The “Per Person” catch

Every time a travel agent sends you an itinerary for a tour package, look for the units of the cost. Usually it’s quoted in US Dollars per person. The funny thing is that this is how it is quoted even when it is just an accommodation package where two or three of you are going to share a room.

I wonder if this is a way to encourage more spending, since the customer perceives the total cost to be a much smaller number when he sees “per person” than when he sees an all-inclusive number.

Like for a forthcoming trip, the travel agent sends me an email saying “the hotel will send a taxi to pick you up at the airport at a cost of EUR 50 per person”!!

On a similar note, I realize travel agents love to bundle. When costs across several hotels and trains and taxis are bundled together and presented to you as an aggregate (“per person”, again), it is easy for them to pass on overheads to you without you figuring out where exactly that overhead went.

There have been times in the past when I’ve received packages from travel agents, then tried to purchase each component of that package online, and found that the total cost of buying the parts separately is approximately half the bundled cost that travel agents impose!

The Lingaraj Effect and Financial Regulation

Lingaraj was a driver who used to work for my father. He had a unique way of dealing with traffic jams on two-lane roads without a divider down the middle. He would instinctively swing the ambassador into the right lane – meant for traffic in the opposite direction (the jam ahead meant there was little traffic flow in that direction).

I remember both my father and I abusing him (Lingaraj) for this method which would only make the jam worse. However, he would persist. And we soon found that he wasn’t unique in his methods. It is the favoured method of most Bangalore drivers. Thus, whenever there is a minor jam somewhere, thousands of Lingarajs clog the “return lane” in all directions, and end up making it worse.

The funny thing about Lingaraj’s method was that it was “too big to fail”. Having switched to the right lane, we would progress much faster (till the site of the jam, of course) than our law-abiding brethren stuck in the left lane. There, someone who had taken responsibility of clearing the jam (not necessarily a cop) would realize that a necessary condition to clear the jam was to get our ambassador out of the right lane. And we would be given passage to shift to the left lane, and past the jam site, much ahead of those suckers who stuck to the law.

For drivers like Lingaraj, moving to the right lane in the wake of a jam is seen as “arbitrage”. And a necessary condition for it to be an arbitrage is that the offending vehicle is “too big to fail”, as I mentioned earlier. And given that in Bangalore, measures like traffic tickets sent by post aren’t that effective, this continues to be an arbitrage, and hence you still see so many drivers use this “method”.

While stuck in a traffic jam like that one last weekend (I was driving, and I consider myself socially responsible so stuck to the left lane), I realized how similar this was to the financial crisis of three years ago.

Traders noticed an “arbitrage” that didn’t really exist (namely, some AAA rated bonds traded at higher yields than other AAA rated bonds) and proceeded to trade on it. When they got into trouble the regulators realized that they had to be bailed out in order to clear the larger mess. The resemblance is uncanny.

So what should the regulators have done? Basically, drivers should’ve been prevented from getting to the right lane in the first place. Then there would have been no requirement to bail them out. In some places, this is done by installing road dividers, but in my experience I’ve seen that doesn’t help, too. People use whatever gaps are available in the divider to go to the right lane, and contribute to the jam.

The only option I can think of is some variation of postal tickets – having bailed out the drivers for going to the right lane, they need to be made to pay for it. Yeah, postal tickets (sending tickets by post for traffic violations) may not be effective, but that seems like the best we can do to regulate this problem. The upshot is that once we figure out how to solve this problem on the road, we can extend the solution to financial regulation, too!

Coffee in America

I could have finished this post in one word  – “horrible”. But for the sake of blogging and detailed description, let me sacrifice brevity, like I usually do. I’m writing this after having drunk a cup of absolutely atrocious self-made coffee. Yes, it is proper traditional filter coffee made using Coffee Day Ultra Rich powder, but somewhere I seem to have messed it up. And the quality of this coffee, the first time I’ve made the brew after returning from America, reflects the general quality of coffee they make in America!

I think I can count on the fingers of one hand the number of times I had good coffee. One was at a friend’s place in New Jersey, where I had traditional South Indian filter coffee out of a steel tumbler. Another was the Turkish coffee at The Hummus Place in Greenwich Village which I’ve talked about in my previous post. That is it! Maybe the odd capuccino somewhere but I can’t remember anything else specific.

The funny thing about America is the size of the coffee lOTas. The average coffee cup in my office was some 400 ml, and each time I would put it under the machine and ask for capuccino it would get filled up! It was extremely disorienting for someone like me who is used to several small doses of coffee during the day. There was another dispenser which dispensed decoction but that was horrible, too. But later on I started drinking from that since I could then control the volume of each dose!

I think I have mentioned this in some other post but another problem in America is they give you hot black coffee and COLD milk. Again extremely disorienting for someone who is used to coffee made with boiling milk. I’m told that the typical American puts such little milk in his coffee that the temperature of milk doesn’t matter. Just that I found it hard to digest (not literally).

Then there was this coffee maker in my apartment. I had to google to figure out how it worked and then realized that an essential part of making it work was to buy filter paper (the first time I’d come across this thing since high school chemistry lab). Since I didn’t have enthu to buy the said paper, I just made do with the two complimentary sheets that had been kindly provided in my apartment. Needless to say the coffee came out to be horrible and I didn’t use the machine again.

One of my regrets of my America trip is that I didn’t order coffee post my several Italian meals. Maybe the Italian restaurants would have made coffee much better than what was available in the rest of the country. And one of the amusing things i remember from the trip is the length of the queues at the Starbucks outlets! That made me realize that people actually go to Starbucks for coffee unlike us here who use Cafe Coffee Day as a convenient hangout location!

Yesterday I did my bit to make up for all the horrible coffee that I’d endured during my America trip. Had two awesome cups of filter coffee at a friend’s place, and then three doses of “sugarless strong” at three diffferent darshini-level places. Unfortunately this morning’s mess-up (now I realize I put 2 spoons of powder into the filter instead of the usual 4) has taken me back to square one, of American quality coffee.