbitrage” if you are able to get her.

While this is a plausible and rather palatable thesis, I have an alternate explanation for the same data – I posit that low ratings don’t matter. Some people might have rated you lowly but they don’t matter since they aren’t interested in you. What matters simply is the number of high ratings that you get – people are always on the lookout for spectacular people to date, and by getting a number of 5s, you are showing that you are found rather attractive by a number of people. The ratings of 1 that you have received are an anomaly – messages of rejection from people who don’t want to date you, and all they do is to pull down your average. A better way of comparing women would be to throw away the bottom 20% of all ratings that a woman gets and then calculate the average – and a lot of 3s that Rudder has analysed in his book are likely to come out as something more than that.

Irrespective of the reason for the correlation of variance with attractiveness, though, what is undisputed is that people look for spectacular people to date. If you are a consistent three, irrespective of whether you go by Rudder’s thesis or mine, a large number of men are likely to rate you as being “unspectacular”. When given a choice between dating someone who is a “common minimum program” on most dimensions and someone who has a “spike” (as recruiting management consultants like to put it), you are likely to be more interested in the one that has the spike. What you consider to be a spike might be considered to be a trough by others, which probably leads to an average average rating (but high variance), but it is the spike that attracts you to her.

The problem with the arranged marriage market in India is that it is set up such that people show off their “average” side. As I had argued several years earlier (back when I was in the market), the Indian arranged marriage market is dominated by people who are themselves “common minimum programmes” and who are looking for “common minimum programmes” to marry. Thus, if you want to enter that market yourself, you try to mould yourself as yet another common minimum program and try to hide your spike rather than to enhance it (it is also a result of counterparties sharing notes in the arranged marriage market, something that doesn’t happen in the dating market. If you have a spike that one girl considers to be a trough, her folks are likely to tell people known to them about your trough (which is actually a spike), and that might pull down your average rating).

Most Indian parents bring up  their kids to become good materials in the arranged marriage market, and since it is the unspectacular CMP that succeeds in that market, parents aspire to get their grown up kids to fit such moulds. Any possibly deviant behaviour is quickly dissed, non-standard careers are strongly discouraged, you are encouraged to dress unspectacularly and so on. Taking this together with Rudder’s thesis, what this means is that if you prime yourself for the arranged marriage market, you are losing out on the dating market!

What it takes to be a success in the arranged marriage market (solidity, unspectacularity, CMPness) are directly at odds to what it takes to succeed in the dating market (a spike, quirkiness, character) and so once you have decided to enter one market you automatically become a failure in the other. This thesis also explains why people who break up in their mid/late twenties and who consequently enter the arranged marriage market (possibly since it offers the quickest chance of a rebound) struggle significantly in that market – they have been primed for the dating market which makes them unhot in the arranged marriage market.

One “spike” that I consider to be a part of my character is this blog. Back in the Benjarong conference, I was given sage advice that I do not disclose this blog to prospective brides from the arranged marriage market, thanks to posts like this one and this one. Finally I ended up marrying someone who I met as a consequence of this blog (this post to be precise – she later told me) – who messaged me on Orkut saying she likes my blog, because of which we got talking and so forth. It was the spike – possibly considered abhorrent by many – that was responsible for my finding my wife!

So decide which market you actually want to be in before you prime yourself. “I’ll also casually look at the other market” is never likely to work.

Time Zones

So I’m in Barcelona. Got here late last night, and it’s too early to judge the city – the back of a taxi in the middle of the night speeding through empty streets isn’t the best way to judge a city. Will go out later today and possibly check for myself.

But one thing I know for sure is that Barcelona is in the wrong time zone. I woke up at 7:30  this morning and it was dark. Like Bangalore is dark at 6 in the morning! And though I’m yet to see an evening here myself, I’ve been told that nowadays it gets dark here only at 7:30 pm or something.

The problem here is that most of Europe wants to be on the same time zone – this map explains the whole issue.

Notice the green region here, in which I’ve been for this week so far. Macedonia on the East and Galicia (that portion of Spain just to the north of Portugal) on the west are on the same time zone! And as you can see from the longitudinal lines on this map, that is like a difference of thirty degrees! Or two hours in terms of the earth’s rotation!

While having the same time zone might make sense in terms of coordinating work timings across places in the same economic zone and could thus lead to better trade and commerce and coordination (see this post on Samoa’s move across the International Date Line for the politics of time zone), having a wide degrees of longitudes share the same time is plain absurd, in terms of the usage of “daylight” in these places!

Thus, it will get dark absurdly really in the day in Macedonia, while the sun just doesn’t seem to rise in Galicia! I’m thinking I should go out for a run tomorrow morning, but what time do I go? By the time the sun is up the traffic will be in full swing!

This whole concept of a common European time is no less absurd than the much-maligned concept of Beijing and Xinjiang (at the western edge of China) being on the same time zone! Yet we don’t hear much criticism of Europe’s time zones. Wonder why!

And on top of having such a wide time zones these guys want to impose daylight savings! This is firmly in the “measure with a micrometer, mark with a chalk and cut with an axe” territory!

The big deal about the half-girlfriend

When all of twitter outraged about Chetan Bhagat’s latest masterpiece “half girlfriend” I didn’t know what the big deal was. Given that concepts such as ladder theory, friendzone, GBF (Gay Best Friend), FGB (Foremost Girl Buddy), Goalkeeper Theory and Petromax are all so well documented and accepted, it doesn’t take much of a leap to get to the concept of “half-girlfriend”, as described in the flipkart summary of the book. 

It seemed to me that the people that were outraging were all pseud-types who had hardly been single in their youth and how looked down upon IITs and IITians (for lacking social skills; and guilty as charged on that count). That they were people who subscribed to a certain view of how friendships and romances and relationships should function, and who were incapable of appreciating any alternate mechanisms. I could think of them as the people who got madly outraged when I put out my now classic blog post on petromaxing in business schools nine Deepavalis ago.

But now that the book has already come out (I have no plans to read it since I don’t read fiction. Moreover, considering myself an authority on alternate mechanisms of romantic relationships, and am married to someone who considers herself an authority on conventional mechanisms of romantic relationships, I don’t think I can bear being lectured upon on such topics), and people that I know, or people that know people that I know have started reading it, I realise why the outrage is all about. Consider this sample which I got on one WhatsApp group this morning:

image

 

The first reaction is that the quality of writing is horrible, but then that’s how Chetan Bhagat writes, and that’s how the audience he writes for wants him to write. And then the whole crassness of the implementation of the concept in the book hits me – while the concept of half-girlfriend might be a bloody good one, with wide-ranging implications and mechanism designs, it seems like (based on the above limited sample) the concept as instantiated by Bhagat doesn’t hold a candle to its potential!

I’ve now crossed the floor. I’m now in the camp of the people who believe that Chetan Bhagat’s Half Girlfriend is cringeworthy – and I find it cringeworthy not because of the concept (which I think is rather worthy), but because of the way that Bhagat seems to have butchered it and made it appear crass and “LS”. By writing this book, Bhagat has nipped in the bud what might have been a phenomenal alternative relationship concept. And that is unforgivable.

I don’t normally quote sitcoms, and I don’t normally watch sitcoms, but given we are on the topic of alternative relationships mechanisms, I can’t help but put a short video featuring perhaps the greatest purveyor of alternative relationship mechanisms of all time – Jeffery Murdoch from Coupling. I couldn’t find an extract from the episode, so here is the full first episode of the first season of Coupling in all its glory! May you be able to get rid of your unflushables!

Planning and drawing

Fifteen years ago I had a chemistry teacher called Jayanthi Swaminathan. By all accounts, she was an excellent teachers, and easily one of the best teachers in the school where she taught me. Unfortunately I don’t remember much of what she taught me, the only thing I remember being her constant refrain to “plan and draw” while drawing orbital diagrams (I’ve forgotten what orbital diagrams look like).

Now, I remember wondering why it was that big a deal that she kept mentioning “plan and draw” while drawing or asking us to draw such diagrams. This question answered itself a few days later at my JEE factory, where the chemistry teacher started drawing an orbital diagram which soon threatened to go outside the blackboard. A friend who was sitting next to me, who was also from my school, quipped “this guy clearly didn’t plan and draw”.

The reason I’m mentioning this anecdote here is to talk about how, when faced with a deadline, we start running without realising what we are doing. I can think of a large number of disastrous projects from my academic and professional life (till a couple of years back my academic and professional life was rather disastrous), and looking back, the problem with each of them was that we didn’t “plan and draw”.

I especially remember this rather notorious “application exercise” as part of my marketing course at IIMB (btw, since the wife is doing her MBA now I keep getting reminded of IIMB quite frequently). We had a problem statement. We had a deadline. And we knew that the professor demanded lots of work. And off we went. There was absolutely no coherence to our process. There was a lot of work, a lot of research, but in hindsight, we didn’t know what we were doing! Marketing was my first C at IIMB (and the only C in a “non-fraud” course, the other being in a rather random course called Tracking Creative Boundaries).

Then I remember this project in my second job. “Forecast”, I was told, and asked to code in java, and forecasting I started, in java, without even looking at the data or trying to understand how my forecasts would solve any problem. Six months down, and forecasting going nowhere, I started coding on Excel, looked at the data for the first time, and then realised how hard the forecasting was, and how pointless (in context of the larger problem we were trying to solve).

There are several other instances – see problem, see target, start running – like the proverbial headless chicken (as made famous by former Indian ambassador to the US Ronen Sen). And then realise you are going nowhere, and it is too late to do a fresh start so you put together some shit.

That piece of advice I received in chemistry class 15 years back still resonates today – plan and draw (pun intended if you are in a duel). Its is okay to take a little time up front, knowing that you will progress well-at-a-faster-rate once you get started off. You need to understand that most projects follow the sigmoid curve. That progress in the initial days is slow, and that you should exploit that slowness to plan properly.

Sigmoid Curve

I will end this post with this beautiful video. Ilya Smyrin versus Vishwanathan Anand. Semi-finals of the PCA candidates tournament in 1994 – the tournament that Anand won to face off with Garry Kasparov at the WTC. Anand, playing black, gets only five minutes to play the whole game. Watch how he spends almost a minute on one move early on, but has planned enough to beat Smyrin (Anand only required a draw to progress, given the rules).

Law of conservation of talent

For starters. there is no such law. However, there exists a belief in most people’s minds that everyone is equally talented, and it is only that talent in different people is spread across different dimensions.

It starts when you are in school. If you are not good at maths, people tell you that you must be good at something else – arts perhaps. At that age it is perhaps not a bad thing – to be told when you are a child that you have no talent no way helps you in growing up. You are encouraged at that age to try different things, to find the thing that you’re good at.

And then you grow up. And you grow up with this entrenched belief of the “law of conservation of talent”. When you see someone good at something, you will assume that that is the only thing that they are good at. When you see that someone is bad at something you assume there is something else that they are good at. When you see someone good at more than the average number of things, you think they cannot be real, or that it is unfair, or perhaps that they are just faking it.

I once heard this story of a mother arguing with a schoolteacher that her son did not need remedial classes in maths. When told that the kid was indeed poor at maths, the mother responded “so what? He might be good at art. Why does he have to pass his maths exam for that?” (not sure I’ve paraphrased accurately but this is broadly the picture). While it might be a good idea to tell the kid that there is perhaps something else that he is good at, the mother strongly believing in the same thing is simply not done.

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Back in business school, there was this set of people who claimed to have a deep passion for marketing. Now, these people belonged to two classes. The first were actually passionate about marketing – there was something about marketing that gave them a kick and they wanted to pursue a career that would allow them to generate such kicks. From my conversations with them I know the passion was real, and most of them are doing rather well now in their marketing careers.

And then there was the second type. This was the class of people who had found that they were no good at mathematics and accounting and economics, and thus figured that they had no hope of a career in anything related to any of these fields, and thus found refuge in marketing. Of course they wouldn’t admit that – they would also claim a deep passion in marketing. While that was okay – perhaps marketing gave them their best chance of pursuing a successful career, and thus I don’t grudge their choice – what got my goat was that these people would claim that because they were no good at the “hard sciences” (mathematics, accounting, etc.) they were “creative”. Who says that mathematics and accounting and economics are not creative subjects? And why does anyone who is not good at these subjects (it is impossible, for example, to excel at mathematics unless you are creative) automatically become “creative”? It is the law of conservation of talent, simple.

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For people who are good at more than one thing, law of conservation of talent can bite you in more than one way. Actually there is more to do with this than just law of conservation of talent – people like to analyze other people by putting them in easily understood silos, or categories. And law of conservation of talent helps assign sets of talents to these silos.

Over the last two years, by hook or by crook, I’ve built my reputation to be a great quant. I consult with companies helping them with their quant and data stuff, I write a quant blog and I write a series in Mint on quant in elections. While it is all good and I’m glad that I’ve built a reputation as a quant, the downside is that people refuse to look beyond this and recognize my other skills.

For example, I think I’m rather good at economic reasoning, and I believe that my prowess in that combined with my prowess in working with numbers can deliver massive value to my potential clients. However, when people see me as a quant, it is hard for them to digest that I could also be good with economic reasoning, or behavioural sciences, for example. Thus, when I take on a mandate to do something beyond quant, people find it extremely hard to accept that I dole out non-quant advice too. I blame the law of conservation of talent for this – when people think you are good at quant, they exclude all other skills you might possibly have.

I’ll end this post with another anecdote from  business school. A few months in, things were going well and I had (even back then) built a reputation as someone who was good at quant and mathematics and accounting and economics (in business school, all these fell on the same side of the fence, so the law of conservation of talent allowed you to be good at all these at once). Quizzing was a related activity, so I was “allowed” to be good at that. If I remember right, what perhaps upset people’s calculations was when I represented my class in the inter sectional basketball tournament and didn’t perform badly – based on reactions after the game I think people were a bit thrown off that I could be good at basketball too (especially given that I’ve never looked remotely athletic, and have always been a slow mover). Law of conservation of talent again!

Derivatives trading in football players

I love it! It’s a dream come true!! It’s official!!!

Football clubs have finally wisened up to trading in derivatives on players’ contracts, it is apparent based on the transfer deadline news of yesterday. Alvaro Negredo has been loaned out by Manchester City to Valencia, but at the end of the year Valencia have an obligation to make the deal permanent. The same article mentions Fiorentina taking Micah Richards on loan, also from Manchester City. In this case, however, Fiorentina has the option to make the deal permanent after a year.

In fact, thinking about it, this kind of option trading in football contracts is not all that new. When Brendan Rodgers was initially appointed by Liverpool in 2012, he was given a three year deal, with the club having an option of extending it by a year (the deal has since been revised).

It’s all very interesting. I’ve constantly lamented that some of the great concepts in finance which are well applicable to everyday life are not applied to the extent that is required. Option valuation is one such concept, for example. I wrote to a friend just now asking why I should join a club he is exhorting me to join, given it’s not doing much now. His reply can be condensed to “option value”.

Option valuation is not the only thing. There is the concept of liquidity. A very commonly used concept within financial markets, it is surprisingly absent in general economic literature. For example, in finance it is a well understood concept that the more the number of active market participants the less is the transaction cost (measured as the bid-ask spread). The same concept can be used to analyze markets for taxis, housing, cooks (why a cook costs much more in Rajajinagar where demand is much lower than in Jayanagar), etc. You never see too many economists talking about it, though.

The problem might be that practitioners of financial economics concepts find finance too lucrative to apply their concepts elsewhere, while mainstream or left-leaning economists might find finance (especially complex derivative finance) abhorrent, and thus are loathe to borrow concepts from that (generally speculating)!

In terms of liquidity, though, things seem to be changing. My old friend Sangeet has been practically making a living over the last couple of years evangelizing the concept of liquidity, through his excellent blog on platform economics. Check out his recent post on Uber, for example. Platform economics is nothing but the economics of liquidity. The success of Sangeet’s blog shows that people are finally beginning to take the concept seriously. Still not mainstream economists, though!