Thaler, NFL and Decision making

Richard Thaler is a Nobel laureate and author of the best selling book: Misbehaving. He is a popular figure in the area of behavioral economics.

Last week when I was reading ‘Misbehaving’- the chapter on decision making caught my attention. It talks about how traditional ways of picking NFL players were resulting in losses. The chapter was from one of Thaler’s popular research papers [1]

He observed:

  • People are overconfident

The selectors were keen on going with gut feelings when deciding who to pick and how much to pay.

  • People make forecasts that are too extreme

Scouts were too quick in making forecasts. Their guesses were not accurate. Predicting a player to become a superstar was far fetched.

  • Winner’s curse

Teams were picking players for more than what they deserved.

  • Present bias

Teams were more interested in the now. They were picking players based on recent performance.

  • The false consensus effect

Teams which liked a particular player felt an urgency of buying them. They assumed that the other teams are also interested in buying them.

I would say this paper’s reach is beyond NFL and picking players. Anyone making investment or hiring decisions can make these mistakes too.

I am hoping  that we will rely more on data than gut feelings as we progress over the time.

References:

  1. Overconfidence vs. Market Efficiency in the National Football League

Decision Paralysis

I visited a grocery store last evening to pick some rice. The aisle had over 50 varieties  with different properties and health benefits. To my surprise their in-house label had replaced my regular brand. On top of that, it was offered at a 50% discount as an introductory offer. I came back and ordered my regular brand from an online store instead.

During a visit to a microbrewery, my friend spent 5 minutes to decide what to order from the menu card. He ended up taking the server’s advice instead. He said the items mentioned were too complicated to understand. We had a great evening: food, music, ambience and drink.

I realized I was repeating the same pattern while ordering my coffee. I have now begun asking for black coffee or cold brew without checking the menu.

I was curious on what was going on with the menu at these cafes and bars. My hotelier friend explained this secret. Most of the customers are busy chatting with friends or checking their phones. If the menu is cryptic, they will ask for the server’s advice. The server will in turn recommend the costliest item on the menu and the customers will end up ordering it.

In simple words, I was getting screwed. I was paying the price for not being aware and conscious. Blaming the difficult menu, urge of checking phones or chatting with friends is of no help.

Everyday we have to make a lot of decisions big and small – what TV series to watch? where to eat? what to order? what to cook? and whom to meet?

This constant activity of making these many decisions takes a toll on our brains. Scientists call it “Decision Paralysis”. Remember this the next time you are eating out or ordering online. Being aware will save you some money and sanity.

Barry Schwartz has written a research paper on decision paralysis.

Other people

India’s unorganized sector also happens to be one of its biggest job providers. Our maids, uber drivers, sales girls and servers at restaurants – all of them constitute it. They are hard working, voiceless, vulnerable and key stakeholders to our economy.

They are the invisible robots who drive us for early morning flights. They serve us our food and drinks with smile. But, we notice their existence only when they make mistakes. Forget tipping, we don’t even smile at them. The idiot phone keeps us glued and takes away all our attention.

We were not born equal. Some people were born rich and some were not so blessed. We should be grateful that we can afford an uber ride or enjoy weekend drinks.

We are better off economically than these hard working people, but does this give us extra power to treat them bad?

Please treat them as humans. Be empathetic with them. Exchanging our position with them won’t be easy for us.

Reference: The Exceptional Persistence of India’s Unorganized Sector

 

No Whatsapp

Whatsapp is synonymous to SMS for most smartphone users in India. It is an excellent service and has made us more connected. I am convinced that they will grow further with their payment feature launch.

But personally, I find whatsapp to be distracting and eating up a lot of my time. I have not been using it since 2016. I think I have not missed out on much.

These are some of the reasons on why I’m avoiding whatsapp:

  • The barrier to communication is zero. Anyone can message you at any time of the day. Earlier one would think twice before sending a SMS. There have also been incidents where cab drivers have sent lewd messages to passengers
  • The never ending beeps and notifications are ugly. I know I can mute it, but I would rather invest my time in something else.
  • Everyone becomes an expert and eat up hours of your time with  preaching and free counseling.
  • The family group where everything gets posted right from morning and evening greetings.
  • The propaganda creators who are responsible for mob lynching. Whatsapp has empowered them.
  • People expect you to immediately reply to their messages. If you have seen it and not replied, you are in trouble.
  • I am against doing any business discussion or conversation on whatsapp. We have been using emails for decade, let us continue that way.
  • Quick and impulsive decisions via whatsapp have put me in awkward situations.  
  • Getting intoxicated and fighting with loved ones because they messaged at the wrong time.
  • I was  glued to my smartphone. It took toll a on my mental health.

Life is not about being connected with everyone every minute. It is more about spending time with self. Those who need me will find me, I don’t have to be on whatsapp.

At what cost?

Insecurity is a disease that humanity has been suffering since inception, history has it in detail.

    • Homo Sapiens killed Neanderthals.
    • Socrates was made to drink hemlock by Athenians.
    • Nero burnt down his own kingdom.

There are many more such stories and I will leave them for you to read.

In this post I am talking about our personal insecurity.

Why?

    • Co-worker gets foreign transfer and you are sad.
    • Wife gets fat bonus and you are unhappy.
    • Friend’s startup got funded and you are grumpy.
    • Sister bought a house and you are miserable.

Purpose of our life has become fulfilling bucket lists, being at the top and winning against all the odds. Our society rewards the machiavellian and punishes the stoics.

But at what cost?

    • Antidepressant and anxiety pills.
    • Alcohol and drugs.
    • Over consumption of sugar, meat and wheat. Everything is processed.
    • Buying more of everything.
    • Maxing out credit card.
    • Venting frustration on numerous issues using social media.

If we are under a simulator (as some billionaires claim), I would  love to hack and fix it.

Why am I giving away books?

I am writing this blog after a while. I should get over my laziness and start writing regularly.

I have been giving away books to my friends over a last few years. Why am I distributing books these books?

  • Am I crazy?
  • Do I have an evil plan?

Some of the books I have been giving away are:

    • Meditations, Marcus Aurelius
    • Think on these things, J Krishnamurti
    • Autobiography of a Yogi, Paramhansa Yogananda

Reading is one key habit that I have picked up in the last few years. During tough days these books were my good companion. They helped me calm down and brought me closer to a better life. That is why I distributed copies of these books to many of my friends.

I remember an incident when someone rejected accepting a book. I wanted to thank him for his intermittent fasting podcast.

Some of my friends liked this idea so much that even they have started giving away books to their loved ones.

Should I continue doing this or stop it?

Book Notes: The Little Prince

The book summarizes journey of Little Prince, the interplanetary traveler: his adventure all along the journey. It included meeting inhabitants from other planets and understanding their priorities..”

Antoine de Saint-Exupéry wrote this book in french which later got translated to many other languages. It is just of 100 odd pages, one reason why i bought it and finished it in a single sitting. The style of writing made me wonder if the author was interested in  philosophy.

It seemed to me that author was sharing his life memories in the form of Little Prince.

Fun fact: Little Prince owned 2 little volcanoes on his planet and he cleaned its ashes. He also had a flower plant which he took good care of.

I will be distributing a few copies of this book to some of my friends, which also means I enjoyed reading it.  🙂

Some interesting lines, notes from the book :

  • He did not know, how the world is simplified for kings. To them, all men are subjects.
  • It is much more difficult to judge oneself than to judge others. If you succeed in judging yourself rightly, than you are indeed man of true wisdom.
  • Conceited people never hear anything but the praise.
  • For, to conceited men, all other men are admirers.
  • For it is possible for a man to be faithful and lazy at the same time.
  • Intoxicated men see double.
  • When one wishes to play the wit, he sometimes wanders a little from the truth.
  • I have friends to discover, and a great many things to understand.
  • One only understands the things that one tames.
  • What is essential is invisible to the eye.
  • It is a good thing to have a friend, even if one is about to die.
  • What is most important is invisible.
  • Men set out their way in express trains, but they do not know what they are looking for. Then they rush about , and get excited, and turn around and around…
  • One runs the risk of weeping a little, if one lets himself be tamed …
  • The thing that is important is the thing that is not seen…
  • “ I know a planet where is a certain red-faced gentleman. He has never smelled a flower. He has never looked at a star. He has never loved any one. He has never done anything in his life but add up figures.  And all day he says over and over, just like you: ‘I am busy with matters of consequence! ‘ And that makes him swell up with pride. But he is not a man – he is mushroom!”

On Money

Study well,

Get a good job,

Earn well,

Settle.

The society created paradox that we ought to follow

  • People complain about their bosses or jobs but continue for money.
  • Earning takes precedence over family, personal health and relationships.
  • Loyalty goes to dustbin for 2X salary raise.

Money is important to meet our ends. But craving for it, swearing by it is a result of materialism. One has to be aware of it and draw clear lines.

Social media is conditioning us to believe us that everything we own is worthless and that we must buy the newer better things out there.  We crave to buy happiness through long vacations, fancy cars, houses and what not. All of this requires money, so we work like donkeys and go mad.

We fall for the never ending loop of work, earn, buy and repeat.

Every week there is a launch of a phone or car or brand of clothing. Buying has become synonymous to happiness, SALE offers being run 365 days. Advertisements tell us: “More is good”, “New will make you superhuman”, “Hurry up, buy now” and a lot more hidden agendas.

What will happen to all the money if we die in a road accident? We spend our present sucking at work, dreaming of a  future which was never assured to us.

Flaws in barter system introduced currency. Our forefathers  might not have imagined that future humans will run after it like monkeys.

We are so caught up in work that we don’t have even have time to spend with our kids. We have to leave them at the mercy of our maids, while we go and work.

We are producing more, buying more and wasting more. West suffers from health issues due to overeating whereas many other nations are suffering from poverty.

O, Twitter!

I love Twitter. It is my gateway to the outside world. It feeds me with daily news, gossips, celebrations and mass outrage.

Twitter connects me to the makers and those who have made it big in their domain. I have learnt a lot through them.

In the pre-internet era, social engagement meant meeting over beer, coffee or dinner. Watching TV with family or night out with friends were the fun activities. Selfies, posting photos and likes had no meaning. Everyone would meet, greet, listen and share. Ironically, we were more connected back then.

Social media has narrowed real and virtual world separation. We meet someone on Twitter and meet over coffee or beer. I have made dozens of great friends. Some of them are very close to me while the others have moved on. My friend tells me how he used Twitter as a hiring platform. Few others share stories about their hookups using Twitter.

At times I ask myself, has twitter made us insecure.  We are all aware of our anxiety – fear of missing out. Constant attention seeking urge on social media platforms has stressed us out.

Twitter’s role in spreading fake news and fueling propaganda is well known.  Many hate groups and radical organizations use it. All you need is some fake photo/video to spread misinformation among followers. Sometimes fake news pick up like wildfire and have resulted in furious debates. News channels take it to the next level with panel discussions and more noise.

Twitter creates mass hysteria. When a celebrity commits suicide or a cricketer does publicity gimmick, the entire platform goes bonkers. We waste our day taking sides on endless discussions

We have failed at being empathetic to our family, friends, cooks and cleaners. Instead we grieve over the death of someone who had no role to play in our life

I had promised someone of buying a good number of twitter stocks few years back, I don’t see it happening now. I could not reach that milestone but that is a story for some other blog post.

Twitter is amazing, use it with care. Do not get carried away, focus on elements which make you happy and intelligent. Avoid blood pressure spikes and heart conditions by not participating in  meaningless conversations. Be more aware.

 

Book notes: how to be a stoic

I picked  “How to be a stoic” out of curiosity. I had watched some lectures on this book earlier on YouTube and it acted as a hook.  The author, Massimo Pigliucci is a professor of  Philosophy at CUNY-Lehman College in New York City. 

I liked the author’s style of storytelling. His analysis on how stoic philosopher Epictetus would have reacted to our modern day problems were spot on. He also shares his personal and other practitioner’s experience on stoicism.  

These are some notes from the book:

The  basic principles under Stoic system

  • Virtue
  • Follow the nature
  • Dichotomy of control
  • (Practical) wisdom
  • Courage
  • Justice
  • Temperance

 

Author has put in a daily stoic practice exercise, which has come from Enchiridion by Epictetus  

  • Examine your impressions

“So make a practice at once of saying to every strong impression: ‘An impression is all you are, not the source of the impression.’ Then test and assess it with your criteria, but one primarily: ask, ‘Is this something that is, or is not, in my control?’ And if it’s not one of the things that you control, be ready with the reaction, ‘Then it’s none of my concern.’”

  • Remind yourself of the impermanence of things.

“In the case of particular things that delight you, or benefit you, or to which you have grown attached, remind yourself of what they are. Start with things of little value. If it is china you like, for instance, say, ‘I am fond of a piece of china.’ When it breaks, then you won’t be as disconcerted. When giving your wife or child a kiss, repeat to yourself, ‘I am kissing a mortal.’ Then you won’t be so distraught if they are taken from you.”

  • The reserve clause.

“Whenever planning an action, mentally rehearse what the plan entails. If you are heading out to bathe, picture to yourself the typical scene at the bathhouse—people splashing, pushing, yelling and pinching your clothes. You will complete the act with more composure if you say at the outset, ‘I want a bath, but at the same time I want to keep my will aligned with nature’ [that is, to apply reason to social living]. Do it with every act. That way if something occurs to spoil your bath, you will have ready the thought, ‘Well, this was not my only intention, I also meant to keep my will in line with nature—which is impossible if I go all to pieces whenever anything bad happens.’”

  • How can I use virtue here and now?

For every challenge, remember the resources you have within you to cope with it. Provoked by the sight of a handsome man or a beautiful woman, you will discover within you the contrary power of self-restraint. Faced with pain, you will discover the power of endurance. If you are insulted, you will discover patience. In time, you will grow to be confident that there is not a single impression that you will not have the moral means to tolerate.”

  • Pause and take a deep breath

“Remember, it is not enough to be hit or insulted to be harmed, you must believe that you are being harmed. If someone succeeds in provoking you, realize that your mind is complicit in the provocation. Which is why it is essential that we not respond impulsively to impressions; take a moment before reacting, and you will find it is easier to maintain control.”

  • Other-ize

“We can familiarize ourselves with the will of nature by calling to mind our common experiences. When a friend breaks a glass, we are quick to say, ‘Oh, bad luck.’ It’s only reasonable, then, that when a glass of your own breaks, you accept it in the same patient spirit. Moving on to graver things: when somebody’s wife or child dies, to a man we all routinely say, ‘Well, that’s part of life.’ But if one of our own family is involved, then right away it’s ‘Poor, poor me!’ We would do better to remember how we react when a similar loss afflicts others.”

  • Speak little and well

“Let silence be your goal for the most part; say only what is necessary, and be brief about it. On the rare occasions when you’re called upon to speak, then speak, but never about banalities like gladiators, horses, sports, food and drink—common-place stuff. Above all don’t gossip about people, praising, blaming or comparing them.”

  • Choose your company well

“Avoid fraternizing with non-philosophers. If you must, though, be careful not to sink to their level; because, you know, if a companion is dirty, his friends cannot help but get a little dirty too, no matter how clean they started out.”

  • Respond to insults with humor

“If you learn that someone is speaking ill of you, don’t try to defend yourself against the rumors; respond instead with, ‘Yes, and he doesn’t know the half of it, because he could have said more.’”

  • Don’t speak too much about yourself

“In your conversation, don’t dwell at excessive length on your own deeds or adventures. Just because you enjoy recounting your exploits doesn’t mean that others derive the same pleasure from hearing about them.”

  • Speak without judging

“Someone bathes in haste; don’t say he bathes badly, but in haste. Someone drinks a lot of wine; don’t say he drinks badly, but a lot. Until you know their reasons, how do you know that their actions are vicious? This will save you from perceiving one thing clearly, but then assenting to something different.”

  • Reflect on your day

“Admit not sleep into your tender eyelids till you have reckoned up each deed of the day—How have I erred, what done or left undone? So start, and so review your acts, and then for vile deeds chide yourself, for good be glad.”

My take away from the book: be virtuous and have a set of principles for a content life.