The real story in India’s demonetisation saga

“Who benefits if we all go cashless?”,  asked a friend* of mine. This is indeed the money question in India’s demonetisation saga with its moving goal posts. “I am not here for the enrichment of Visa, MasterCard etc.,” she added.

Apart from convenience and fraud protection, the economic case for an individual consumer is near impossible to make. Many problems solved by card issuers are those related to card usage, not arising from the transaction or commerce itself.

The benefits of consumers going cashless accrue variously to businesses, who can reduce the cost of cash handling; to various players in the payments ecosystem — card makers, technology providers, POS terminal makers, card issuers and acquirers, wallets, and schemes such as Visa, MasterCard and RuPay — who make a fraction of a basis point on each transaction; and to society at large, in aggregate and in the long run.

My friend* remains suspicious of ideas where consumers were required to participate without having any agency, since, she argues, we do have agency in using cash e.g. when hoarding cash as vulnerable women do.

This is a fair concern. But consumers accept the notion of a state-sanctioned currency as a widely accepted means of value exchange within a territory. Consumers make trade-offs to get things they desire while accepting certain loss of agency even if they do so holding their noses.

As it stands, the state has unfair power in determining whether the currency has the value it is supposed to have. It is a power imbalance where the consumer’s agency is considerably less than the state’s. Consumers begin first and foremost with the belief that the state won’t mess with them and their stash of wealth. This trust is essential to exercising the consumer’s agency in stashing away hoards of cash. Acts such as the overnight demonetisation and the cack-handed execution of it destroy trust. The cash hoards of those vulnerable women have been destroyed in value overnight. Their agency is hugely reliant on the state’s benevolence in this instance.

What happens when the state does mess with consumer trust such as by demonetisation or overnight devaluation of the currency?

This is where the conversation veers into virtual currencies such as Bitcoin that remove state as the holder of power and distribute power to the two or more parties transacting. It would be the subject of an altogether different essay on why we are happier trusting an algorithm than we are trusting elected representatives whom we can bring to account.

The chatter about the demonetisation of certain currency notes and going cashless — the latter being some ways off in India, given the lack of infrastructure needed to make cashless work — is just a sideshow.

The main game is data.

When the economy goes cashless, a lot of data will be generated and the aggregate economic case for society will begin to emerge. At the very least, there will be new money brought into the system with convenience reducing the friction in commercial transactions and money.

Professional — and armchair pro-am — economists have wondered a while how India’s GDP would change if the unorganised sector, including the vast cash economy of domestic and unskilled workers, quotidian daily purchases like cigarettes and paan etc were to be recorded formally. The probability of such aggregation will increase with more data collection, though it remains to be seen whether this newly counted GDP growth will weather, balance or exceed the drop in GDP predicted by many due to the demonetisation.

“Who benefits if we all go cashless?”.

The key beneficiary of India going cashless will be whoever can make sense of the gazillions of exabytes of data that these transactions will generate, and that will enable the study of deviation from patterns to identify funds that may fail ATL/AML scrutiny. In an ideal scenario, the money that otherwise goes unnoticed while transacting in cash will be noticed and people in possession of it brought into the tax net, netting more money into the state’s coffers.

Money in all this is still the distraction. The real story is data.

As consumers, this real story should worry Indians because Indian citizens have no guaranteed right to privacy and India has no data protection laws to speak of. Despite a massive universal ID programme, named Aadhar, the government appears to have very little appetite for change in this regard. The Government of India’s open government data platform was launched in 2012 but is rightly criticised for incomplete thinking. A consultation on it  was opened to the public in July 2016.

My advice to my friend and to those watching the demonetisation story in India is quite simple:

If you want agency, watch the main game of data — and what unfettered, unregulated  access to data might enable — not the sideshow — of moves towards cashless society.

If this be the only lesson of 2016, so be it.

Here’s to not fearing the anomie of 2016 and to rebuilding in 2017!

*(Thanks are due to my friend, whom I do not name, for asking the vital question that sparked the conversation on November the 27th and 28th, 2016, and for permitting me to use her words in this post.)

Of pigs and predictions

The Trump victory has left many of my friends reeling and in disbelief. It has also already brought out criticism of pollsters and polling data. Some sceptical ones go a step further and condemn all prediction makers, and mock machine learning and artificial intelligence. This condemnation is foolish and tantamount to throwing the baby out with the bathwater.

Prediction models turn on data, collected from the right questions being asked of the right statistical sample of people. Reductive questions generate neat data sets which then provide all the right answers.

But as experienced market research people will tell you, far fewer people, than those who enthusiastically nod and say they will purchase a new product, actually do. It is not that people are lying, it is just that human beings tend to give answers to please the asker. On politics and other emotionally charged matters, this tendency to give socially acceptable answers to minimise confrontation is especially pronounced. People also change their minds over time.

If the outcomes of any large exercise, where people actually make active choices, shock us it is worth remembering that the only truth is revealed preference i.e. what our actual choices reveal about our preferences. Human beings do not always seek to maximise utility, often preferring to use simplifying shorthand or heuristics to make decisions. The heuristics could have encoded in them experience and knowledge, as well as prejudices and received wisdom.

The concept of revealed preference is, of course, flawed too. If I pick Candidate A over Candidate B, it does not say I prefer Candidate A, merely that I prefer Candidate A to Candidate B. In the future, if Candidate A is up against Candidate C, I may pick Candidate C not because of Candidate C’s superiority over Candidate A but because my preferences are not immutable. Faced with more than two options, we have a way to simplify the choice for ourselves as well as I have written here.

It may sound nihilistic to suggest predictive modelling is not really reliable. But if we are relying on flawed and mutating preferences, and treating them as immutable truths in our analysis, how can methodologies and predictive models generate anything reliable?

It would be akin to putting lipstick on a pig. We would have used up lipstick but the pig would still be a pig.

In the last UK general elections, the Brexit campaign, and now the US general elections, predictions have failed to, er, predict anything reliable.

It is time we learnt to judge differently — by expanding our comfort zones, by listening more, by asking and seeking to understand more, by being healthily sceptical, and by bringing critical thinking lenses to all those pursuits.

For now, if your side won, good for you. The advice to try and understand the other point of view applies to you too. But if your side didn’t win, dry your eyes, dust yourself up, and go out and talk to someone who is not cohabiting your comfort zone.

The narratives we hear will have rough edges, and not the cleanliness or reductiveness of survey questions. But that texture is the stuff understanding is made of. Less data, more understanding. That is what we need.

Empathy as luxury?

“Empathy is luxury. Think about it. If you have the time to read about other points of view, you have the luxury of time, that you can spend on reading other perspectives and build empathy.”, said my interlocutor, an entrepreneur building a platform for contrarian views. I am paraphrasing a bit but we had been talking about how to break the filter bubble that the liberal metropolitan elite inhabit. Better people than I are already exploring how the word “elite” came to be associated pejoratively with liberal, metropolitan persons.

Research evidence from the USA and the UK however shows us that the poor, who do not have spare time since more time spent working is more money, are more charitable and more community minded. In other words, the poor display more empathy. How can empathy be a “luxury” then?

I believe in the essentialness of empathy though I arrive at it from another perspective.

I see myself as a part of a whole, whether that whole be our neighbourhood or the planet. As such my being empathetic is nothing more than my honouring my self.

She wasn’t convinced.

Further expounding on how I got to this framing of this world, I found that it may have come from imbibing some of the Hinduistic philosophical and cultural values amidst which I grew up in India. The idea of the unity of the macro- and the microcosms of our being is embedded in Aham Brahmasmi, “I am the infinite reality”. The idea is also embedded in the greeting Namaste, “I bow to the divine in you”. The idea of consequentiality of our actions naturally follows, often stated controversially in the western world as “Karma is a bitch”.

It is trivially evident that neither business nor humanity can act as if their shared linkages and connectivity do not matter, and as if they can thrive or even survive without one another.

Both spiritually and rationally, empathy is therefore not a luxury in my view.

The idea of luxury as empathy however appeals to me. More on which, later.

Motivation as a design assumption

Holacracy. MOOCs. Food labels.

Holacracy isn’t working. MOOCs have low completion rates, and an estimated 90% drop-out rate. Food labels to help consumers make informed choices show mixed effectiveness and decidedly no downward impact on public health concerns re obesity.

Other than not working as well as optimistically assumed in their wake, they have one more thing in common.

Their design assumes that people have self-motivation in heaps, and when faced with choices, they draw upon that self-motivation to make the best decisions for themselves.

From organisations, to education, to nutrition and health, the assumption of the “highly motivated and self-interested individual” does not stack up.

The reality is different from the design assumptions made.

As Buffer found out from its year-long no-managers experiment, people were expected to direct and motivate themselves, the lack of managers soon became overwhelming, and an implicit hierarchy emerged nonetheless.

Similarly MOOCs assume that a highly motivated and self-driven student is the only kind around. A self-motivated student will benefit from auto-didactic methods disproportionately more than a peer who isn’t so driven. As a teacher, I can attest to these phenomena too: students have variable levels of motivation, cognition and learning capacity; they may or may not understand the sequentiality of learning certain modules i.e. prior art in a field, which, of course, is more essential in some fields than in others; they may not understand some content and that can be demotivating in itself; they may not have the time or dedication to complete assigned readings; and last but not the least, they will always have have questions and if not, a facilitator teacher can make them question their tightly-held beliefs in a setting that makes them think.

In other words, willpower depletion, by the many demands made on us by life, is a real phenomenon.

The design problem that technology entrepreneurs keep dreaming of does not have to bring about “disruption”. It is more complicated than that.

The design problem is to keep people with varying motivations involved, and progressing.

If at all we achieve step change or “disruption”, the design challenge is to do so the existing tools of facilitation and enabling, along with new tools of technology and emergent social contexts, to address the same problems of variable motivation, cognition, and commitment to learning.

A designer assuming a bottomless pit of self-motivation in its audience sooner than later discovers the ordinariness of the human condition.

The medium is the message

President Obama wrote a piece on Feminism for Glamour magazine.

Curious minds want to know why that specific magazine. Here is whom the magazine is for, according to its owner Conde Nast: “Glamour is for the woman who sets the direction of her own life and lives it to its fullest and chicest. Her point-of-view is unmistakably American, unwavering in its optimism and wide open to the possibilities ahead. The dream job, the perfect look, the right guy: All are in her reach.

How would writing in that magazine ensure the article gets read by men, someone asked. Legit question.

Here is how.

Several media outlets men might read – Vox (under Policy and Politics, no less), New York Times, Rolling Stone, Time, and many others – have picked up and paraphrased the essay’s main ideas for easy reading by men. Obama thus neatly sidestepped men wondering why he is lecturing to them and got a standing ovation from women for his approach as a Dad.

And yet he is getting heard by men, as the conversation on those paraphrased articles shows. Several men are commenting on these paraphrased pieces that while they disagree with Obama politically, as fathers of young women, they agree with him completely on this matter. This is not a surprise. Research evidence shows that when daughters are born, men change their attitudes to traditional gender roles for women. Indeed many young women may be making their dads read the article. There is also the possibility that Hillary Clinton’s popularity among young women could get a boost from this, because he spoke with them but not quite at them by referencing his daughters in the essay.

There is more to this than meets the eye though. More than Obama. More than feminism.

There is a quiet but firm change happening in the magazine world. And so-called millennials are leading it. With guidance and nurture from older, steadier, more experienced hands in the trade.

Here is a Teen Vogue piece on a young woman, presumably a teenager, on how she became a feminist. Here is a piece on how queer identity may make a person a target for violence, and another on how American culture fuels homo and trans phobia.

Glamour and Teen Vogue are not magazines common prejudices about “girlie mags” allow us to expect to do a great job of hosting and enabling such discourse on identity. But they are doing it. Anna Wintour, the tour de force in Conde Nast, is guiding a team of millennials which is doing a great job getting the unfairly reviled younger persons reading serious stuff. In other words, emergent generations are being engaged using old fashioned tools.

Their views have a platform. Their voices are being amplified by “curation” led websites that “grownups” read. Change is quietly happening, while we are too busy stereotyping millennials and younger generations.

The revolution, it is clear, is not being televised.

It is being written and read and discussed on channels that allegedly responsible adults dismiss as pointless, past-it, dying or any number of hand-waving adjectives.

Be there, or be square.

And Obama is no square, as we all know by now.