At Ambit, we spend a lot of time reading articles that cover a wide gamut of topics, ranging from zeitgeist to futuristic, and encapsulate them in our weekly ‘Ten Interesting Things’ product. Some of the most fascinating topics covered this week are: Management (Why smart people make bad decisions), Society (Two worlds in which we live), Technology (A brief history of Bitcoin), Capitalism (Playing boardgames right), Strategy (The illusion of certainty), and Investing (The retirement fund time bomb).
Here are the ten most interesting pieces that we read this week, ended May 1, 2021.
1. Why smart people make bad decisions—and why it’s hard to learn from our mistakes [Source: worth.com]
The primary function of most of your brain’s physiology is to dampen and regulate arousal. Stress-related physical disorders are best understood as disorders of arousal. Overarousal cannot only cripple our bodies, but it can also cripple our minds. Findings from neuroscience have taught us that overarousal can play an important role in contributing to many of the poor decisions we make. If we can better understand how this happens, perhaps we can better prevent many actions we would later come to regret. Brain creates error-prone simplifications: In order to manage all of the data it must process in a day, the brain creates information-processing short-cuts, or simplifications. An information-processing simplification (sometimes called bias) is a processing filter that results from being confronted with an incomplete or overwhelming amount of information. Simplifications streamline or attempt to clarify large or incomplete data sets and allow us to reach decisions that would otherwise be daunting.
Why it’s hard to learn from our mistakes: Our brains perceive ambiguity and overstimulation as “threats” that must be defended against. Defense mechanisms are designed to ensure our survival in stressful situations. As such, they override our otherwise natural tendencies for corrective learning from our mistakes. In fact, the more we use these simplifications, the stronger they become. With time and use, the brain develops preferential pathways for information processing, decision making and action. The more we do anything, we alter our brains to become better at it.
4 dangerous oversimplifications: a) Binary Thinking – It increases volatility and causes us to ignore the details that can be the difference between success and failure; b) Intuitive Thinking: It employs pattern recognition and makes decisions based upon previous experience exclusively; c) Confirmative Thinking: Brain searches for information that confirms the biases we already hold and the decisions we’ve already made. It rejects anything that does not fit our predetermined narrative; d) Primary-Effect Thinking: This refers to our tendency to make decisions thinking only of the primary outcome desired. Also, research tells us that physical exercise and sleep are important to “prime” the brain for learning. Thirty minutes of physical exercise seems to be adequate. Exercise increases the release of brain-derived neurotrophic factor (BDNF), which is a chemical that appears to increase neuroplasticity. Lastly, sleep actually affects learning.
2. A bit of history about Bitcoin and its creator Satoshi Nakamoto [Source: Forbes]
On April 26, 2011, Bitcoin creator Satoshi Nakamoto sent his final emails to fellow developers in which he made clear he had “moved on to other projects,” at the time handing over a cryptographic key he had used to send network-wide alerts. Flash forward to 2021 and the Bitcoin story is, in many ways, still just beginning. With the price reaching new highs above $60,000, there is increasing recognition of Nakamoto’s invention – a digital money free from the control of any central party or government – and its necessity. The author of this article published new research that presents, for the first time, a full exploration of Satoshi Nakamoto’s time as lead developer of the Bitcoin project. Entitled “The Last Days of Satoshi: What Happened When Bitcoin’s Creator Disappeared,” it’s a comprehensive look at what Satoshi went through to launch Bitcoin and the choices he made as a developer, and it goes on to foreshadow why his impact on the technology has continued long after his absence.
The author also shares some things that he learned while researching Satoshi and his early work as manager of the Bitcoin code. 1) Satoshi believed Bitcoin was an alternative to central banking: He wrote on the P2P Foundation forum in February 2009: “The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.” Contrary to what critics might say, Satoshi frequently evoked central banking and money printing as issues of concern in the creation of his invention.
2) Satoshi was active behind the scenes after he “Left” Bitcoin: Thanks to new emails provided by Gavin Andresen, a developer who collaborated directly with Satoshi and took over the project in his absence, this picture is now more developed. Indeed, there was some back and forth between Satoshi and other developers, most notably on how to handle the publicity the project was then receiving, among other technical issues. 3) Satoshi knew Bitcoin was a scientific breakthrough: On the original Bitcoin.org website, Satoshi claims that Bitcoin solved the “Byzantine general’s problem,” which he has since been widely credited with doing. 4) Satoshi was really spooked by the idea Bitcoin could be compromised: Bitcoin blockchain was exploited in 2010, and this bug resulted in the creation of billions of bitcoins that violated the software’s monetary policy. Satoshi became less collaborative with other developers, was more prone to making unannounced additions and updates to the software.
3. Podcast: The Illusion of Certainty with Annie Duke [Source: Alliance for Decision Education]
Best-selling author and decision strategist, Annie Duke, joins your host, Executive Director of the Alliance for Decision Education, Dr. Joe Sweeney, for a Bonus Episode of The Decision Education Podcast, recorded in May 2020. In this episode from our archives, Annie and Joe discuss things that fall inside and outside of our control in life, the ways in which we veer from rationality, the value of humbly holding our beliefs, parenting tips for the pandemic, how we can use mental time travel to help us cope with the present, and the illusion of uncertainty. You’ll also hear about why quitting can be a good thing.
4. Mundia and Modia - The two worlds in which we live [Source: peakd.com]
This author of this article says we live in two worlds. 1) Mundia: It is the world of immutable laws, e.g. gravity, electromagnetism, and supply and demand – it is the world that we see when we look out at the natural landscape. 2) Modia: It is the world of social relationships, e.g. love, hate, admiration, envy, loyalty, and gratitude – it is the world that we see when we look out at the social landscape. The author feels while all of us live in both worlds, most of us live in one world much more than the other: we are Mundians or Modians, not both. Mundians look out at the world and see the natural landscape; Modians, the social landscape.
Mundia and Modia explain why people tend to move rightwards as they age. We are all born Modians, knowing nothing about the world, but trusting our parents to inform us. Later we learn from our teachers, and our peers. It is usually perfectly clear who has the right opinions in our society, and we accept their opinions as fact. But as we move away from the orbit of our parents, an interesting thing happens. We become acutely aware of the social hierarchy of our peers. It often becomes clear that the high-status opinions in this society are different, often diametrically opposed, to those of our parents. Which do we choose? Most of us still don’t have a well-formed inner model of the world from which to make a Mundian decision, but most of us value highly our status among our peers, so it’s an easy choice: we abandon the opinions of our parents, and embrace those of our peers.
As we age, we gradually learn more about Mundia. Its immutable nature means that our knowledge about it is cumulative. Occasionally, we learn things that seem to contradict what we thought we knew, and we have to reconsider our ideas, but the direction is always forward. Nothing of the sort happens in Modia, at least on a macro scale. Opinion-makers are always changing. Intellectual fashions go in and out of style. To a Modian, it seems natural to keep up with the latest fashion, and they are instinctively swept along. But a Mundian soon becomes disillusioned; the world is supposed to be immutable! When our personal experiences of the world contradict its social messages, Mundians rebel. And so, they gradually move to the right.
5. The art of having impossible conversations [Source: skeptic.com]
This is an excerpt from a book about how to communicate effectively with people who hold radically different beliefs. We live in a divided, polarized era, and we’re not talking with each other. The repercussions of this are vast and deep, including the fear of speaking openly and honestly, an inability to solve shared problems, and lost friendships.
“The Russian-born American game theorist Anatol Rapoport had a list of rules for offering disagreement or criticism in conversations. These rules are now known as Rapoport’s Rules, and they have been described by the American philosopher Daniel C. Dennett as “the best antidote [for the] tendency to caricature one’s opponent.” Dennett neatly summarizes Rapoport’s Rules in his book Intuition Pumps and Other Tools for Thinking. If your goal is to engage someone successfully, take these steps in this order:
Attempt to re-express your target’s position so clearly, vividly, and fairly that your target says, “Thanks, I wish I’d thought of putting it that way.”
List any points of agreement.
Mention anything you have learned from your target.
And only then are you permitted to say so much as a word of rebuttal or criticism.
The author says that adhering to Rapoport’s Rules can be difficult, especially in a heated discussion, but it will significantly advance the civility and effectiveness of your conversations. It discusses these tools and techniques in detail – Avoid facts, Seek disconfirmation, Epistemological questions, Moral questions, and Dealing with anger.
6. In a Covid-19 war room in Mumbai, the pandemic feels interminable – but key lessons have been learnt [Source: scroll.in]
The second wave has created havoc in Mumbai. The number of Covid patients has been increasing day by day. “Can you tell me again how you are related to the patient?” Sangeeta Patil of the Malpa Dongri municipal school, one of the 50-odd teachers staffing the Covid-19 war room in Mumbai’s K-East ward, repeats herself over the telephone. It is a couple of hours into her shift and Patil, tasked with making follow up calls to patients in home isolation, has just been informed of a patient’s death by a relative. How can that be, she asks a colleague. Only three days ago, she had spoken to 53-year-old Prakash Jagdale. He had no symptoms then, and today he is dead. Patil is visibly shaken.
One of the key learnings from the early months of the pandemic for the city’s civic body, Brihanmumbai Municipal Corporation, has been that strict triaging of patients is essential to ensure the best use of resources. ‘Triage’ is the process of determining the priority of patients’ treatments by the severity of their condition or likelihood of recovery with and without treatment. The war room staff are primarily BMC school teachers, many of whom come from as far as Palghar, Vasai and Virar, mobilised for Covid-19 duty. They are supported by data entry operators and doctors. The teachers call each person on the list and record all details including oxygen saturation levels, symptoms, comorbidities, vaccine status and the type of house they live in. The last data point helps in deciding if home isolation is indeed feasible, said Dr. Prachi Jadhav, in-charge of the war room.
Patil’s mobile phone rings incessantly. Before the ward war rooms became operational, it was her number, as the medical officer of health, that was circulated widely. “So everybody, from the Commissioner down to the last person in the ward, called on this number,” she said, throwing her hands up in mock frustration as the phone rang again. It was a member of the contact tracing team, one of the many across the 12 health posts or Arogya Kendra, calling with feedback. Feedback from team members with on ground experience she says, has proved helpful in establishing and tweaking protocol. “We are learning as we go along,” she said. The pre-monsoon period comes with its own set of public health challenges for the city. But, Dr. Urmila Patil, the medical officer of health for K-East ward, whose remit extends to monsoon preparedness measures, is confident the lessons from battling Covid-19 over the last year would prove useful in dealing with them.
7. Interesting take on how much worth your time is [Source: A Wealth of Common Sense]
In his final letter to shareholders as CEO, Jeff Bezos took a victory lap by calculating all of the time Amazon Prime has saved for its customers: “Customers complete 28% of purchases on Amazon in three minutes or less, and half of all purchases are finished in less than 15 minutes. Compare that to the typical shopping trip to a physical store – driving, parking, searching store aisles, waiting in the checkout line, finding your car, and driving home. Research suggests the typical physical store trip takes about an hour. If you assume that a typical Amazon purchase takes 15 minutes and that it saves you a couple of trips to a physical store a week, that’s more than 75 hours a year saved. That’s important. We’re all busy in the early 21st century. So that we can get a dollar figure, let’s value the time savings at $10 per hour, which is conservative. Seventy-five hours multiplied by $10 an hour and subtracting the cost of Prime gives you value creation for each Prime member of about $630. We have 200 million Prime members, for a total in 2020 of $126 billion of value creation.”
The author makes the point that people do not not necessarily go to Amazon for the best prices, they go to Amazon for convenience. “Prime as a convenience is worth every penny and then some,” he says. But how many people realize the value of time and are willing to pay for it? People are generally bad at managing their time. People feel guilty spending money on “unnecessary” services or items. People love complaining about being busy. We complain about being busy yet fail to understand buying time is actually an investment, not an expense. The author then sets out to list some ways to buy yourself more time. Click on the above link to find out…
8. India’s ticking retirement fund time bomb [Source: The Ken]
One in five Indians will hit the big 60 by 2050, but most of them are banking on their children for support instead of planning a retirement fund. With interest rates eroding in the face of inflation, time is running out for investors, young and old alike. Anand Kalyanaraman, the author, warns that Indians are simply not putting enough into their retirement kitty. He notes that low interest rates, exacerbated by Covid and rising inflation have meant lower returns for those investing in the fixed income category and the only way forward is “discipline and diversification in investing”. One key hindrance is that Indians are stuck with a severe lack of financial literacy.
He observes that interest rates in India are likely to stay low or head even lower in the medium to long term. This could cause the retirement corpus to just balloon more. As it is, the numbers are daunting—even the average Indian middle-class with modest spending will need a few crores, he notes. “The lack of planning in India’s retirement pension landscape is a combination of several factors, all feeding into each other. For one, a majority of India’s workforce is in the unorganised sector, their low income levels barely enough to cover monthly expenses.” Ajit Menon, chief executive of PGIM India Mutual Fund Pvt Ltd, estimates that only 10% of India’s 500 million workers constitute the organised sector.
He says that calculating retirement corpus involves a mixture of facts and assumptions—such as expected retirement age, time to retirement, expenses during retirement, inflation, return on investment during retirement, and life expectancy. Tweak a couple of assumptions here and there and you can “get whatever [figure] you want,” says another expert. “It makes the entire exercise quite subjective.” All of them however, arrive at the same conclusion—the numbers can get as staggeringly high as multiple crores of rupees. However expertly one plans, the best one can aspire for is to retire with adequate funds. But that is the daunting task. What makes it worse is many don’t take the first step.
9. What benefits does a country get after winning the World Cup? [Source: scienceabc.com]
Even if you are not a sports fanatic, you surely must be excited about Olympics and World Cup. Seeing your country’s team/athlete playing in these tournaments will surely excite you. Every four years, when the Olympics or World Cup comes around, it’s hard not to get in the spirit when your country is presenting itself on the world stage. Even someone who avoids sports at all costs is liable to feel a twinge of pride if an athlete from their country makes the finals of a major Olympic event. However, once the World Cup trophy is won, or the Olympic golds have been counted, what actual benefit is felt by the country itself?
Over the course of the World Cup, particularly as it progresses to the later stages, the eyes of the world turn to the remaining countries. This can increase a country’s appeal for travel and tourism, and generally increase the standing of the country in the athletic realm of the world. Although there is no direct correlation, relevance on the global stage of sports is often equated with a relevance in terms of economics, development, and political strength. This benefit of being a world champion is more difficult to quantify than the direct financial award the winning team(s) receive. In the past 28 Olympics Games, 206 different nations have participated, so for about one month every four years, all of the world’s greatest athletes gather to compete.
Most countries have some level of government sponsorship for athletes and national teams, so winning additional medals could lead to a shift in budget, allotting more money to these efforts. Successful national athletes also popularize sports in a given country, inspiring more young people to become professional athletes. While earning the right to host a World Cup or the Olympics is seen as a great honor, residents of these areas often have mixed feelings. Being named a host nation for such an event may result in an initial boost to the economy, particularly as new stadiums and facilities must often be built. As a whole, hosting a championship event is seen as a blessing or a curse, depending on factors that only become clear after it’s too late!
10. Board games teach us a lot about capitalism [Source: skeptic.com]
This was adapted with permission from Your Move: What Board Games Teach Us About Life, by Joan Moriarity and Jonathan Kay, published in 2019 by Sutherland House. Board games that most people, especially children, are inspired by the real world. That does not mean they always reflect the values and preferences we exercise in our real-life capacities as workers, family members, friends and political actors. While many would love the cutthroat dynamical instability of Monopoly because it makes for exciting game play, it is also necessary to understand and recognize that real life has to follow different rules because humans have more complex and urgent needs than game tokens.
Monopoly for example is one board game that makes us appreciate the advantages of the welfare state, which, when it is functioning properly, doesn’t just redistribute money from rich people to poor people, the author says. “It also softens the iterative feedback dynamics within the system so as to ensure that minor nudges — a lost job, a criminal conviction, a divorce, a medical setback — do not create feedback effects that ultimately produce a full-blown personal catastrophe,” says the writer. In the real world we understand that job training, public health care, a humane criminal justice system, community housing and support for single mothers are examples of support systems that help cushion the impacts of the ‘moves’ that life plays on unsuspecting people, however skilled or emotionally strong they may be.
“The dynamics that govern Monopoly can help us understand how much of the character of our societies is embedded in — and dictated by — the dynamical feedback processes encoded in our economy and laws. If you want to improve the moral character of a society, you do not necessarily have to change the way people think and feel. Sometimes, all you have to do is fiddle with the rules that govern what happens every time they pass Go”.
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