Baskets of deplorables

OK this is a political post. You might infer something about my political leanings from this, and you might classify me as a “deplorable”, but I run that risk.

I don’t like the way our politics is turning out nowadays. You are free to interpret “our” and “nowadays” in whatever way you want. What I don’t like is that people seem to wear their political beliefs on their sleeve, and think it is okay to shame and cut contact with people who don’t share their beliefs.

I don’t know when exactly this started – but it was surely sometime between 2013 and 2016. The culmination of this attitude was US Presidential candidate Hillary Clinton describing her opponent Donald Trump’s supporters as a “basket of deplorables“. And that attitude seems to be being taken forward by people of various political dispensations three years on.

I long for the days when people treated their political opinions like their private parts – stuff that existed and was put to good use when required, but not put on display. Nowadays, though, trawl through any social media platform, and you find people making political statements all the time. If you aren’t in a filter bubble, you will surely be seeing flamewars. And a difference in political opinion is no longer just a difference in opinion – you consider someone with differing views as despicable.

I’m friends with a lot of people who hold strong political opinions, and whose opinions might differ from mine. I don’t care about it – since there is plenty to them otherwise that makes them valuable to me, and so I continue to hang out with them.

Some people, on the other hand, don’t think like this. According to them, some political positions are so horrible that anyone who endorses that position is necessarily a horrible person, and not worth engaging with. For them, their political axis is fundamentally uni-dimensional – the world doesn’t exist outside of the dimension that they consider to be a dealbreaker.

As a consequence, any stand endorsed by a politician who endorses their dealbreaker position also becomes a dealbreaker. Political commentary and evaluation is based on who takes the stand, rather than the stand itself. Everything is seen through a political lens, and anyone who disagrees with them is worthy of ridicule.

It is sad that politics has taken over our lives so much, and people consider other people’s political opinions as such an important part of their lives. And the way social media and feedback loops work, I see no way out of this.

Mass marketing and objective journalism

This is a fascinating essay by Antonio García Martinez on the history and future of journalism (possibly paywalled). The money paragraph is this:

The bigger switch happened as a national market for consumer goods opened after the Civil War, when purveyors like department stores wanted to reach large urban audiences. Newspapers responded by increasing the number of ads relative to content, and switched to models that went light on the political partisanship in the interest of expanding circulation. This move was driven not exclusively by lofty ideals but also by mercenary greed. And it worked. Newspapers used to make lots of money. Mountains of money.

Basically, the move to objective journalism came in the late 1800s when advertisers such as Macy’s wanted to take out full page ads, and wanted to do so in newspapers that served the largest sections of the market. And when a newspaper had to reach a large section of the market, it inevitably had to tone down the partisanship, and become more objective.

Over the last decade, we have been witnessing (across the world) the decline of objective media. All media is “#paidmedia” based on which side of the political spectrum you stand on. There aren’t that many truly objective papers around, and social media is bombarded left and right by extremely politicised reporting that goes as “news”.

It is perhaps no coincidence that this period has coincided with a time when print circulation has been dropping steadily (in the developed world at least), and where online advertising can be highly targeted.

In theory, mass marketing is inefficient. When you pay to put up a hoarding somewhere, you’re possibly paying a small amount for each person who sees the hoarding, but not all of them might find it interesting. Consequently, this reflects in a depressed per-person price of the hoarding implying the owner of that real estate can’t make as much as she could if the hoarding were to be more “targeted”.

When you can target your advertisements more precisely, everybody wins. You as the marketer know that your advertisement is only being shown to your intended audience. The owner of the real estate where you put your advertisement can thus charge you more for your advertisement. Even the customer will be less pained by the advertisement if it is highly relevant to her.

Another way of seeing it is – an advertisement shown to a customer who doesn’t want to see it is wasted. The monetary cost of this waste are borne by the owner of the real estate and the advertiser, and the non-monetary cost is borne by the customer (being forced to see something she didn’t want to see). And so one of the biggest technological problems of today is on how we can target advertisements better so that we can minimise such costs – and in the last decade and half, we’ve made significant progress on that front.

The problem with greater efficiency, however, is that it comes with the side-effect of biased media. When Nike knows that it can precisely target an advertisement at American leftwingers, it makes an ad with Colin Kaepernick and shows them to American leftwingers to sell them more shoes.

This doesn’t however, mean that Nike only sells to left-wingers. The same company can make another advertisement targeted precisely at right-wingers and use it to sell shoes to them!

So now that you can make left-wing and right-wing ads, and you have the ability to target them, you want to cut the waste and place the ads so that you can target as best as possible. In other words, you want to place your left-wing ads in places that only left-wingers want to see, and right-wing ads only in places that right-wingers will see. And so you prefer to advertise in CNN and Fox rather than in a hypothetical “broad market” media outlet.

And the reason you created the politically charged ads in the first place was because there were some outlets (Facebook, for example) where you could precisely target people based on their political orientation. And so you see the vicious cycle – that you can target in some places means you want other places where you can target and that creates demand for more polarised media.

It was the opposite cycle that took effect in the late 1800s and early 1900s. There was no way brands could target (also, when you make physical advertisements, with 1900s technology, each advertisement is costly and you don’t want to make one per segment) too effectively, and so they went mass market in their communication.

And this meant advertising in the outlets that could get them the maximum number of eyeballs. When you can’t discriminate between a “right” and a “wrong” eyeball, you pay based on the number of eyeballs. And the way for media organisations to grow then was to cater to everyone. Which meant less less bias and more objectivity and more “features”.

Sadly that cycle is now behind us.

Volatility and price differentiation

In a rather surreal interview to the rather fantastically named Aurangzeb Naqshbandi and Hindustan Times editor Sukumar Ranganathan, Congress president Rahul Gandhi has made a stunning statement in the context of agricultural markets:

Markets are far more volatile in terms of rapid price differentiation, than they were before.

I find this sentence rather surreal, in that I don’t really know what Gandhi is talking about. As a markets guy and a quant, there is only one way in which I interpret this statement.

It is about how market volatility is calculated. While it might be standard to use standard deviation as a measure of market volatility, quants prefer to use a method called “quadratic variation” (when the market price movement follows a random walk, quadratic variation equals the variance).

To calculate quadratic variation, you take market returns at a succession of very small intervals, square these returns and then sum them up. And thinking about it mathematically, calculating returns at short time intervals is similar to taking the derivative of the price, and you can call it “price differentiation”.

So when Gandhi says “markets are far more volatile in terms of rapid price differentiation”, he is basically quoting the formula for quadratic variation – when the derivative of the price time series goes up, the market volatility increases by definition.

This is what you have, ladies and gentlemen – the president of the principal opposition party in India has quoted the formula that quants use for market volatility in an interview with a popular newspaper! Yet, some people continue to call him “pappu”.

Government and markets

It’s been a while since I wrote a post like this one – I remember a decade ago, I used to flood my blog with such stuff.

In any case, last week, in response to the “10yearchallenge” meme, Nitin Pai of Takshashila wrote an Op-Ed in the Print on how India has changed in 10 years. While he admits that the country has grown and the lives of people has improved in some ways, the article leads with the headline that India should be be ashamed of what has happened in the last 10 years. This paragraph is possibly representative of the article:

While individual Indians seem to have done well over the past decade, India is more or less where it was. Worse, politics and policy priorities seem to have regressed to 1989.

Reading through the article (I encourage you to read it, it’s good – never mind the headline), I found a clear and distinct pattern in the kind of things where things have gotten better in India and where things have gotten worse.

Everything where markets function, or where the government doesn’t have much of a role, things have changed significantly for the better. Everything where the government has an outsized role, either because it is the government’s job or the sector is overregulated, things have gotten worse. So our cities have gotten more crowded. Infrastructure has gotten worse. Law and order has regressed. And this has had little to do with the party in power – whatever the government touched has regressed.

Looking at it in another way, Indians seem to be highly capable of making their lives better by coordinating using the invisible hand of the market. However, we seem incapable of making our lives better by coordinating using the government process.

From this perspective, there is one easy way to progress – basically reduce the government. Get rid of the overregulations. Get the government out of things where it shouldn’t be. Give a freer hand to the market.

Unfortunately, ahead of general elections this year, we see most parties taking a highly statist line. This is a real tragedy.

When Jayalalithaa Ruined My Birthday

As the Babri Masjid was being brought down, I celebrated.

I had come up with this line a few years ago, and said that whenever I write my autobiography, I’m going to begin it this way. And while I’m not as certain nowadays that I’ll write an autobiography, in case I write one I’ll still use this line to open it.

This line could also be used in a logic class, the kind of lectures I delivered fairly frequently between 2012 and 2016, illustrating logical fallacies. For this one might induce the correlation-is-causation fallacy in your head, and you might think that if I celebrated while the Babri Masjid was being brought down, I must be a Muslim-hating bigot. So here is what will be the second line in my autobiography, whenever I write it:

It was my tenth birthday, and there was a party at home.

There is something special about your birthday falling on Sundays. The first time that happened, in 1987, was also the first time that my parents organised a birthday party for me. I’m too young to know how many people came, but there were a lot of people filling our house that evening. We had professional catering and I got so many gifts that I got to using some of them (such as Enid Blyton story books) several years later.

Maybe I read some of the books around the time my birthday fell on a Sunday once again, which happened in 1992. That also happened to be the next time I had a party at home, and this one was different, with less than ten guests, with all of them being my classmates in school.

My mother had done the cooking that day. We played cricket and hide-and-seek, and some other party games (which I don’t remember now). And then later that evening, news on television told us that the Babri Masjid had been brought down that day and riots had started.


The only thing that registered in my head then was that there would be no school the next day, and I didn’t know when I would distribute the chocolates I had bought for the customary school distribution.

The long term impact, though, was that my birthday got inextricably linked to the Babri Masjid demolition.

So over the years, when people have searched for an anchor to remember my birthday, they’ve inevitably used news of the anniversary of the Babri Masjid demolition. This morning, for example, I got a message that said “Happy birthday. Babri Masjid article came up somewhere 🙂 “. Another friend messaged me to remind me of what I’ve written to being this post.

A couple of years back, a friend messaged me later in December apologising for missing my birthday, adding that he had missed it because there wasn’t much news about the Babri Masjid anniversary. This must have been in 2016, which was among my worst birthdays because beyond close family, hardly anyone wished me that day.

And I blame former Tamil Nadu chief minister Jayalalithaa for that, for after a rather prolonged illness, she had passed away the previous night. And that meant that the news waves in India on the 6th of December 2016 were filled with news of Jayalalithaa’s demise, with any Babri Masjid anniversary stuff being pushed to the backburner.

The situation got rectified last year with it being the 25th anniversary of the Babri Masjid demolition, so the number of people who wished me went back to “normal levels”. And perhaps with elections being round the corner again, and without an important death to distract the news, I’m guessing that Babri Masjid has made enough news today for enough people to remember my birthday!

I must also take this opportunity to thank certain entities who unfailingly wish me on every birthday.

Oh, and I discovered this morning that today is 6/12/18. And my wife helpfully added that I turned 36 today.

Now I feel really old!

The market for gay relationships

The market for homosexual relationships is an interesting one from the analysis perspective. Like the market for heterosexual relationships, it is a matching market (we are in a relationship if and only if I like you AND you like me). Unlike heterosexual relationships, it is not a “bipartite” market, since both the nominal “buyer” and the “seller” in a transaction will come out (no pun intended) of the same pool (gay people of a particular sex).

The other factor that makes this market interesting (purely from an analysis perspective – it’s bad for the participants) is that there is disapproval at various levels for homosexual relationships. Until today, for example, it was downright criminal to indulge in gay sex in India. Even where it is legal, there is massive social and religious opposition to such relationships (think of the shootout at the gay bar in Florida, for example).

Social disapproval has meant that gays sometimes try to keep their sexuality under wraps. Historically, it has been a common practice for gays to enter into heterosexual marriages, and pursue relationships outside. In fact, there is nothing historical about this – read this excellent piece by Srinath Perur on gays in contemporary hinterland Karnataka, for whom Mohanaswamy, a collection of short stories with a gay protagonist, was a kind of life changer.

Organising a market for an item that is illegal, or otherwise frowned upon, is difficult, since people don’t want to be found participating in it. If I were a gay man looking for a partner, for example, I couldn’t go around openly looking for one if I didn’t want my family to know that I’m gay. So the first task would have been discovery – “safe spaces” where I would be happy to expose my sexuality, and where I could also meet potential partners.

When demand and supply exist, buyers and sellers will find a way to meet each other, though often at high cost. One such “way” for homosexual people has been the gay bar. Though not explicitly advertised, such bars act as focal points (I have a chapter on focal points in my book) for gay people.

They also act as an “anti focal point” (a topic I HAVEN’T covered in the book, for a change!) for heterosexual people who want to stay away because they don’t want to be hit on by gay people (thus reducing market congestion – another topic I cover in my book). Similarly other cultural activities have acted as focal points for gay people to get together and meet each other.

Like in heterosexual relationship markets (this is the link to a sample chapter from the book), the advent of dating apps has revolutionised gay dating, as apps such as Tinder and Grindr have provided safe spaces where gays can look for relationships “from the comfort of their homes”. There are studies that show that Grindr has changed the nature of relationships among gay men, and how these apps have “saved lives” in places such as India where homosexuality was criminal until today.

Today’s Indian Supreme Court ruling will have a massive positive impact on gay relationships in India. For starters, there are still millions of people in the closet – while apps such as Tinder and Grindr allowed more people to participate in these markets (since this could be done without really “coming out”), that gay sex was a criminal act would have led to some people to err on the side of caution (and deprive themselves of the chance of a relationship). Gay people who were worried about criminality, but not that much about social sanctions, will now be more willing to come out, leading to an increase in the market size.

Barring congestion (when “bad counterparties” prevent you from finding “good counterparties”),  the likelihood of finding a match in a market is generally proportional to the number of possible counterparties. Since gay relationship markets are not bipartite, we can say that the likelihood of finding a good match varies by the square of the number of market participants (and this brings in the Indian Prime Minister’s infamous 2ab term). In other words, it not only allows the people now coming into the market to find relationships, but it also allows existing players to find better relationships.

Then, there is the second order effect. Decriminalisation will mean that more people will come out of the closet, which will mean more people will find homosexuality to  be “normal” leading to better social mores (to take a personal example, I used to use the word “gay” as a pejorative (to mean “uncool”) until I encountered my first openly gay acquaintance – someone with whom I share on online mailing list). And as social attitudes towards homosexuality change, it will lead to more people coming out of the closet, setting off a virtuous cycle of acceptance of homosexuality.

In other words, today’s decision by the Indian Supreme Court is likely to set off a massive virtuous cycle in the liquidity of the market for homosexual relationships in India!

PS: It is a year since my first book was published, so we are running a promotional offer where you can buy the Kindle version for one dollar (or Rs. 70).


One axis politics

Historically, political leanings have ben described on two dimensions – economic freedom and social freedom. In the American scenario, the Republican Party has historically been supportive of economic freedom and restrictive of social freedom. The Democratic Party has been liberal on social freedom but illiberal on the economic freedom front.

While other major Western democracies occupying these two opposite quadrants, the other two quadrants have been largely empty. The libertarians occupy the “free on both fronts” quadrant, but nowhere is there a party to represent them – giving people freedom on all fronts means lesser power for the government and no politician wants that. And being restrictive of both kinds of freedom means people won’t vote for you – at least this was the way historically.

Of course things have been different in India. While we did have a series of governments between 1991 and 2004 that were reasonably economically liberal (“liberalisation” happened in this time period), all Indian political parties are required to swear by socialism, and they swear by it in spirit as well. So the difference on the economic freedom front between different Indian parties is marginal (in 2014, many of us thought the BJP might be supportive of economic freedom, given its record in the 1999-2004 period. Instead, it gave us demonetisation).

So in effect, in India we have a one-axis democracy, where parties try to differentiate themselves on one axis, which is the kind of social freedom they allow. Even there, it is not so much of an axis, but different ways in which they control social freedoms.

The BJP doesn’t want you to eat beef. The AAP doesn’t want recorded music in restaurants. The Congress and JDS don’t want live music in restaurants. The BJP puts cow welfare over human welfare. The Congress enacts and supports laws that allow suppression of Muslim women (by Muslim men). Many parties want to ban liquor, despite it having been repeatedly shown that such bans don’t work. No party wants to legalise marijuana, despite our rich tradition in the substance (heck, its scientific name is Cannabis indica). And we all seem to vote based on which of these social freedoms are more precious to us than others – economic freedom is a battle already lost.

In any case, it seems like other countries are also moving towards one axis democracy.  A chart posted on Twitter today describes results from a survey in the US on voters’ attitudes towards social and economic freedoms, and how they voted in the 2016 presidential elections (which Donald Trump famously won).


A large part of America seems to lie in the left half of the economic freedom spectrum. Yes, the republican voters are still more towards the centre than the democratic voter, but the bigger separation here is on the social rather than the economic dimension. And the Trump administration has been pursuing several policies cutting economic freedoms, such as tearing up trade deals and imposing tariffs.

So it seems like the world is following India in terms of enacting one axis politics – where voters vote more on the social dimension rather than the economic dimension. Then again, I don’t expect this to last – with parties moving left economically, soon you can expect economic freedoms to be crushed to the extent that it becomes advantageous for a party to signal economically right and still get votes.

PS: We don’t need to limit ourselves to two dimensions.  A few years back, Nitin Pai had proposed the Niti Mandala which has three dimensions.