Do Goans really want to become Portuguese citizens?

Mario Miranda's Goa

Suppose people from a poor third world country were given the option of being citizens of a rich first world country. Would they take it? Or leave it?

As a rule, people from poor third world countries don’t have the option of acquiring first world citizenship, so this remains a mostly theoretical question. Goa is an exception to this rule.

Goans who were Portuguese subjects before 1961, when India liberated Goa from the Salazar dictatorship, can choose to take a Portuguese passport. Their children and grandchildren can make the same choice. In effect, Goans who can trace their roots to colonial times can choose to be EU citizens.

How many of them have taken the option? My best estimate is about 15%.

I did a small poll of friends and family to guess this number among people I thought had enough context to hazard a guess. The range of guesstimates ranged from <1% to >80%. People like us don’t have an intuitive sense for a natural emigration rate.

My 15% estimate is a “soft” number because (surprisingly) there doesn’t seem to be any authoritative public data on this process. Google doesn’t throw up any crisp, credible results. Here is how I pieced together the estimate:

The most frequently quoted number in the press is that there are about 70,000 Goan-origin Portuguese citizens resident in Portugal, another 30,000 in the UK (as EU citizens before Brexit), and about 50,000 living in India (presumably on OCI visas). Adding these numbers up, it seems that about 150,000 Goans have opted for Portuguese citizenship.

How many Goans had the option?

Goa is tiny. Its population today is only about 1.5 million. This number includes migrants from the rest of India who settled in Goa after 1961, who are not eligible for a Portuguese passport.

The population of Goa in 1961 was just under 600,000. If that eligible population grew at a rate of ~1% per annum, about a 1 million would be eligible.

Taken together, it seems about 15% of eligible Goans chose EU citizenship. Or, 85% of those who could have moved from the third world to the first world chose to stay! My own guess was that at least 30% eligible Goans would have taken the EU passport because of the size-of-the-prize.

What is the size-of-the-prize these Goans are choosing not to take?

The chart below shows that trajectory of India and Portugal’s per capita GDP in today’s USD from 1961 onwards (sourced from the World Bank…btw, I love this online data visualization tool!).

At the time the Salazar dictatorship was thrown out of India, emigrating to Portugal was not that attractive. Portugal's per capita GDP was at USD 360 in today’s money. Portugal was basically just another third world dictatorship that happened to be in Europe.

However, after democracy was established in 1974, after Portugal joined the EU in 1986, income skyrocketed. Today Portuguese incomes are about USD 23,000 compared to Indian incomes of about USD 2,000.

Looking at the average Indian's income may be misleading. Goa is much more prosperous than the rest of India. Goa's per capita income is about USD 6000. After adjusting for purchasing power parity, that might mean emigration doubles real income rather than increasing it 10X. 

In general, demand for emigration vs. income follows an S shaped curve (first S shaped curve in the diagram). The promise of doubling income, off a relatively high base, clearly isn't enough to prompt a mass migration of the comfortably-off.

Migration is all about S shaped curves

Culture must also be a factor. Goans are stereotypically laid-back. They might care less about the extra income than other Indians. Most Goans don’t speak Portuguese. I can imagine that the psychic cost of learning a new language to gain a foothold in a new home must be daunting.

Perhaps the biggest factor limiting emigration is that many Goans have chosen to stay home.

This is certainly the most emotionally resonant factor for me, as a Tam Bram from Mylapore, Madras. I’d attended a school reunion in Chennai (nee Madras) a few years ago when only 2 out of the 75 science students from my class showed up. The rest were abroad. The large concentrations were in California, Texas and New Jersey. Another Tam Bram friend I was discussing this phenomenon with told me about his classmates from IIT-Roorkee. He is the only one, out of about fifty, who is still in India.

These people are not emigrating because of economic necessity. The quality of life they would have experienced in India was always going to be okay. A big part of the reason they emigrate is because others like them are also emigrating (this is the second S shaped curve on the diagram).

I guess that if enough people-like-us leave home, home doesn’t quite feel like home anymore. I guess its good that enough Goans are staying at home for Goa to still feel like Goa.

Paul Fernandes' Goa

"Asgard is not a place. Asgard is a people."

Surtur straddles the ruins of Asgard
as Thor and Hela face off

"Asgard is not a place. Asgard is a people."

But is it? 

Would Israel still be Israel if it were not in the holy land?

Would Hogwarts still be Hogwarts if it were rehoused in a steel and glass structure in London?

For context “Asgard is not a place. It’s a people” is from the Marvel movie Thor: Ragnarok! 

Thor (the most powerful hero in the universe) has used the demon Surtur to destroy his hometown Asgard. This will also destroy Hela (Thor’s evil sister) who derives her power from Asgard. 

Thor and his superhero friends rescue the people of Asgard from the collapsing city. They load them up into a spacecraft and ferry them off to a new life on a new planet. 

This collateral damage is worth it because as the all-father Odin explains to Thor “Asgard is not a place. It’s a people.” 

The all-father presents his argument as if it is obvious, as if it is self-evident that Asgard is its people. Hollywood clearly assumes that the trade-off is obvious, and Hollywood’s assumptions are a pretty good barometer of the zeitgeist. 

But stepping outside the Marvel-verse, is it really that obvious? Is it even sort of true at all?

There are plenty of real-life situations that parallel that of Asgard.

Consider the Maldives. The entire country is just about one meter above sea level. Most estimates are that the islands will be submerged by 2100. The people (about 500,000 people) could be relocated. But is it obvious to those people that the Maldives are not a place, but a people? 

Or Tehri - the ancient town on the banks of the sacred Baghirathi river - which was submerged under the Tehri dam? People were relocated. They lived. Were they OK?

Or Chernobyl. Its evacuee population was relocated to the purpose-built Soviet city of Slavutych (now in the Ukraine). Maybe these people were OK. Maybe Chernobyl was sort of soulless anyway.

Professor Stephen Landsberg, the Armchair Economist, asked this question sharply and provocatively after hurricane Katrina. Back in 2005 the American government was planning to spend over $200 billion on New Orleans. The pre-Katrina population of the New Orleans metro region was, say, 1 million. That is $200,000 per individual, $800,000 for a family of four. Would people rather take the lump sum of  $800,000 and relocate to an American city of their choice? Or have the government spend $200 billion on their behalf rebuilding New Orleans? 

Landsberg’s point was the most people would rather take the $800,000 and move. It’s a good point, as long as the thing being destroyed is not sacred, as long as “Asgard is not a place. It’s a people.”

I guess it hinges on whether the place in question is sacred. 

I guess mighty Odin the all-father is well qualified to take that decision.

Ari Ben Cannan in The Promised Land of Israel 
From the movie Exodus
Starring Paul Newman

Learning monetary policy from Monopoly

Ben Bernanke, Mervyn King and D Subbarao ought to play more Monopoly. That would teach them a thing or two about the perils of an expansionary monetary policy.

I learnt about the dangers of monetary expansion last weekend, when my daughter challenged me to a game. I nearly lost inside half an hour. I landed on three houses at Oxford Street and had to mortgage King’s Cross and Liverpool station to survive; the end seemed nigh. But then I picked up £200 as I passed Go, then another £150 from Community Chest, and an hour later both my daughter and I were in rude financial health.

In effect, I’d been bailed out by an expansionary monetary policy.

Monopoly has fixed nominal prices (i.e. a hotel room on Pall Mall always costs £625). However the real price of that hotel room is constantly declining. The Bank pumps £200 per player into the economy every round, so money supply is constantly increasing, so “sticky” prices keep getting smaller compared to the money in the game, so, on average, everybody feels richer.

Hotels on Pall Mall and Vine Street are life-threatening early on. As the game develops, the board fills up with houses and hotels, and landing at a hotel on Pall Mall is a mere flea-bite. By now the action has shifted to Mayfair and Park Lane. If the dice roll such that all players survive long enough, even a hotel on Mayfair stops being life-threatening.

From that point on, the players are no longer playing Monopoly, they are playing Comfortable Oligopoly. In this game, the veneer of competition is maintained, but the Bank ensures that nobody actually goes bust, despite the fact that nobody is taking any real risks or making valuable things. There is no natural way of ending this meaningless game. My daughter and I stopped our game only when higher authorities stepped in and decreed that it was lunchtime.

So, policy makers, play a few endless games of Monopoly. Learn that in the short term, monetary expansion can save a few dads from going bust. Learn also that monetary expansion that goes on and on and on robs the world of meaning, until the real economy finally breaks through and produces lunch.

PS: I wonder if the great monetarists Milton Friedman and Robert Lucas suffered through a few endless games of Monopoly?

A simple solution to America's fiscal cliff problem

Allow congressmen to vote in private.

This isn’t my idea. I’m channelling the noted political philosopher, Sir Humphrey Appleby. Sir Humpy explains to Jim Hacker in the very first episode of Yes Minister that Jim’s election winning slogan, “Open Government”, is in fact an oxymoron. You can be open, or you can have government, you can’t have both. I’m also channelling Fareed Zakaria’s excellent (and serious) book, The Future of Freedom.

Zakaria’s argument is that most American politicians are not stupid. Most of them don’t want to drive off the fiscal cliff. Most of them would happily cut a deal to avoid disaster, if they could. They can’t. Because they lack the privacy needed to cut deals.

For most of America’s history, Congress could do its work in private. Politicians could imply one thing while talking to constituents, go to Washington, exercise their better judgment on what is best for the country, and go back to their constituents with a shrug and an I-tried-my-best story. For most of America’s history, that worked well enough.

At some time in the 1960s some well-intentioned people thought pols should not be allowed to tell lies to the public, and decided to make their deliberations and voting records public. As a result, politicians live in a fish bowl, utterly at the mercy of special interest groups. They can’t exercise mature judgment, and therefore can’t fulfil the design of representative democracy.

This shouldn’t be hard to explain. Perfect transparency is unhelpful in most everyday contexts: in family life, in sports teams, with friends or at work. But, unfortunately, even my ardent inner optimist doesn't think politicians are going to be allowed to escape their fish bowl world any time soon.

Wish you were here, Sir Humpy. We miss you.

Sir Humphrey Appleby

Is Mark Zuckerberg richer than Mr Darcy?

This picture of Mark Zuckerberg’s wedding with Priscilla Chan was one of the few truly heart warming images from the last few weeks. This picture was so heart-warming because I learnt something new: I didn’t know Zuckerberg’s girlfriend was Asian. This knowledge re-framed the Zuckerberg wedding for me, as a fellow Asian. This isn’t just another wedding photo any more. It is now the picture of every Tiger Mom’s most fervent dream coming true. Dennis and Yvonne Chan, ex-refugee immigrants who ran a Chinese takeaway in Boston, must be so happy with their multi-billionaire son-in-law. How nice for them!

As my heart warmed to the Chan family’s good fortune, I started slipping into an authentic Tiger Mom mindset, and some more tough-minded thoughts took shape. A good Tiger Mom would do some rigorous competitive benchmarking. She would ask herself, “Mark Zuckerberg is a nice boy, but is he really rich enough for Priscilla? Is he as rich as Mrs. Bennet's son-in-law, Mr. Darcy? You know, the one they want to marry Elizabeth off to?”

It turns out Mrs Chan need not have worried, her son-in-law compares very well with Mrs Bennet’s son-in-law. Jane Austen tells us that Mr Darcy had an income of ten thousand pounds per year, in 1810, in England. Converted into today’s money, that is about $600,000 per year. That is a tidy income, but feels distinctly imaginable, more affluent-professional than masters-of-the-universe, certainly not the kind of money that animates the Occupy Wall Street movement. A self respecting Tiger Mom would wish more for her children.

So, is that game, set and match to Mrs Chan? Was Mr Darcy really no better off than assorted corporate vice presidents? Mr Darcy owned half of Derbyshire and employed a vast domestic staff, but he couldn’t buy an asprin, or watch the World Cup finals on HDTV. Can one really compare his situation to ours? To whatever extent comparisons are possible, it seems like our living standards have improved so much that millions of upper middle class professionals enjoy a quality of life that is equivalent to that of the most privileged landed aristocrats just two hundred years ago, which is a comforting thought in these troubled times.

Mrs. Bennet’s partisans might argue that relative income matters more than absolute income. This is reasonable. Behavioural economics and evolutionary biology suggest that people care more about status than about absolute living standards. Mr Darcy was high status, certainly higher status than the armies of contemporary upper middle class professionals who share his living standards. But how does his relative income or status compare with Mark Zuckerberg?

The American academic James Heldman tells us that Mr Darcy’s income of 10,000 pounds per year was 300 times the per capita income in his day. The per capita income in today’s America is $48,000, so a contemporary Mr Darcy would make approximately $15 million per annum, which is starting to feel appropriately rarified. Mark Zuckerberg’s fortune is at least $10 billion. If that earns risk free returns of 2% p.a., that is an income of $200 million, which is an order of magnitude more than what our contemporary Mr Darcy makes.

James Heldman also refers to the economic historian G.E. Mingay, who estimates that there were only 400 families among the landed gentry of England with an income in the range of 5,000 to 50,000 pounds per annum, with the average being about 10,000. To keep things simple, lets say that puts Mr Darcy in at about the 200th richest man in his England. Mark Zuckerberg is the 14th richest person in his America, trumping Mr Darcy once again, without any fiddly adjustments for the larger population in today’s America. However one looks at the numbers, our contemporary Tiger Mom Mrs. Chan has outperformed the proto-Tiger Mom Mrs. Bennet.

At this point, the top performing Tiger Mom in the jungle would need to pause, offer the other Tiger Moms a cup of tea, and initiate a conversation about how money doesn’t really matter, that there are many qualitative things like character and compatiability that make a marriage successful. This blog would like to join the Tiger Moms in drinking a cup of tea. This blog would also like to wish all happiness to the newlyweds Mark and Priscilla. May they play many Limca Cuts.

Why the Irish, and Indians, rationally believe in fairies

"Because the upside to disbelief is too small."

Zigackly. I picked this gem up from Michael Lewis' hilarious new book, Boomerang. The passage in question is about Ireland:

Ian (Michael Lewis' Irish guide) will say “Over there, that’s a pretty typical fairy ring,” and then explain, interestingly, that these circles of stones or mushrooms that occur in Irish fields are believed by local farmers to house mythical creatures. “Irish people actually believe in fairies?,” I ask, straining but failing to catch a glimpse of the typical fairy ring to which Ian has just pointed. “I mean, if you walked right up and asked him to his face, ‘Do you believe in fairies?’ most guys will deny it,” he replies. “But if you ask him to dig out the fairy ring on his property, he won’t do it. To my way of thinking, that’s believing.” And it is. It’s a tactical belief, a belief that exists because the upside to disbelief is too small...

To my ears, that rings true of India too. Superstition is about economic, rather than scientific, rationality. Lewis' chapter about Ireland is still visible at Vanity Fair.

Death to Rummaging

I am in the market for a new bag. Nothing special, just a simple duffel bag for everyday use. The one specific feature I want is an optic yellow inner lining.

This is the bag I use today.



It isn't bad. It is a Samsonite, the fabric is tough, the zipper works fine. But the inside of the bag can get as dark as the belly-of-a-whale, especially indoors. Finding my wallet, blackberry, goggles or even a dark coloured t-shirt involves a fair bit of rummaging, rather than just spotting.

This is the bag my children use.



It is clearly better than mine. The cheerful optic yellow inner lining makes it easy to spot stuff inside the bag. No rummaging required. I bought it years ago in the USA, without realizing its virtues. I want another bag like this.

However, this is surprisingly hard to find. I looked around the shop at the club. All the bags on display had black inners, even if they had florescent colours on the outside, sort of the wrong way around. I don't know how representative the shop at the club is, but clearly, brightly coloured inner linings for kit bags are not an industry standard.

The same shop sells tennis balls. The tennis balls are all optic yellow, which is mildly irritating, because the tennis balls are optic yellow for exactly the same reason the inside of the kit bags ought to be optic yellow, but are not.

Why has the better-product-wins logic played out so neatly with tennis balls, but not with kit bag linings? It might be because luggage is more about fashion than function, whereas tennis balls are entirely about function. Though, I don't quite buy that; generally, good function is fashionable. It could be because of the institutional unity of tennis. Once the grand slams decide yellow balls are better, the entire tennis world follows their lead. There is no similar grand slam-like authority for luggage, identifying and modelling the better products.

For whatever reason, it seems I can't buy the kit bag I want even on the internet. Shopping websites show luggage outsides, but don't specify the colour of the inner lining. Looks like I will be rummaging around for my wallet in the belly-of-a-whale for a while longer.

The Ghost, The Darkness and Rational Exuberance

I was presenting at a business conference last month, and started my piece with this home-edited five minute clip from a favourite 90s film, The Ghost and The Darkness.



This broke the tedium of hour after hour of Power Point presentations. But that apart, this film clip did try to make a point. The Ghost and The Darkness is about an engineer who is desperate to protect his people from man-eating lions. He has an idea to trap the man-eaters. The idea doesn't work out. Regardless, it remains a very good idea. The point is, in real life, most good ideas don't work out.

It is easy to think ideas that don't work out are bad ideas. Yet, the difference between ideas that work out and ideas that don't are usually small tweaks, timing, or pure dumb luck. I loved this NY Times article published in February 2010, when Apple was making waves with the iPad launch. It is by Dick Brass, a former Microsoft executive who worked on building a Windows Tablet PC way back in 2001. This project failed. The tablet group at Microsoft were eliminated. Regardless, the potential for tablets remained as good as ever.

My presentation went on to describe how my employer's products and services help companies institutionalize innovation, which is not an appropriate topic for this blog. But zooming out, this thought does feel relevant to the zeitgeist.

In the aftermath of the dot com bubble, and then the housing bubble, it is easy to be negative. Most people been stung by too much optimism, too much faith, by irrational exuberance. Rational cynicism feels like an antidote. It is easy to believe that every girl or guy who comes up with a crackpot scheme to catch man-eating lions is stupid, or a self-serving crook, or both. "It will never work" feels intelligent, prudent, a good default setting.

The trouble is, dominant black hat thinking is becoming a self fulfilling prophecy. Kick-starting growth has to start with an act of faith; with believing that lion-catching contraptions are worth building, even if many of them are going to fail. John Maynard Keynes, like Wodehouse's Psmith, described this act of faith as "animal spirits". A metaphor I prefer in today's cautious climate is Leon Walras' tatonnement, French for the trial and error process of groping for a handhold while climbing a rock face. Either way, moving on is going to involve a fair bit of rational exuberance.

Red Plenty

I generally review books after I have read them, but I'm posting about Red Plenty when its still in my Amazon shopping basket. I heard about this book's premise on the radio, and the premise may turn out to be its most more interesting part.

Here is what the front flap says:

Once upon a time in the Soviet Union...

Strange as it may seem, the grey, oppressive USSR was founded on a fairy tale. It was built on the twentieth century magic called "the planned economy", which was going to gush forth an abundance of good things that the lands of capitalism could never match. And just for a little while, in the heady years of the late 1950s, the magic seemed to be working.

Red Plenty is about that moment in history, and how it came, and how it went away; about the brief era when, under the rash leadership of Nikita Khrushchev, the Soviet Union looked forward to an future of rich communists and envious capitalists...

This was the time between the launch of Sputnik in 1957, and the Cuban missile crisis in 1962, when the Soviet Union looked and felt rich and successful. It felt like the Soviets had invented a wonderful new world, both morally and materially superior to the West. So...this was the illusion, the chimera, that lured Nehru's India into decades of socialism and stagnation.

Red Plenty's hero is Leonid Kantorovich, the only Soviet to win the Nobel Prize for Economics. He invented linear programming (among other things), and so helped create the impression that Soviet science could allocate resources more effeciently than capitalist markets. The book is a melding of fact and fiction about how that vision was, and was not, true.

The other book in my Amazon shopping basket is Michael Lewis' The Big Short. I've actually started reading this book, but I didn't finish my father-in-law's copy on our last trip to Madras. It feels like a nice counter-point to Red Plenty. It too takes us back to a far-away past, the time between the fall of the Berlin Wall and the fall of Lehman Brothers, and reminds us that capitalism can also fall into catastrophic science-induced hubris.

Tiger Mothers and OPEC

Amy Chua's fifteen minutes of fame are almost over. The Tiger Mother story has played itself out as a news item. Yet, after having read the Economist, Elizabeth Kolbert in the New Yorker, David Brooks in the NYT, Larry Summers in the WSJ, The Guardian, Slate and probably a dozen other stories about The Battle Hymn of the Tiger Mother, I feel like the mainstream media are missing the central point, the reason why Tiger Mothers are both so heartening and so scary.

By now, most blog readers probably know the outlines of Ms Chua's story. Her book, Battle Hymn of the Tiger Mother, is supposedly a memoir about raising children on a strict regimen of no TV, no video games, no play dates and no sleepovers. The time that was freed up was reinvested in music practice and homework. Her regimen worked. Her daughters, now 18 and 15, grew into music prodigies with straight A grades.

Amy Chua spiced up this unsurprising story with the provocative claim that Chinese mothers are superior to Western ones; that her experience is evidence of this superiority. By mischievously framing the question in racial, or geopolitical, terms, she twanged a bunch of recessionary anxieties about Western decline and the rise of China. She has been rewarded for this cynicism with a firestorm of media commentary, and a place on both Amazon and New York Times bestseller lists. The racial and geopolitical sub-text is so deliciously juicy that it has drawn most of the media attention.

However, to me, the Chinese angle is irrelevant. I grew up among the Tamil Brahmins of Mylapore, a culture which is chock-a-block with Tiger Mothers. This also kills the theory that Tiger Mothers are somehow products of the immigrant experience.

This isn't about Asian values either. Slackistan, a new movie I'm itching to watch, should illustrate this point. It is about the indolent lassitude of privileged young Pakistanis; Asian setting, no Tiger Moms in sight.

American Jews are pushy parents, according to stereotype. In this, they are no different from other Western families who want to provide well for their children. Spotting Western Tiger Parents from a wide range of cultures is as easy as watching tennis on TV. Venus and Serena Williams' dad Richard, or Andy Murray's mom Judy, or Martina Hingis' mom Melanie - Tiger Parents all. Every race, religion and ethnicity can and does embrace the Protestant work ethic, in the right circumstances.

Those right circumstances are defined by incentives. Tiger parenting happens when parents respond to incentives. If good grades open up a credible path to a better life, parents will push their children to get good grades. The bigger the gap between the parent's life and the promised life for the children, in terms of either tangible income or status, the harder the parent will push the children.

Slightly less obvious, the same dynamic works with parents further up the food chain. These are parents in high-status positions, who are not wealthy enough to pass the same status on to the next generation. Senior civil servants, army officers or tenured university professors like Amy Chua, who are rich in status but not in wealth, might push their children even harder than the aspiring middle class. One of the clearest results in behavioural economics is that the pain of losing something is far greater than the joy of gaining the same thing.

On the other hand, Bertram Wilberforce Wooster and members of the Drones Club were so completely secure in their privilege that swotting to better one's life made no sense. Ditto for George W Bush. Ditto also for Jawaharlal Nehru, who was never more than an average student through his Harrow and Cambridge years. Similarly, coal miners who can only imagine that their sons will also be coalminers are unlikely to become Tiger Dads who push their sons to straight As.

Looked at this way, Tiger Parents, and the middle-class bourgeois values they reflect, are fundamentally good. They inhabit worlds with social mobility. They inject even more mobility these worlds with their energy, ambition and enterprise. They make democracy and capitalism possible; if this feels like an over-claim please read Fareed Zakaria's The Future of Freedom, a book I loved and wholeheartedly endorse.

So ambition and hard work are good. But how much is too much?

The scary thing about Amy Chua is not her ambition, or her Chinese-ness (she is a second generation American, married to a Jew, whose parents emigrated from the Philippines). Her problem is extent. No TV or video games until homework and music practice are done? Fine. No dinner unless the "The Little White Donkey" is played perfectly? No way. But that, apparently, is what Amy Chua does.

I find the most intuitive way to understand this is with another Econ 101 concept: cartels.

Consider OPEC, the cartel of twelve countries which controls most of the world's crude oil. It is in the best interests of the group as a whole to maintain a high price for crude oil. Their oil ministers meet, agree on production quotas, limit supply, and drive up crude oil prices to profit-maximizing levels. However, it is in the best interests of each individual country to renege on the agreement, and produce more than the agreed quota of crude. The higher the price of crude, the stronger the individual country's incentive to renege (especially if it is a democracy heading into an election year). As more countries renege on their production quotas, the price of crude drops, and ideally the cartel breaks down in a flurry of bitterness, finger-pointing and name calling.

Cartels can also do good. Everybody benefits from low trade barriers. Each country has an incentive to "cheat" and raise protectionist walls for local political gains. Supra-national arrangements, like the WTO or the EEC, are all about making it harder for individual countries to cheat, and therefore making everyone better off. In general, cartels work if they have fewer participants, if cheating is easy to spot, and if punishments for cheating are severe.

The supply of homework hours is analogous to the supply of crude oil. All families would be better off if there were limits on pushy parenting; say, children have at least an hour of unstructured time every day. The problem is with enforcing a cartel to limit the supply of homework time. Lots of suppliers, no way to monitor cheating, no punishments for being caught... this cartel would break down in a flash. Tiger parents will immediately turn that hour of free time to homework, to get ahead of the competition.

One of the few things I love about Amy Chua's story is that for fifteen years she never told her peers how hard she pushed her kids. She fabricated medical reasons why her daughters couldn't go on play dates or sleepovers. Her peers had no way to know she was "cheating", and couldn't punish her with social ostracism. A lot of the vitriol being directed at her now is the finger-pointing and name-calling that happens when a cartel breaks. I'm sure a lot of the finger-pointers and name-callers are secretly vowing to double-down and push their children even harder. I don't think there is a happy and harmonious resolution to having Tiger Mothers in our midst.

Sport as a metaphor for life might work here. A sportsman needs to focus, play hard, and play to win, even when the opponent isn't playing the right way. Say the umpire doesn't call a chucker at cricket. As a batsman, you just mark your guard again and bat on. Say your opponent is calling your shots long at a club tennis match. You stop going for the lines and find another way to win. Playing their game is not an option. Letting them win is also not an option. I guess that is one way to deal with Tiger Parents, because for better and for worse, they are here to stay.

Etah, ASBOs and Skybet

"I started my management career in a backward village in Etah, Uttar Pradesh. I lived in the village, as one of the local people, trying to improve their lives.

Women in my village walked five miles each way, every day, to get water for their families. This was obviously a big effort; it left them physically drained. Couldn’t we improve these women’s lives by putting in a water pump, right here, in our village? Of course, easily done. My company bought and installed a new water pump in the village. But that didn’t work out. The women still had to do their daily hike for water because the water pump never worked. It got vandalized at night, either for components or by local boys with nothing better to do. My company repaired the pump, again and again. But it never worked.

The breakthrough came when the company stopped buying the pump, and said the villagers would have to buy a new pump themselves. Sure the company could top the pot up with cash if needed, but each family in the village would have to contribute towards buying the pump. There were no exemptions for poor families. The could make really small contributions of one or two rupees. But everyone had to contribute. It took months of conversation, cajoling and threats of being socially ostracized to get every family to contribute. But once they got there, once the villagers had their pump with their own hard earned money, the pump stayed in repair. People would protect their pump from thieves, vandals knew they would be ostracized. Nobody cares about a company’s pump."

This is not a parable. I heard this story as a historical account, from a friend who now teaches at Stanford. He started his career with Unilever India as a management trainee. This prestigious Unilever program places trainees in villages in Etah, a backward part of Uttar Pradesh, for six weeks.

This placement provides Unilever trainees - who mostly are privileged, ambitious, well-educated, upper-middle-class youngsters from India’s metros - with a lifetime supply of interesting stories. There have been insinuations that the sole purpose of the Etah placement is to equip management trainees with good stories. These insinuations are not true. Unilever has a dairy factory in Etah. The company is engaged in an Integrated Rural Development Program (IRDP) in the surrounding villages to improve the supply of milk to its factory. Management trainee placement in Etah is a part of this larger serious-minded program.

This story keeps coming back to my mind because its insight, call it the Etah Insight - that public enterprises work only if the populace are emotionally invested in the enterprise - feels bleeding obvious, but is so often ignored.

For instance, just last month, the Con - Lib government in the UK announced an emergency budget. They are raising the personal allowance by $1000; so 880,000 families will be taken out of the income tax net. This sounds both pro-poor and fiscally responsible, and has attracted almost no comment from the mainstream media. However, looked at through the lens of the Etah Insight, it could actually mean 880,000 more families have less of an emotional stake in their society’s success.

Taxes need not be about revenues. They could have a role to play even in households who receive more in benefits than they would ever pay in taxes. People who realize that benefits and government services are not free are more likely to use these services responsibly and respect the society which provides these benefits.

Taxes could be re-framed, like voting, as a part of a broader social contract. Benefits become a part of a contract rather than a pure entitlement. Taxes, despite being involuntary, could help foster a sense of ownership in the “broken society” that David Cameron’s Conservatives once cared so much about.

Stimulus spending, which is a bit like buying water pumps for villages, is in the news across the pond. The commentary is predictably sterile and partisan, with the left talking up spending and the right claiming that the $787 billion stimulus did not work. The Etah Insight suggests that the more creative conversation is in the middle and a few levels deeper; about precisely where stimulus spending would work, which depends mostly on whether the social norms to make stimulus work are in place. Will the stimulus pumps remain intact, or will they just get vandalized by the local yobs?

The Etah Insight also suggests that the pain of paying taxes matters. It is clearly easier to collect taxes like VAT and TDS, which are perceived as higher prices or lower incomes rather than as a price paid for governance. However, making it necessary to pay hard cash for government services could produce a more engaged, and ultimately more successful, citizenry.

The Etah insight is not on the public agenda, but the bookies are one constituency who seem to get the idea. Betting remained robustly recession proof through this World Cup. Why? Skybet’s advertising slogan hit the bunny on the nose: it matters more if there’s money on it.

Crocodile Safari

Had stopped by at the Madras Crocodile Bank recently. The overwhelming impression I came away with was one of plenty. Plenty of crocs, piled up on top of each other. Well fed, too. Tourists can pay Rs. 60 for the privilege of watching the crocs eat dead rats which are tossed into the croc enclosures. Sometimes the crocs don't bother moving and simply ignore the rats; they're too full.

The crocs which are most obviously thriving at the Croc Bank are Mugger or Marsh Crocodiles. Other species are hard to spot in their enclosures; the Muggers are the ones piled up on top of each other. Muggers at the Croc Bank have taken to double clutching, one female laying two clutches of eggs in a season, a phenomenon that has not been observed in the wild. This astounding fertility has led to a Mugger-boom and allowed the Croc Bank to supply Muggers to zoos and wilderness restocking programs around the world - Bangladesh was down to a single crocodile in a tank at a shrine before the Croc Bank shipped some across the border. It has also led to a surplus stock at the Croc Bank of 1000 Muggers. My inner economist can't help asking the question - should these animals be harvested?

The stock answer is NO! A legal trade in wildlife products generally makes poaching more lucrative. If the Croc Bank sells Mugger hides to licensed dealers, it becomes harder to protect more vulnerable sub-species like the Philippine Crocodile from poachers. This is why, say, ivory from elephant culls is not sold.

However, it turns out that trade in crocodilian skin is entirely legal, and that this seems to be helping conservation. There are now commerical crocodile (or alligator) farms in Australia, Africa and the USA. And commerical farming seems to be working. Here's a quote from an American alligator farm web site:

In the 60's, the American alligator had almost become extinct and was placed on the endangered species list by the Federal Government. Commercial farming was correctly seen as a way to ensure the preservation of this reptile.

Why is this working? There is a nice little Powerpoint presentation on the CITES website which provides a clue. Back in the early 80s, the international trade in croc skins was over a million skins a year. Almost all these skins came from the wild. Today, the volume of trade is about the same. But 80% of this trade is in skins from ranches or captive breeding facilities. This is relatively easy to regulate because there are only five tanneries in the world which process croc skins. Skins which don't get processed at these tanneries are basically worthless, and so are unattractive to poachers. So croc conservation becomes this self supporting little econo-system, saving the crocs from extinction without competing for tax revenues or charity.

This conservation success story also has a cultural benefit in the American south. Alligator meat is a part of traditional Cajun cuisine, and thanks to the alligator's remarkable comeback, its meat is back on the dinner table.

The only little grouse I have with this story is that the majesty of a wild animal in its natural setting is somehow lost in this business of commercial farming and theme parks. But even here there may be a marketing opportunity. Maybe red blooded men could go adventuring into the swampy jungles of Queensland on a crocodile safari, hunt down their reptilian prey, cook it Cajun style over a campfire, and capture their experience in free verse. A new-age male-bonding rite-of-passage. It wouldn't sell in Bangalore or Chennai. But in Queensland? Would Queenslanders like Matthew Hayden or Andrew Symonds buy an all expenses covered wilderness experience like that? They just might...

There but for the grace of you go I

Came across this story in the New Yorker, a profile of a liberal Iranian economist called Mohammed Tabibian. Has stayed in memory because Iran, seen through Tabibian's eyes, reminds me so much of India.

Here are some nuggets that I really liked:

- Tabibian speaks with a lucidity and directness that is startling in a culture marked by allusiveness and elaborate courtesy

- In Iran the spectrum of economic thought, Tabibian joked, "runs from left to left". The so-called convervatives... talk of redistributing Iran's wealth, not of re-structuring its economy

- "The common morality was that if the rich give a part of their wealth to the poor, then the poor will be helped out. Many days and nights, in my imagination and daydreaming, I distributed the wealth of my family to the poor in my neighbourhood. Always my calculation came to the same conculsion: that such an imaginary scheme, even if it happens, makes us poor and the neighbourhood not much better off"

- Tabibian is not bothered by the negative example (of free markets run amok) unfolding in the West. "We are on two different sides of the spectrum. You need more regulation. We need less regulation and government intervention"

- The senior Iranian clergy at Qom "were nice people, gentle people, very concerned about morality and things to come from the other life". Their economic presriptions, however, were vanishingly vague: society should be prosperous, people should not be greedy

- After the Revolution, the Central Bank had only one clear priority, to abolish the interest rate which was deemed un-Islamic. And yet, no matter which policy the Central Bank pursued, interest quickly reappeared. A bank branch in Tehran would place a red car on its roof and announce that all depositers would be entered into a lottery for that car - a strategy that allowed the bank to pay a variable rate of return on its deposits. Bankers even found ayatollahs who would issue fatwas in support of their schemes

- The revolution had made education available to more Iranians. But there was no role for these people in an economy that depended not on productive industries but on the dispensation of oil-rents

Blogger or banker?

Here's the theory on people who work for a bank and blog for fun. Do they think of themselves as bankers or bloggers?

It boils down to their Ginis. You see, some people have magic lamps inhabited by blue-suited banker Ginis, some people's magic lamps have sailor-suited Ginis... :)

Actually, a Gini coefficient is a measure of statistical dispersion, and is a standard measure of income inequality in a society. My take is that people from more unequal societies are more likely to define their identities in terms of who they are at work.

Why?

Imagine a relatively well-off person living in an obviously unequal country. He needs to make peace with the fact that he lives a comfortable life, but the people from the slum/ favela/ ghetto/ council estate/ inner city live obviously miserable, abysmal lives. The sheer presence of that abyss, the unspoken fear and guilt that that abyss evokes, pulls at the psyche of the comfortably-off like gravity. The psyche protects itself from that pull by believing that privilege and comfort are deserved, earned, by hard work, by education, by qualifications, by seriousness.

In this unequal context, it is hard to think of oneself in purely frivolous terms. It feels like being the surfer on the beach in Apocalypse Now. Its the reason why cricket in India or football in Mexico are not just silly games played for fun, they are about the redemption of national pride.

So what do I expect to observe in the data? I expect people from more unequal societies to wrap their identity ever more tightly around their professional selves.

Here are Ginis for some of the OECD-30. Their rankings are:

1. Mexico: .474
2. Turkey: .430
4. USA: .381
7. Great Britain: .335
8. New Zealand: .335
12. Canada: 0.317

The two most unequal OECD members are Mexico and Turkey. Fortunately, I have friends from Mexico and Turkey who tell me their compatriots unambiguously define who they are in terms of who they are at work.

Also, to my earlier observation, Britain's Gini is the same as New Zealand, and is a lot lower than the USA. Canada is even further away from the USA than is Britain. So if the theory holds, Canadians should be a less likely to derive their identity from work than either Americans or Britons, despite Canada's stereotypical cultural location somewhere in-between the USA and Britain.

India is not in the OECD. So I looked up the World Bank's Ginis metrics, which show that India is better (i.e. more equal) than the USA.

While that is flattering, and says something important about the world's only superpower, the World Bank might be systematically underestimating South Asian inequality. Pakistan looks really good on the same metrics, more equal than the Netherlands, Canada, France or Switzerland. That doesn't ring true. My hunch is that India really is in the mid - 40s pack, along with Mexico, China, Jamaica and Turkey.

A more classical theory, which involves no melodrama about the gravitational pull of the abyss, is the impact of marginal tax rates on labour supply. More equal societies have higher marginal tax rates. People therefore have less reason to work hard to earn money. They therefore invest more of their time, and identity, in leisure rather than labour.

I buy into the conventional theory, but it doesn't quite feel complete. Maybe that is because I remember an India with high marginal tax rates, in Indira Gandhi's time, when people still wrapped their identities around their work, even if they didn't work especially hard. The ways in which people construct their identities change more slowly than tax policy.

Boars, Bears and Core Competencies

Being an omnivore is a winning strategy for bears and boars. Does the same logic work for business corporations?

Most management thinkers like corporations to be specialists (like anteaters) rather than omnivores (like boars or bears). CK Prahalad and Gary Hamel, the Core Competency gurus, usually advise businesses to stick to their knitting, do what they do best, and buy the rest on the market. This is not an especially new idea. Think back to Adam Smith’s pin factory or David Ricardo exhorting Portugal to stick with making wine and buy English cloth. Specialization leads to efficiency, which raises productivity and therefore incomes.

But are specialists too fragile? If one wants to think about businesses as institutions which are meant to be resilient to the madness which sometimes infects markets, maybe boars and bears are better role models than anteaters, hummingbirds or cheetah.

Adam Smith and the Mystery of Mushie

I finally discovered why Mushtaq Ahmed, the Pakistani leg spinner, was so much more successful bowling for Sussex than any other team. Angus Fraser writes:

"When Sussex signed him for the 2003 season not even the club expected him to have such an impact. His initial deal was on a modest basic salary with huge bonuses for taking wickets. The contract worked. Mushtaq claimed five 10-wicket hauls to become the first bowler in five years to take 100 county championship wickets in a season, and Sussex's 164-year wait for the county championship ended."

The power of incentives. Angus goes on:

"It is a mystery why such a fine bowler failed to have similar success in Test cricket."

Was the Pakistan Cricket Board enlightened enough to offer Mushtaq steeply sloped incentives linked to an objective measure of performance? No. It is stunningly unsurprising that Mushtaq bowled with more heart for Sussex than for Pakistan.

A more serious point: the incentives need to matter at a visceral level. At a cognitive level, every player always wants to win. The bones don't always agree. South Africa are playing like their bones packed up and went home home after the Edgbaston test.

Working hours

Found a interesting natural experiment on culture at my workplace.

As a manager, my approach to working hours has always been laissez faire. I'm fine with members of my team working whatever hours suit them, as long as commitments to colleagues are kept. Some people come in at 7:30 and wrap up by 4:30. Other come in at 10:00 and work till 7:30. Still other, like me, frequently do a second shift between 9:00 and 10:30 after the kids are in bed. This works just fine.

I recently discovered that my successor at the department I used to run until early 2007 has a different approach. He expects people to be in at 9:00. And he shoos home the laggards who're still working at 5:30. And while the panache and elan that this department had in my time are missing, this approach also works well enough. There isn't one right answer here.

However, the two right answers produce interestingly different selection effects.

My laissez faire approach tends to favour ambitious people willing to work long hours to get ahead. Other things being equal, people who were willing to put in 70 hours a week instead of the typical 50 would achieve more and be rewarded for that achievement. And I did observe a handful of people who were ravenously hungry for success choosing to burn their weekends at work trying to get ahead.

Under a more rigid 9:00 to 5:30 culture the ambitious can't catch up with more talented, knowledgeable or likable colleagues by sheer dint of hard work. Preventing over-long working hours is sort of like a price-setting mechanism in a cartel. People who work too many hours would be "punished" by an external or superior enforcer.

As a result, one would expect people with boundless raw ambition to self-select out of the organization. The culture would increasingly reflect the choices of people with ambition, but who are less willing to make personal sacrifices for the sake of ambition.

Nothing wrong with that. But over time, it does produce an interestingly different culture.

Shaping the beast

Where does culture come from?

I found myself arguing on my blog that culture is a given. More specifically, that corporate cultures are deterministically shaped by underlying economics. Companies, great companies, get good at the stuff that sits in their economic core and build rich cultures that celebrate and enhance that core. Even great companies remain mediocre at pretty much everything else, and have weak, transactional cultures in non-core areas.

I have also found myself passionately arguing on my friend Vishnu Vasudev’s blog that culture is malleable. The music lovers of Madras can be trained to sit in their seats until the concert is over. There is nothing about Madras or its culture that prevents this basic courtesy from taking hold.

Do I really believe both ideas? When is culture malleable? When is it diamantine?

Rattled the options around in my head over pints of Grolsch at Canal House last evening. Came up with a list of three culture-shapers. Economics and leadership were the usual suspects. The surprise candidate, the one I like most, was design.

Incentives shaping culture is obvious, to the point of being anodyne. It probably is the one thing Marxists and Chicago school liberals will agree on. The point worth remembering is that soft incentives - prestige, tribal membership, reinforcement of identity, shame, inertia - these are often more powerful incentives than explicit money.

So, incentives work. What else? Leadership? On no other topic have have more words been expended to say less. Naw, please. Lets not bring that cheezy, nutritionally-deficient, management jargon into this blog :)

More seriously, leadership can be transformational. Authentic leadership is rare, and can be an amazing experience for both the leader and led. I'm a huge fan of what Saurav Ganguly did for the self-belief of the ~20 Indian cricketers who played under him. Saurav and John Wright really did change the culture of the Indian cricket team. Dhoni (more than Kumble or Dravid) carries the torch Saurav lit.

But, unfortunately, authentic leadership depends on personal chemistry, which doesn't scale.

In larger organizations, leaders tend to reflect cultures more than they shape them. Strong cultures are very good at self-selecting clones. At best, change-leadership in large organizations (or even nations) is about sensing the shift in the tectonic plates the organization stands on, and preparing the organization to positively respond to that shift. Those tectonic plates are mostly economic.

So incentives work on both a large and small scale. And personal leadership works, but on a small scale. What else is out there?

Design. Architecture. Physical organization. Much more interesting.

An Agile team - with business customers, systems analysts, testers, developers and the copier boy all crammed into a messy conference room - creates a culture, a vibe, which is 10x more effective than the same people with the same incentives sitting at their desks and pinging emails at each other.

A suite of offices organized around a service hub - fully equipped with printers, sofas, steaming coffee, and streaming sports coverage on a plasma screen - creates a more social and collaborative work place than a bunch of closed doors along a long corridor.

Offices with glass doors and/or big windows opening on to the corridor takes that a step further, and also reduce the risk of corruption.

Facebook's instant messenger works on the same general principle of manufacturing chance meetings. I wind up chatting with friends I was not specifically planning to call. A laptop in the kitchen means the net gets used a lot more than when a desktop sat upstairs in the study.

My first job was at Procter and Gamble in India. While I was there, P&G formalized the dress code (made ties mandatory) as part of an effort to make the culture more formal, accountable and better at completing projects in time, within budget and up to specs. The broader effort worked. The dress code change was not irrelevant.

A petting zoo under the stands at Twenty20 cricket matches makes it easier to take kids along. I was glad to have this facility at hand at Trent Bridge earlier this summer. Changes the mix of fans in the stands.

The famous broken windows theory maintains that smartening up a neighbourhood can actually reduce crime in that neighbourhood. Policing inspired by this theory is credited with a part of reduction in urban crime in America, in very serious circles.

A lot of this can, of course, be interpreted economically. A laptop in the kitchen is less costly to use, in terms of effort. Accepting a bribe in a glass office is more costly, in terms of embarrassment or risk. The dress code change sends a "signal" about what the organization now values.

But it is more fun, and perhaps more useful while planning culture change, to think about these changes as design rather than incentives changes.

Scrabulous scandal

Start with first principles.

Intellectual property right (IPR) laws exist to increase the stock of knowledge in the public domain. Giving innovators a time-bound monopoly hurts the public interest in the short term. But it helps the public interest in the long term, by increasing the rewards on innovation.

Notice that the argument works only if the knowledge created actually filters into the public domain. The argument might work in pharmaceuticals. Patented drugs do become generics in fifteen years.

This is totally not working in media/ entertainment. Private businesses seem to have a lock on media/ entertainment properties pretty much in perpetuity, to a point where I simply can't believe that the public interest is being served.

Take the latest absurd scandal . A company called Hasbro claims to own rights to Scrabble. They therefore claim that the boys who developed the Scrabulous application are violating Hasbro's copyright.

Let's even assume that the corporate lawyers have their papers in order. Where is the moral case here? Scrabble was invented in 1931. Why is this game not in the public domain 77 years after it was invented?

To make this situation even more absurd, Scrabulous is not a knock-off. It is a real value added innovation.

There are any number of small businesses which will print and sell the old off-line Scrabble without paying Hasbro royalties. Seems reasonable that they shouldn't have the right to print and market zero-royalty copies for 15 years. Feels like even the argument breaks down somewhere between 15.01 and 77, but there is an argument.

But with a true innovation - one that delivers massive amounts of additional value to at least some end users - isn't that what IPR laws are meant to be enabling? And these same IPR laws are now being used to prevent such innovation? This is a system that has been perverted to the point of absurdity.

Separately, the business executive in me can't help spotting mutual interest.

I suspect the Agarwala brothers would not be averse to an appropriately valued buy-out. Nothing at all wrong with a buyout. Reminds me of a pitch-your-business-idea-to-venture-capital competition when I was at B-school. Six out of eight teams' exit strategy was to sell out to Microsoft. All that may be going on here is legal posturing by Hasbro to scare the developers into accepting a lower price.

It's just a shame that laws that were initially written to serve the public interest can be used to create the opposite of what was intended.

Fun days, summer balls, team spirit and all that jazz

I'm seriously back-logged at work after a day out water skiing, a night out camping and a night out for the summer ball...all company events. Got to spend lots of time out soaking up the glorious English summer, and to reflect on corporate fun events and how they work.

- Conclusions first. My top management tip. Spend the money, create the time, and make sure your team does lots of fun stuff together. The return you get in terms of morale and productivity (less time wasted on whingeing/ managing the whinge) is huge

- The cricketing parallel...more games are won in the dressing room than on the field

- Things I remember doing on Fun Days include, in no particular order: water-skiing, white water rafting, yatching, steering a canal boat, camping, ultimate frizbee, fishing, mini-golf, tennis ball cricket, baseball hitting in batting cages, softball, bowling, skiing, laser tag, rock climbing, a ropes course, hiking up Snowdon (the highest peak in Britain), hiking up Scafell Pike (the highest peak in England), quad bike racing, go karting, a treasure hunt through the "heart of rural England", archery, ice-skating, clay pigeon shooting, visiting an aquarium, visiting ESPN Zone, visiting an amusement park with many roller coaster rides, and wine tasting

- This does not include Community Days, which might involve riding a bicycle 75 miles across the Pennines, building a house for Habitat for Humanity, or painting the hall of an inner city school

- Fun Days are fun despite being hopelessly bad at the fun activity. This is less obvious than it sounds. Games I play regularly, like squash, are fun when I'm playing well and no fun when I'm playing badly

- The Fun Day is mainly about being out with the blokes from work, and not talking work. The activity is just time structuring

- The hardest thing about fun days is being inclusive. The activities I've listed above reflect the culture of the teams I work in...mainly quant jocks in their 20s. The teams are very diverse in terms of ethnicity/ race/ nationality, but are very homogeneous in attitudes/ interests/ mind-set. I remember a gentle, soft spoken girl who decided to make herself unavailable for white water rafting because she couldn't quite picture herself in a wet suit. That didn't feel right

- Twenty20 cricket games don't qualify as official Fun Days, because they are not inclusive enough

- It's impossible to be completely inclusive. Our most feminine fun events are probably the Summer and Winter Balls. These tend to involve nice clothes, stately homes, fine food and wine, live entertainers or fireworks, karaoke, an open bar and disco dancing. A shaven-headed Australian Vice President in his mid-forties consistently boycotts these evenings, since he "doesn't want to watch 23 year olds getting wasted and throwing up in the toilets". In case you're wondering, I've never seen or even heard of anyone throwing up in toilets at company events

- Fun Days have no impact on the number/ quality of people who apply for jobs at this company. Potential recruits, especially graduates, care a lot more about pay, prestige and career prospects than fun or culture

- Fun Days, and the broader culture that they are a part of, are great for retention. Culture is a big part of what people like about their jobs here. It is a key reason why people who leave want to (and often do) come back. People leaving and coming back...and the incentive that creates to leave on a whim...is a topic for another post

- The disconnect between the selection effect and the retention effect is quite an interesting puzzle, really. When asked, graduates say they want "serious" jobs. Join us because we do cool Fun Days sounds condescending. That apart, there are at least three other interesting economic effects going on here:

(i) Competition. Other employers competing for the same talent also do Fun Days

(ii) Asymmetric information. Everybody says their company is fun. But is it? Really? An extra $5000 is real for sure

(iii) Consumer choice theory. People are really bad at forecasting what they enjoy/ care about/ derive utility from. They overestimate the utility of obscure features while evaluating digital cameras. Similarly, they underestimate the utility derived from fun or culture in evaluating potential employers.