Nowadays, it’s quite common to see some of us complaining about the existence of mediums, built to provide a social experience and often, these gets called ‘distractions’. But, do we realise our individual experience of these platforms are visual reflections of our mind. In the age of convenience, machines are well equipped not only to process our choice function but also to predict our preferences. Like, you get asked to enjoy those social interactions, which have already been experienced by you for a prolonged time and the function gets updated continually by your changing preferential patterns. And I hope it can be safely assumed that you spend time on what you actually prefer, you like experiencing your preferable social interactions over those platform such as watching acts of your desire. As its out of likeliness, you can’t consciously motivate yourself to get out of it forcing you to call for external help (maybe, government) to regulate the existence of social interactions, allowing the opportunity to restrict your freedom and a future prospective topic of protest on implementation. We, certainly are hypocrites searching for a perfect equilibrium in a world of irrationality.

Looking for solutions, when there aren’t any. Maybe we are trying too hard, that’s why it becoming too difficult.

By the way, coming to the real point of writing all this, on a lonely Thursday evening was to share two lovely poems that showed up on my screen as a part of my recent social interactions.

Make the Ordinary Come Alive

Do not ask your children
to strive for extraordinary lives.
Such striving may seem admirable,
but it is a way of foolishness.
Help them instead to find the wonder
and the marvel of an ordinary life.
Show them the joy of tasting
tomatoes, apples, and pears.
Show them how to cry
when pets and people die.
Show them the infinite pleasure
in the touch of a hand.
And make the ordinary come alive for them.
The extraordinary will take care of itself.

William Martin

Into my heart an air that kills

Into my heart an air that kills
From yon far country blows;
What are those blue remembered hills,
What spires, what farms are those?

That is the land of lost content,
I see it shining plain,
The happy highways where I went
And cannot come again.

A.E.Houseman

Apart from a hypocrite, I am definitely not a literary critic. So, let us choose to enjoy the experience without a struggle.

Firstly, the title of the article may sound pretty academic but believe me, it’s open for all unlike them.

The central theme of all economic theory revolves around the demand-supply mechanism and even, the suppliers think about consumer demand before initiating production. Hence, it won’t be highly unusual to look at the demand side with a bit more interest.

I believe, one should have a two pronged approach of understanding ‘demand’ – the ‘desire’ for the product and the ‘affordability’ for the product. Lets take a closer look at the former and leave the later only to the experts. In general, when we talk of desire we tend to loosely define ‘desire’, confusing it with ideas of ‘wanting’ and ‘liking’. So, it’s important to have a holistic way of defining ‘desire’, holistic theories of desire comes into two main categories – functionalist and interpretationist. The Functionalist way would be to negate the state of desire unless the causal role of desire exists while, the Interpretationist way would be to accept having a desire only if there’s enough action (action is based out of the belief that it will fulfil the desire) taken towards the cause subject to the premise (premise is the content of the desire).

Post reviewing existing literature, Schroeder, Timthe¹ addressed ‘desire’ using below pointers,

• One typically desires ‘P’  if and only if it is disposed to take whatever actions it believes are likely to bring about ‘P’.
• One typically desires ‘P’ if and only if it is disposed to take pleasure in it seeming that P, and to take displeasure in it seeming that ‘not-P’.
• One typically desires ‘P’ if and only if it is disposed to believe that ‘P’ is good.
• One typically desires ‘P’ if and only if it is disposed to attend to reasons to have ‘P’.
• We tend to desire what is good.
• We tend to desire what they need to survive and reproduce.
• We normally desire pleasure and do not desire (better: are averse to) pain.
• We that desire ‘P’ tend to have their attention captured by information that bears on whether or not ‘P’.

Now, let me bring your attention to phenomena like ‘wanting’ and ‘liking’ and maybe try to match it up with ‘desire’. As per psychology and neuroscience, there are two different motivation centres for wanting and liking. ‘Wanting’ has an unconscious trigger getting operated from the deep brain system involving the basal ganglia and nucleus accumbent while, ‘liking’ has a conscious hedonic operating mechanism governed by the brain’s prefrontal cortex and possibly, anterior insula. In general, we want what we tend to like but there are cases, when our likes doesn’t align with our wants like, our sweet cravings during a strict diet. On the other hand, desire do seem to have some overlap with wanting and liking in few instances but doesn’t seem to have a generalised definitive causal network with either. This might sound a bit strange as we, humans are pretty casual in making statements like, we like to desire what we want!

From the viewpoint of an economist, we just need you to buy it, irrespective of whether ‘you wanted it’ or ‘you liked it’ or ‘you desired it’. But as a consumer, you should be cautious and conscious of yourself. The surprisingly funny part is even if you think you are, you actually aren’t.

1. https://plato.stanford.edu/archives/sum2020/entries/desire/ ↩︎

There are actually lots, over which I often obsess about but one such long lost obsession of mine has been with an entity called the ‘zero’. Couple of years back, I wrote a piece on the other extreme partner of zero – the ‘infinity’. Unlike infinity, the metaphysical existence of zero is questionable as we haven’t been able to justify its conceptual significance.

Now, why do I say this?

If we try to interpret the physical existence of the mathematical entity ‘zero’, we would attribute it to ‘nothing’ (not-a-thing). Let’s imagine a glass filled with water and we are emptying it, eventually the glass has nothing in it but at the same point, it’s occupied with ‘void’ (vacuum). Defining the existence of void as absence of anything or as the manifestation of nothingness, simply pushes us towards a contradiction. Allowing the existence of ‘something’ in the glass conflicts with the entire claim of having nothing in it and therefore, the idea of zero doesn’t makes sense.

The presence of void has always intrigued mankind, starting from Greek philosophers to Buddhist monks.

…Asserted that space, or the Void, had an equal right with reality, or Being, to be considered existent. He conceived of the Void as a vacuum, an infinite space in which moved an infinite number of atoms that made up Being (i.e., the physical world). These atoms are eternal and…

Democritus¹

Even in Pali Buddhism there is the Void, called sunnatta, meaning emptiness. Nibbana (nirvana) can be realized by the sole path of contemplating all conditioned things as empty, soul-less (anatta), devoid of a permanent and personal entity. Nibbana (nirvana) is the Unconditioned and hence “It is just because there is no sense experience that in Nibbana (nirvana) there is happiness,” said Buddha.

Paul Brunton²

Coming back to our zero, one interesting fact that needs to be put forward is that we have started including zero in our modern day Arabic number system while the ancient Egyptians, Babylonians and the Romans didn’t have zero in their numeric system. Then I guess, it won’t be too wrong to say that having zero in our system serves the sole purpose of solving complex equations with ease where, again the entire system of equations could be a product of our mind like our assumption of zero.

We all are in a loop and sadly, there’s no solution to our delusions and illusions. Maybe, it’s not that sad to remain unanswered.

1. https://www.britannica.com/topic/void-philosophy ↩︎
2. https://paulbrunton.org/notebooks/19/5 ↩︎

Conventionally, thanking notes are added at the end of the article but let me do it my way and thank Numberphile for introducing this beautiful thought experiment to me.

The thought experiment that’s up for discussion is the ‘Sleeping Beauty problem’. The name itself gives us some clue about the experiment, it’s about a beauty getting drugged to induce sleep and once she wakes up, gets asked with a difficult question – if you think it’s inhuman or illegal then let me tell you she has given consent and moreover, it’s just a thought!

Let me give you the specifics of the experiment and elaborate on the multiple layers of the game. The different components of the game include – a beauty (ofcourse), an amnesia-inducing drug (not only induces sleep but erases memory as long as she’s under the spell of the drug), a coin (adds randomness to the game) and finally, an interviewer/observer/volunteer (who asks questions/observes/coordinates the experiment).

The game starts on a Sunday and ends on the following Wednesday. At the start of the experiment, our beauty would be drugged followed by a coin (unbiased) toss and depending on the outcome of the toss, future actions are to be determined.

• If it’s a head, our Sleeping Beauty will be awakened and interviewed only on the next day, Monday.
• If it’s a tail, our Sleeping Beauty will be awakened and interviewed not only on Monday and but also on Tuesday.

And in either of the case, she will be awakened on Wednesday without an interview and she’s free to go.

If you are wondering about the effects of the amnesia-inducing drug, let me clarify – during the experiment, once or twice, whenever she will be awakened and interviewed, every time she would be drugged to put her back to sleep making her forget that awakening. Also, a point to note – she has consciously signed up for the experiment knowing the experimental design.

It’s time to reveal the most important bit, the ‘interview’ question that gets asked to our Sleeping Beauty –

“What is your credence now for the proposition that the coin landed heads?”

If you folks are like me, then possibly you are wondering what does the word ‘credence’ means, in simple words credence is the degree of belief one has for an event to be true. If I simplify the question too, it ends up being –

What is your degree of belief that the outcome of the coin toss is Heads?

Time for solutions!

To satisfy the growing human urge of quantifying qualitative aspects, we decided to replace ‘degree of belief’ by the term ‘probability’. By doing this, we allow us to use simple math to solve the question.

But, there’s a catch. Imagine if the solution was so easy, why would I write so much about this problem.

One straight forward approach to the problem was given by American philosopher, David Lewis –

Sleeping Beauty doesn’t receive any new non-self-locating information throughout the game as she already been conveyed details of the experiment. Since her credence before the experiment is Probability (Heads) = 1/2, she ought to continue to have a credence of Probability (Heads) = 1/2 as she doesn’t gain any new relevant evidence when she’s awakened during the experiment.

David Lewis, http://www.fitelson.org/probability/lewis_sb.pdf

In other words, at the start of the experiment a fair coin was tossed with equal chances of occurring either a head or a tail and our sleeping beauty doesn’t retain any other information other than that during the course of the experiment, so her belief of having heads on the coin should be half.

The other argument or the solution has been opposed by the Lewis and his followers. Let me bring that solution to you too but in my way. Our Sleeping beauty has to wake up twice if we have tails to be the outcome of the coin toss, so the probability of the day being Monday given tails is the outcome should be equal to the probability of the day being Tuesday given tails is the outcome, solely because she doesn’t have any memory of her last awakening, she treats both days as indifferent from each other.

If this is true,

Probability (Monday | Tails) = Probability (Tuesday | Tails)

then by rule of conditional probability,

Probability (Tuesday and Tails) = Probability (Monday and Tails)

Also, the probability of having heads on a Monday is equally likely as of having a tails on a Monday.

 Probability (Tails | Monday) = Probability (Heads | Monday)

then by rule of conditional probability,

Probability (Tails and Monday) = Probability (Heads and Monday)

Equating both results, we get –

Probability (Tails and Tuesday) = Probability (Tails and Monday) =
Probability (Heads and Monday)

and

Probability (Tails and Tuesday) + Probability (Tails and Monday) +
Probability (Heads and Monday) = 1

The answer to our standing question comes out to be one-third as heads occurs only once among the above possibilities.

What exactly happened, did I manage to convince you that mutually exclusive solutions exists for a unique problem!

Nah, nothing like that, I am not that great yet. I just brought you, a problem whose solution has always been up for a debate or maybe all the proposed solutions are right in their own way or maybe an unanswered one.

I chose to talk about this experiment as an example of the ambiguities that exists around us in various shapes and forms and their existence serves a bigger purpose of provoking us to venture into the unknown.

The journey of job search with countless rounds of interviews is pretty exhausting. At the same time, the experience of attending interviews are insightful in terms of understanding the industry demands. So, let me share some takeaways from my recent experiences and to give some background, these roles were focussed around data analytics.

Before everything, let me first get you some etymological facts about the word ‘jargon’.

• The French word is believed to have been derived from the Latin word gaggire, meaning “to chatter”, which was used to describe speech that the listener did not understand.
• The word may also come from Old French jargon meaning “chatter of birds”. Middle English also has the verb jargounen meaning “to chatter”, or “twittering”, deriving from Old French.
• The first use of the word dates back to The Canterbury Tales written by Geoffrey Chaucer between 1387 and 1400. Chaucer referred to jargon as the utterance of birds or sounds resembling birds.
• In colonial history, jargon was seen as a device of communication to bridge the gap between two speakers who did not speak the same tongue.

https://en.wikipedia.org/wiki/Jargon

In short, the word ‘jargon’ traces back to denote something which is not clearly understood and nowadays, jargons are being treated as a true measure of knowledge, quite paradoxical!

Ideally, there shouldn’t exist any sort of duality between ‘being conceptually clear’ and ‘being jargonistic’ as jargons are just names assigned to the underlying concept but I find interviewers to be quite obsessed with those specific names. However in the job, one should always present ideas in the simplest of the ways to create more business sense, a true mystery of wants!

Oh, wait!

I got swayed with the contradictions of our daily life. Let me get you some economics, for which you might have chosen to read this piece.

Imagine, someone (either a brave or a fool) asking John Maynard Keynes ‘how to make money in the stock market?’ and Keynes being the father of macroecon is expected for a response with all sort of complicated terminology. But to everyone’s surprise, he simply writes in our holy book, The General Theory of Employment, Interest and Money that stock markets work like the popular newspaper game of 1930s – The Beauty Contest. The game gives us six choices to guess the prettiest lady out of 100 photographs and if a player’s choices included the most popular face (the popular faces are those with most votes from the readers), they would win a prize.

And, the strategy to win is not to declare your own preferences as those might not be the universal preferences. The winning strategy should be to guess the other’s preferences and their guesses. In order to boil down to the most popular face, one needs to update the chosen set every time, as they go one level deeper in guessing other’s preferences.

Now, tell me does this simplified way of explaining the price fluctuations make Keynes, a less knowledgeable individual than the modern day social media finance influencers?

Maybe for some but I do believe understanding Keynes is much more difficult than being a jargonistic self acclaimed intellectual. Enough of bitching…let me come back to our discussion.

Now, it’s time to join the dots and this quote of the genius will reveal the underlying idea –

Successful investing is anticipating the anticipations of others.

John Maynard Keynes

A well informed investor invests in a stock at a lower price, anticipating other’s demand for that stock and when that demand starts getting realised at a later time (others too start buying that stock), price of that stock rises. When the price is at its peak and others anticipate the price being overvalued, the well informed one exists the market with a profit at the expense of those, who couldn’t sell it off at the right time. At the end, stock markets are nothing but a demand-supply game!

Time to end with a lesson for me and maybe for you too, only if you want to be to be at the pinnacle of success – Don’t try to change the world…you can’t, change yourself!

But, like all others, I too anticipate – ‘ache din ayenge…good days will surely come!’

Nowadays, all around wherever I see and even in my interviews, everyone is pretty fascinated with the ‘upcoming’ recession. And being in the world of economics and finance, I felt the need to talk something about it.

So…

Have you guys heard about Pygmalion, the legendary King and sculptor from Cyprus?

OR

Have you by any chance seen the movie ‘My Fair Lady’?

Now if I say, whoever answered ‘yes’ to the above questions could actually solve the riddle of the ‘upcoming recession’, would you believe me? Possibly not.

Let me help you to join the dots!

For those who doesn’t about Pygmalion or the movie ‘My Fair Lady’ – Pygmalion was a Greek mythical character, who fell in love with one of his sculptures, a beautiful statue of a lady and later that, statue became real by the name, Galatea. Much later, George Bernard Shaw got inspired and composed a play, ‘Pygmalion’ and that play was enacted through the movie, ‘My Fair Lady’. Pygmalion of Shaw revolves around a cockney flower girl being transformed to a delicate young woman with aristocratic pretensions.

For drawing the final connection, we have a prominent sociologist Robert K. Merton, who coined a term for the ‘Pygmalion Effect’ – ‘Self-Fulfilling Prophecy’. He states,

‘Self-fulfilling prophecy is a three-stage process beginning with a person’s belief – false at the time it is held – that a certain event will occur in the future. Next, this expectation or “prophecy” leads to behavioral change that would not have occurred if it were not for this false expectation. Finally, the expected event occurs and the prophecy is fulfilled.’

I believe you got a hint of where I am heading towards, our expectations play a key role in determining our follow up actions and when the same translates to the rest, our expectations come out to be true. If we all expect a recession to happen, fear of losing jobs kicks in, we start cutting down current expenditures getting investors and businesses worried about making long-term investments or expansion plans as aggregate demand of the economy is declining and the economy runs into the issue of falling national output. Its true, when we see Fed raising interest rates to control inflation (borrowing costs for businesses and individuals increases), we expect that as a signal for tough times to come and cut down our demand for big-ticket items and that disrupts the money market and supply side dynamics letting the economy to fail, which is not the ideal way to go!

I was going through an interesting article by USA Today where they spills out some important facts,

‘During the pandemic, households amassed about $2.5 trillion in excess savings from hunkering down at home and trillions of dollars in federal stimulus checks aimed at keeping workers afloat through layoffs and business closures. As a result, Americans have a big cushion of savings to help them weather high inflation and interest rates. They’ve whittled down much of those excess reserves but about $1.5 trillion still remains, according to Moody’s Analytics. Consumers also still have lots of pent-up demand to travel, go to ballgames and dine out now that the health crisis has receded. So while consumption has flagged, rising just 1% annualized at the end of last year, it bounced back and grew 3.8% in the first quarter. Also, both households and businesses have historically low debt levels, Moody’s says, so they’re not burdened by high monthly debt service payments.’

Further they mentioned, ‘consumer spending, which makes up about 70% of GDP, has been surprisingly healthy, jumping 0.5% in April after adjusting for inflation.’

https://www.usatoday.com/story/money/2023/06/09/are-we-in-recession/70304424007/

The recent reports say, things are looking better for US GDP as the household spending played a key role and can be attributed to the positive expectations of consumers even though businesses are focussed to play it safe.

Household spending, meanwhile, jumped 0.5% after edging up 0.2% in May. And incomes grew 0.3%, though that’s less than the 0.5% jump the previous month. That means incomes are outpacing inflation, extending a recent trend and giving Americans more purchasing power. That’s mostly good news, especially for low- and middle-income households whose pay wasn’t keeping pace with surging inflation the past couple of years.

The nation’s gross domestic product grew at a 2.4% annual rate in the second quarter as robust business investment offset a modest gain in household spending.

https://www.usatoday.com/story/money/2023/07/28/pce-inflation-report-slowed-june/70482453007/ 

Post the facts, let me summarise with some simple economics –

An economy ideally works through a demand driven channel and supply creeps up to satisfy the demand. Businesses/suppliers opt for their resource boost (hiring more workers, using more capital, tech innovations) to cater the overgrowing demand driven by multiple factors like population/appetite rise which solves macroeconomic problems like unemployment. Now as wages increases, willingness to spend increases, consumer prices increase and inflation hits us. Central bank intervenes raises borrowing rates, curbs our demand for high ticket items and equate demand with supply at a lower price. But, continued stark rise in borrowing rates will slow down economic growth, severely affecting the confidence of businesses and consumers pushing the economy into a depressed state.

I do understand that an economic cycles are hard to predict and can’t be explained by simple economics as markets are highly competitive with irrational agents. But we must remember, for our economy to grow – we should expect good times and business must opt for expansionary measures to catch up to our expectations.