Behaving Ourselves

November 14, 2016 § 1 Comment


misbehavingMisbehaving: The Making of Behavioral Economics (Thaler, Richard H)

Not very long ago, I blogged about Bronislaw Malinowski’s Magic, Science and Religion, where he strove to convince his readers that the Stone Age people of Papua New Guinea were as rational and logical as the modern man of science: it is just the modern world has equipped us with so much more pre-digested knowledge. We couldn’t have figured out by ourselves a lot of the stuff that we ‘know’ to be elementary; a lot of the stuff the Trobrianders accepted as obvious appear ridiculous to us. We forget that large parts of our cutting edge science, too, would appear indistinguishable from mythology and superstition to aliens capable of inter-galactic travel.   

One of the sciences where our current knowledge might be on wobblier ground than we realize is economics. The trouble with economics, as Thaler points out, is that it comes up with laws about the rational decisions that people ought to make in economic matters; then it performs a quick sleight of hand and assumes that everyone does make rational decisions in economic matters.

As Thaler points out in every chapter in this book, this is not quite accurate, even on a broad, average basis. As a rule, people do not always behave in a way that economists would describe as rational – while gambling, investing, spending frivolously, suing, earning or giving away. The way people think about money changes depending on whether they already have it and can lose it, don’t have it and can win it, have already spent it on something they haven’t used, or are paying for something they’ve already used. Conventional economics tells us that these things shouldn’t make a difference, and more, that these things do not make a difference to people. But they make all the difference.

A girl splurges on some dresses that she now doesn’t like; her mother, furious, insists that she wear the dresses she bought. An economist would call it a sunk cost: whether the girl wears the clothes or not makes no material difference as long as she doesn’t buy any more. And yet there is a perfectly sound logic to this, one that parents around the world would understand. The girl’s punishment would teach her a lesson she would remember the next time she felt like going against her mother’s advice. This may not be an economic goal but at times, it is certainly a well-defined parenting one. People do not think with only their wallets all the time. Either we do not maximize our utility all the time (as economists say we do), or we try but fail to do so (because we are of inferior intellect than those economists), or the economists’ notion of utility is too simplistic to cover all our aspirations, fears and things in between.

So what Thaler (and some of the others he mentions, notably Danny Kahnemann and Amos Tversky) wanted to do was study the economic decisions that people actually make, and to try and understand the rules underlying those. Misbehaving is the story, not just of those quirky decisions, but of Thaler & co’s struggles to gain academic respectability for their theories and methods from “the establishment”. For long they were dismissed as an irrelevant side-show, and derided for cozying up to psychologists instead of to mathematicians. The people who misbehave in this book are the old-school economists who didn’t see behavioral economics as a worthy occupation. Besides, if your theory predicts that people will act in a certain way, and most of them don’t, it is your theory that is misbehaving, not the subjects of your predictions.

Oddly, Thaler’s story has a parallel with Bronislaw Malinowski’s. Until Malinowski’s generation, primitive tribes were studied almost like zoological phenomena by anthropologists: they were not thought capable of human intelligence. Malinowski stayed among the tribes, studied the way they behave without preconceived notions; he thought that’s what anthropology should be all about. Until Thaler, Kahneman and Tversky, people were studied as if they were logical automatons: they were not thought capable of human passions and emotions. Thaler thought he would study the way they behave without the baggage of economic theory about how they OUGHT to behave: he thought that’s what economics should be all about.

Misbehaving is a hefty book, funny, rambling in parts, bristling with ideas and stories, very different in form and substance from the slim, austere volume of essays that Malinowski published, but I got the same moral out of both: that ultimately, people are people. In order to understand them, you need to observe them, walk around in their shoes, collect the data. And before you do any of that, you ought to forget all the theoretical models and frameworks they taught you in college.

Advertisements

Coming up Trumps

November 10, 2016 § 8 Comments


Today I am making a one-time exception to talk about politics instead of books: I’d have to be an emotionless automaton not to struggle to process what just happened in the presidential elections.

When unexpected stuff happens, the mind seeks closure, and hunts for a good explanatory framework to hang its hat on. Now, in this case, there are several serviceable ones to choose from. Some of them helpfully provide an explanation that is also a satisfactory lashing-out: the White Racist Backlash,  the Woman-on-Woman Misogyny, the Ignorant Bigotry of the Unwashed, the xenophobia caused by economic inequality, the mean-spirited nativism of newly naturalized Hispanics…but I like to paint a wider canvas and with a broader brush, so here’s the one I’m going with.

In the mid-20th century, Nikolai Kondratiev and Joseph Schumpeter came up with a theory of economic history that states that booms and bust cycles last broadly 40-60 years apiece, and form alternating cycles. So you have Prosperity, Recession, Depression, Improvement, Prosperity…you get the picture. In a similar vein, I believe it is possible to talk of alternating political waves of centripetal and centrifugal revolutions (towards and away from the center). I wouldn’t be surprised if such a theory already exists, because it fits. It is largely Western democracy centric, but I think elements of it are increasingly applicable to the rest of the world.

A centripetal wave is inclusive and relatively liberal, but in order to be inclusive, it is also about compromise and increasing complexity and corruption, until those side-effects breach a threshold and the people reject it comprehensively in favor of the simplicity and clarity of thought of a more extreme position. This comes with its own baggage: a heightened sense of jingoism, suspicion of foreigners, a stronger focus on the military, a stronger inner unity fueled by aggressive economic growth, but also by a feeling of competitive animosity towards the Others. Eventually, these side-effects too reach a level when people reject it and lurch back towards the inclusive, amiable, corrupt center.

So, empirically: we had a centrifugal, uber-nationalist period between 1776 and 1857, fueled by the Industrial Revolution, the American Revolution, the French Revolution, the Spanish guerrilla war against Napoleon, the South American and Mexican wars of Independence, the failed revolutions in several countries, the Italian risorgimento, perhaps even the failed 1857 revolt in India. Then, there was a long period of stable centrism, until the next wave of establishment demolition, between 1914 and 1948 (from Franz Ferdinand to Nehru and Mao), followed by another largely centrist era.

Donald Trump’s win proves to me that we are now well into the next wave. But the US didn’t start the fire. It is merely part of a global centrifugal anti-establishment wave, that started in 2010 with the Arab spring in Egypt, Tunisia and Libya, the failed ‘Green Revolution’ in Iran, the failed revolutions in Yemen, Bahrain and Syria (that are still burning), the accession to power in 2012 of Vladimir Putin in Russia, the accession to presidency in 2014, of Recep Tayyip Erdogan in Turkey, the accession to power in 2014 of Narendra Modi, and of course the Brexit in the United Kingdom. Every one of these was brought about by a strong mass movement across sections of society, and those that failed, did so because of undemocratic reactionary interventions from outside. Next stop France, where Marine Le Pen is already cracking her knuckles in anticipation.

And the Republican Party? Only weeks ago, they were panicky, in such complete shambles that they were talking about recovering by 2028 at the earliest. They didn’t plan this. Nobody planned it.

Here’s what Otto von Bismarck said, when asked about how leaders make history. And mind you, the man knew a thing or two about his subject.

“A statesman has not to make history,” (imagine this said in a Teutonic accent), “but if ever, in the events around him, he hears the sweep of the mantle of God, then he must JUMP UP! and CATCH it at the hem.” (emphasis mine)

That “mantle of God” Bismarck was referring to, is the zeitgeist, the spirit of the times, the inexorable tsunami of history, that has now swept along all of us, and Donald Trump is helplessly at the crest of the wave, and when we look up, we see him leading us.

Conclusion 1: The lurch to the right will not be without some positives, just like the centrism wasn’t without its negatives.

Conclusion 2: For liberals and centrists: this too shall pass, though it may take the next few decades or so until the next centrist wave, and many of us may not be around to see it. It’s definitely going to get worse before it gets better.

Conclusion 3: Since neither party establishment really saw this coming, it is a historical accident that it was D Trump v H Clinton. If it had been J Bush v B Sanders, we’d possibly be seeing THE SAME WAVE, and President Bernie waving to us from its crest.

I feel better already. And also worse.

The Approach of Perfection

November 1, 2016 § 4 Comments


attarThe Conference of the Birds (Attar, Fariduddin) (translated by Afkham Darbandi and Dick Davis)

 I heard of the Manteq al Tair nearly two decades ago, in Jorge Luis Borges’ characteristically brief short story, The Approach to al-Mu’tasim. Borges’ terse summary of the ancient tale blew my mind then, but I wasn’t even sure at first that it was a real book, and not something he invented. It took me all these years to seek and acquire an English translation, and I am glad I did: Darbandi and Davis’ translation, in flawless iambic pentameter, does full justice to the Sufi classic in form and substance.

I have run into Dick Davis before, having read his rather excellent prose translation of Abul Qasim Ferdowsi‘s Shahnameh a few years ago, but I’d like to talk more about the original poem than about the translation (which just tells you what a great translation it is).

Abu Hamid bin Abu Bakr Farid-ud-din “Attar” was born in the twelfth century in the town of Neyshapur, to the north east of Persia. Some say he was among those massacred by Chingiz Khan’s Mongol hordes when they poured into Khorasan in the 1220s. In between, Attar was many things: possibly a seller of perfumes, probably a healer and dealer in herbal remedies, and without doubt one of the greatest mystical poets in the Sufi tradition, and the Manteq al Tair (The Conference of the Birds), an epic allegorical poem, is arguably his best work.

Sufism is the inner, deeply spiritual tradition that permeates Islam, and runs as a powerful undercurrent below more worldly traditions like the Sharia law that we hear so much about. It isn’t a different sect, just a different aspect of Islam, an aspect that it shares with other eastern religions, like Hinduism and Buddhism (which, like all religions, have other less praiseworthy aspects as well). Small wonder that the frame story of the poem is possibly borrowed from one of the sections of the Kalileh wa Dimneh, a 6th century Persian translation of the Indian Panchatantra.

The story of the Conference is easy to relate. There is a kingdom of birds, and it is in crisis. The birds decide they need a king to lead them, a bird more perfect than all of them. One of them, the hoopoe, recalls seeing in his childhood, in China, a feather of the ultimately perfect bird, the Simurgh. He exhorts the rest of the birds to join him on a journey to the distant land where the Simurgh lives, so that they may offer him their crown. Overcoming their many misgivings about the daunting journey ahead, the birds set off in search of the Simurgh. During the quest, they come face to face with their flaws and deepest fears, their vanities, timidity, sentimental attachments, and other weaknesses; many drop out along the way of thirst or weariness. They cross the valley of the Quest, then that of Love, that of Insight into Mystery, then of Detachment, Oneness, Bewilderment, and finally the Valley of Nothingness. The hoopoe is their guide throughout, encouraging them with parables and philosophy, until eventually, ragged and exhausted, a mere thirty of them reach their destination. But where is the Simurgh? It is nowhere to be seen. Someone finally shows them a mirror and in it they see their own reflection, and they realize that they are the Simurgh, that they have become the perfection that they had been seeking so assiduously.

bird

« Read the rest of this entry »

The Tribe of Man

October 26, 2016 § 4 Comments


malinowskiMagic, Science and Religion and other essays (Bronislaw Malinowski)

Bronislaw Malinowski was arguably the most important anthropologist of the 20th century. Armed with a degree from the London School of Economics, he shipped himself off to the Trobriand Islands in Melanesia and stayed there for several years to study the indigenous culture. His path-breaking research from that period catapulted him into a position of pre-eminence in the field, and influenced generations of anthropologists on both sides of the Atlantic.

And yet, chances are, you haven’t heard of Malinowski. Why should you? we live in a world where all the information in the world is accessible at our fingertips, but the Malinowskis of the world remain hidden in plain sight, lost in a crowd of Kardashians.

I stumbled upon his work (and this important collection of essays) because of my appetite for material concerning world mythology. Reading books of mythology led to reading books on mythology, and then to the books on things that are associated most closely with mythology: literature, language, social history and finally anthropology. Greek mythology led me to Robert Graves, and his bibliographical notes pointed me to Erich Fromm; Fromm, in turn, led me to JJ Bachofen and his fascinating theories of mutter-recht, but there, in an introductory passage in the edition I have, written by Joseph Campbell, was a reference to Bronislaw Malinowski. Weeks later, my attention was arrested by a quote attributed to Malinowski in a different book; it was the work of a minute to seek and order the slim book of essays under review.

The discipline of anthropology has its origins in mid-19th century Europe, and was strongly influenced by Darwin’s theory of evolution as well as by the colonial conquest of most of the rest of the world by European powers. Consequently, primitive cultures were studied, but from far above, as intellectual curiosities, like species of butterflies or finches.

Malinowski’s approach of staying for several years among the people of the culture he was ‘studying’ was therefore novel, and it yielded several interesting insights. I will mention only two.

The first relates to the nature of mythology. In Malinowski’s view, it is not, as the Nature mythology school believed, a set of contemplative reactions to natural phenomena (abstract art and science are not part of the stone age native’s mental makeup), or poetic symbology, or simply a set of stories that signify nothing. Myth is living, breathing reality for the Trobrianders, a functional, pragmatic embodiment of their beliefs, practices and morality. It is as true and tangible to them as any statement we hold to be self-evident and obvious today. It is what Thomas Kuhn would have called a paradigm.

The second relates to the nature of men. As was known by his time, the “savages” of Melanesia didn’t understand the concept of paternity. They attributed the conception of a child in a woman’s womb to the mischief of a ghostly spirit, and didn’t believe that a man had anything to contribute to that process. A modern man would scoff, and consider himself infinitely superior to them.

And yet, Malinowski shows, they had every bit as good a grasp on logic, and cause and effect, as the “civilized” people of the Earth: they simply didn’t know as much as we do, especially in abstract, theoretical subjects. They knew, for instance, when to plant which seed for best effect, or how to read the sky for clues to predict the weather, or where to fish at which time of the year. It is in fact this scientific (a word used advisedly) belief in cause and effect that led them astray: a Melanesian woman had an active sexual life practically every day from the day she stopped being a virgin, yet got pregnant just a few times in her entire life. The event of conception was possibly correlated closer with some food she ate, the phase of the moon, or the passing overhead of storks, than with the act of sex! If you didn’t know the things you know, how many of them would you figure out by yourself?

It is a sobering thought, that what separates me from a stone age tribesman, is not so much how smarter I am, man to man, (or nobler, or better read) but the accumulated body of knowledge and beliefs made available to the two of us by our respective societies: our mythologies, in other words.

Of course, this is not only true of Trobrianders and 20th century anthropologists, but of any two individuals anywhere, and forms the basis of modern liberal beliefs in nurture over nature. It also feeds the belief that there is one single human nature worldwide, and our differences have more to do with cultural reasons than anything innate.

This, to me and others who think like me, is kind of basic and obvious. Conservatives would call it a myth. And so it goes.

lead_deskew=-22 checksum=0c08fb04944c51ad334eeee56f127234

Myth & Melanesia (courtesy mythencyclopedia.com)

Uncle Thurber Tells A Story

July 10, 2016 § 1 Comment


Thurber92

92 Stories (Thurber, James)

I have read a few short stories by James Thurber as a kid. A couple were autobiographical in style, and documented his experiences growing up in a chaotic family with loud incompetent uncles, eccentric sleepwalking cousins and long-suffering aunts. One was about a man, his wife and a unicorn in the garden. Another reimagined the historic meeting between the Generals Lee and Grant at Appomattox.

Of these, only the last named features in this large 500+ page tome, which consists of four collections of Thurber’s pieces – some short stories but mainly essays. The most powerful ones were about marriage, which Thurber mostly projects as unhappy but entertaining chess games between mean husbands and bitter wives, or vice versa. His portrayal of between-wars America is infinitely more vivid than anything a history book could accomplish, and he has an uncanny ability to take a small, commonplace situation and riff off a rambling stream-of-consciousness string of funny thoughts.

For instance, surveying the 1930’s Manhattan skyline, James Thurber sees between 8th street and 6th avenue, amongst the indistinguishable roofs, a sign for an upholstery shop, that said, in four-foot long neon letters, “O Charles Meyer”. Thurber promptly dashes off a brilliant essay, speculating, among other things, about O Charles Meyer’s personality, his business, his offspring: their number, gender and names (youngest son O Henry Meyer, if you please) and about what would happen if he himself were to attempt to meet Mr. Meyer.

I do not, of course, know O Charles Meyer in the flesh, but I have a certainty of what he is like, large heavy man, elderly and kindly, with the peering eyes of a person who has spent his life puttering with the upholstery of chairs of sofas. In the old chairs and sofas that have been brought to him for reupholstering he has found scissors and penknives and necklaces and unopened letters and hundreds of thousands of dollars in bills which little old women have hidden away. If this is not true, I don’t want to be told so.

Well, I have developed a certainty of what Thurber must have been like: thin, neurotic, baldish, nervous-looking, jumpy, with permanently etched worry-creases on his forehead and eyebrows raised in doubt and skepticism, talking nonstop out of the side of his mouth, to nobody in particular, complete nonsense of course, but brilliant nonsense, with a very straight face, ignored by most people except those who find everything he says hilarious. Maybe I am thinking of a distant uncle at a family reunion long ago. Hold on – surely I am thinking of Woody Allen. Equally, maybe Woody Allen is thinking of James Thurber when he is being Woody Allen. But if my description of Thurber is not true, I don’t want to be told so.

Thurber is an American legend who has probably influenced generations of humorists and brought a smile to millions of readers around the world.  But the truth is, 92 funny stories written in the same style, one after another, can be a bit of a drag, and I recommend Thurber  in small doses, possibly sandwiched refreshingly for best effect between chapters of Fyodor Dostoyevsky and Franz Kafka.  (Actually, this could also be a recommendation for how to read Dostoyevsky and Kafka)

James_Thurber_NYWTS

What he really looked like: but don’t tell me

The Startup Star

June 25, 2016 § Leave a comment


41puRJbtwkL._SX331_BO1,204,203,200_Zero to One (Notes on Startups, or How to Build the Future) (Thiel, Peter with Masters, Blake)

What can I say about Peter Thiel that the internet doesn’t know already? He founded PayPal, sold it to eBay, founded Palantir, invested in Facebook, funded SpaceX and LinkedIn, helped Hulk Hogan sue Gawker; he is the lawyer who emerged victorious from the ashes of the Dot Com Bust and showed us all – techies, investment bankers, media pundits, management gurus and lay public – how to run a successful tech start up, or to spot an idea that can eventually become successful. Here he is, giving us the benefit of his wisdom in this book: How to Make Millions from your Start Up in Seven Easy Steps, or words to that effect.

Thiel generally makes sense, and writes well. He even has some really epigrammatic lines in there: ‘All Rhodes scholars had a great future in their past,’ being the most memorable. He has many good suggestions, heuristics and useful thumb rules:  start with a good team that gels together, plan well, have something unique that can be defended, focus on a small market to dominate before moving on to bigger things, and a few others. He also quotes from or refers to Anna Karenina, Francis Bacon, Jose Casablanca, Ralph Waldo Emerson, Friedrich Engels, Fermat’s Last Theorem, Lady Gaga, Georg Hegel, Oedipus, Vilfredo Pareto, John Rawls, and the Unabomber: erudite man. So, a very readable book, all told.

Trouble is, Thiel’s conception of success, as is evident from his title, is binary. Facebook, Paypal, Apple, Google, Tesla: these are his success stories. And of course they are. But if success in business – particularly that kind of success, in conceiving an innovative, differentiated, paradigm-changing, industry-creating idea and executing it to commercial success – were as easy as following a few steps from a book, we would all be billionaires. As Thiel’s Preface begins, ‘Every moment in business happens only once…if you are copying these guys, you aren’t learning from them.’ Should we learn from Thiel, then?

office-culture-in-startups1

Sliding to success in a start up! (Courtesy: yhponline.com)

 

Everything Before Us

June 19, 2016 § Leave a comment


HobsbawmThe Age of Revolution (1789-1848) (Hobsbawm, E. J.)

Eric Hobsbawm was an eminent British historian whose career spanned from 1948 to 2011. He is discredited these days, specially in conservative circles, as a ‘Marxist’, which is shorthand (in those circles) for ‘la-la-la-la-la-I-can’t-hear-you-la-la-la-la-la’. The serious charges leveled against him include being ‘Stalin’s cheerleader’, and of peddling propaganda in the guise of history, but Niall Ferguson, not by any stretch of imagination a bleeding heart pinko, had this to say about the man:

“That Hobsbawm is one of the great historians of his generation is undeniable…His quartet of books beginning with The Age of Revolution and ending with The Age of Extremes constitute the best starting point I know for anyone who wishes to begin studying modern history.”

All I know is, I read Hobsbawm’s ‘On History’ many years ago, and much of it made sense to me, particularly his definition of history, not as a set of reference points or even a duration, but as the process by which the past became the present. (He also quotes Fustel de Coulanges as saying, ‘History is not an accumulation of events of all kinds  which occurred in the past. It is the science of human society’) It is in light of these statements that one must study Hobsbawm’s The Age of Revolution.

While the period under discussion (1789-1848) was indeed eventful in European history – the fall of the Bastille, the coronation of Napoleon, Trafalgar, Waterloo, etc. – it is not the events themselves that Hobsbawm is mainly concerned with, but the consequences of the two main events of the age: the Industrial Revolution in Britain and the French Revolution, and how society, politics, economics, and art changed as a result of these events. Language, ever a faithful barometer for society’s priorities and preoccupations, changed as well, and a selection of the new words that were coined in this period tells Hobsbawm’s social transformation story succinctly: ‘industry’, ‘industrialist’, ‘factory’, ‘middle class’. ‘working class’, ‘capitalism’, ‘socialism’, ‘aristocracy’, ‘liberal’, ‘conservative’, ‘nationalism’, ‘engineer’, ‘crisis’, ‘statistics’, ‘journalism’, ‘ideology’ and ‘strike’. If you can imagine a world without these words, you would be thinking of a pre-1789 timeframe.

delacroix

It was the best of times, it was the worst of times: Liberty leading the people, Eugene Delacroix

 

« Read the rest of this entry »

  • Notes

    *************************
    Please note that I use the 'Rating' button on each post to rate MY experience while reading the book in question. If you have positive or negative opinions to express about the POST itself, please use the Comments section, or send me an email. Please do not use the rating button.

  • Posts

  • Categories