How Ronald Coase could help students skip boring lectures?

How Ronald Coase could help students skip boring lectures?.

Weekend read – ek economist aur ek physicist

Weekend read – ek economist aur ek physicist

 

Exponential Economist Meets Finite Physicist

Act One: Bread and Butter

Physicist: Hi, I’m Tom. I’m a physicist.

Economist: Hi Tom, I’m [ahem..cough]. I’m an economist.

Physicist: Hey, that’s great. I’ve been thinking a bit about growth and want to run an idea by you. I claim that economic growth cannot continue indefinitely.

Economist: [chokes on bread crumb] Did I hear you right? Did you say that growth can not continue forever?

 

bhala uska jalsa mere jalsa se behtar kaise??

Detailed info on jalsa coefficient and its derivation methodology can be found here.

Jalsa coeff can be used for various comparisons - I vs U, I vs I, I vs Them, current vs past, past vs future, future vs current……

but a simple technique is to consider a salary raise scenario – say you get promoted and now need to work more hours (at home or office is immaterial here).  for simplicity lets assume your employer is generous and you demanding – and hence no weekend slogging. So, you work only 9hrs a day during weekdays. your salary – lets just is denoted by this variable “i”.  your jalsa coeff is 9.57i. Post promotion (or as the case may be) you work 2hours extra daily on an average. i.e. 11 hours a day during weekdays. And again assume that no weekend work. your jalsa coeff for the same salary is 8.14i.

Reduction in jalsa HAS TO BE compensated by higher income. To get the new salary, we have to divide the two coeff (9.57i and 8.14i),  to get 1.18 or ~18% increase in income. And this 18% is to just be at par. This does not even include weekend hours put in. say you put in 4hrs on weekend too, income should increase by atleast 37%. Your jalsa coeff should increase every year, as you OUGHT to have more fun every year.

and what about trips/site visits. well those days are complete waste as you are 24hrs a day away from your circle of jalsa.

Jalsa Coefficient

j = i  [ 24 - 8 - (5d + 2w)/7]

Jalsa – a widely common word used in western India. While it can be used in different contexts, it generally means “to enjoy”.

for eg:

• Q – kem cho, majaa maan?
• A – jalsa chaale…

or

• Q – What are they doing at the carnival
• A – jalsa chaale…

for more examples please contact your nearest friend (real/twitter/facebook any will do) from the dry state.

Jalsa is a highly subjective term and can not be measured like we measure wealth, health, stealth, tilth… until now. Today i present you the Jalsa coefficient. Since everyone indulges in “Jalsa” in some or the other way – it made me think – how do we measure jalsa? Not because i wish to find how much jalsa does Mr Abc indulge in compared to Ms Xyz… but cause if i can measure it, i can manage it – or rather maximize it.

Lets discuss two important concepts here – time and money. Remember you had more jalsa (fun/enjoyment) during your college days when you had no money but all the time in the world – and now when you are working – you have all the money but very less time for yourself/family – let alone jalsa. However – that island trip was expensive but worth the jalsa you had there. Because even though some things don’t cost money – for EVERYTHING else you need visa (or mastercard  but not AmericanExpress, it’s not accepted everywhere). So you need money – earned/borrowed/inherited – but you need for a certain degree of Jalsa.

So the conclusions drawn from the discussion are that, Jalsa is :

• directly proportional to – free time
• directly proportional to – income

It is upto anyone how they use this free time – but let’s assume that one makes full use of one’s time and money.

How do we measure free time (or available time)?

Lets suppose you work ‘d’ hours per day during a weekday. Now work can be defined as anything non jalsa. Since Jalsa is generally associated with indulging in non-productive tasks (read non-earning tasks) – lets include office hours in your work. In addition once can add any other “Earning” task – investment time etc… No matter how much you enjoy it – you get paid for your work – so it should be included in your work time. So “d” hours per day on an average on weekdays represents your work time. Since some of us work on weekends (fortunate or not would be decided by the coefficient). lets say one works “w” hours per day on an average on weekends. So total hours available is = 52x [ 24x7 - (5d + 2w)].

But do not forget your beauty sleep – good sleep is essential for good health and hence wealth. 8 hours per day of sleep is essential for everyone (no, it does not include office nap time as you are getting paid for it). Subtracting the time you slept from our previous equation we get the total available time

available time = 52 * [ 24*7 - s*7 - (5d + 2w)]

Now that we have established this equation – lets move to the next task on hand -

How do we mea$ure income?

For simplicity lets measure income as your annual income from work. Lets denote it as “i”. To make it comprabale – I measure salary in $ million. For non $ denominated income, please use purchase power parity (PPP) multiple to calculate income.

Jalsa Coefficient

Jalsa coefficient being directly proportional to free/available time and income can be summarized as:

Annual Jalsa Coeffieint (J) = income x available time, or

J = i * 52 * [ 24*7 - s*7 - (5d + 2w)]

also we can denote daily jalsa coefficient as small “j”:

j = i * 52* [ 24*7 - s*7 - (5d + 2w)] / (52 * 7)

=> j = i *[ 24 - s - (5d + 2w)/7]

Please note – “J” or “j” is just a coefficient and has no absolute value. It can be only used for relative comparison.

I have built an excel form to compute jalsa coefficient. hope you can fill it out (anonymously) to track how good the coefficient is:

https://docs.google.com/spreadsheet/viewform?formkey=dEVTV2k1eHZDVmlkQXI2Vng4Ukd1a0E6MQ

How much would Microsoft pay for facebook??

or… another way to value Facebook…

after all Microsoft was the first one to pay $ 400 million to sabeer bhatia for… well… every one knows that…  it’s but natural to ask what Mr Bhatia did with his 400 millions, and the answer lies in some failed internet start-ups. but that’s not what am interested in. Have you ever though how many users did Mr Bhatia’s mail service have?

Before you guess, let me remind you that this is 1997 we are talking about. An era when Intel was inside, pentium was the king, dial-up was a privilege, might Google was not yet registered as a company, Wachowski brothers were still writing the script and an era when Dolly was cloned. But then, it was the most famous email provider of its time. Allow me to break the suspense – 8.5 million users. Now that sounds low, doesn’t it. We all know that Apple sold more iPhones than that. But then, as i said, this was 1997. There were hardly 70 million people who could own a PC and top that – browse the net. And then obviously not all of them were “active” users. So, the numbers are$400 million for 8.5 million users. or roughly say $47.5 per user.

Now that we have established what Mr. Gates paid for every mail user, lets extend the logic to facebook. And while we are at it, lets assume (conservatively) that it’s as difficult, or easy if I may,  to make money from facebook as from mails. Zuckerburg says that his site had 845 million active users in Dec 2011 (mine had… well never mind). No mind you, this is active user base, and not the whole lot who has a facebook account. Just to make clear how big the general user base could be, compare it to the gym -folks who pay for one and the “active” members among them who religiously pay a visit to the gym. However, i do not have numbers for the total user base. So lets keep it simple and go ahead with 800 million active users (my fortune cookie read today – “keep it simple”).Let u multiply the $47.5 per user to this number to get a value of $40,135 million. keeping it short – $40 billion. That sounds way low than what we saw on facebook’s timeline. But here’s the catch, this is what microsoft would have paid in 1997. That was 3 recessions ago. Since , world GDP has doubled to almost $60 trillions and so has MSFT’s stock price. So if we double our valuation number we get $40×2= $80 billions.

“$ 80 BILLIONS”. This wasn’t much of rocket science, right…. for god save us if rockets were made with this science. Now if you believe this number is small  then let me remind you that there weren’t many big web-mail providers in 1997 (just 2 for that matter) while we today have many “social network” players. And if you believe that this number is too big, then let me remind you that this was a “conservative” back of the envelope calculation.

But the question remains, what do we do with this number. How does this benefit us?? The answer, for the lack of $$$ in our accounts, is pretty simple. There is no value addition accrued to us. But then so is the case for facebook, the website. So all you can do is share this post by clicking the like button down here. (or paste the link in facebook, its just 2 extra steps – thanks for that)

Also Read

• How the fb  IPO should be – or how it should not be a regular IPO

Impact of crisis on marriage markets...

Reblogged from Mostly Economics:

One central theme which has emerged recently is rising inequality across the world. The haves and getting richer and have-nots not as much. The result is rising inequality. This has been happening for a while but it took this  crisis to point to this disturbing trend. And of course the crisis has made things even worse with most people getting effected at middle and lower income quintiles.

Read more… 789 more words

Interesting read. my takeaway - marriage is for the rich and do not fret if you are not an "Early Adapter"

Related articles

• Is Marriage Only For Rich People? (andrewsullivan.thedailybeast.com)

How the fb IPO should be

So facebook has launched its IPO… Lots been said about it here and there.

But hey, in the whole process, where is the user? Wasn’t facebook suppose to be “user-centric”?? We all now what happens if investors run companies. And then we also know how clueless companies are if they are run by founders (read google). So facebook should do something different. Something new. Going the IPO route is very old-school and not fb like. After all the stock exchange won’t autopost on FB if I buy FB (yes that’s the ticker they are aiming for).

The company should raise money through its user-base and let them trade the shares on facebook. How about that?? 500 million users can each contribute $10 to raise $5bb. Given wha tpeople spend on online games, FB credits etc… most of the userbase should be on board with a $10 share price. A lottery system can be used if number of applicants are more than 500mm. There can be some flexibility here in terms of max share per user – say 5 or 10. All users should be given stock-credits which could be later traded on the website. And just like the exchange, prices would be determined by stock-credit trading.  The big investors can then jump in here and trade FB credits for FB stock-credits. And about that conflict of interest, well an SEC app on fb platform can take care of it.

Trading can be 24×7. No middlemen involved. And given the userbase, there would be ample liquidity – across the globe. Voting rights will also flow to the share holders. And management releated polls can be easily done on fb platform.

Shareholder meeting can be done online, implies less expenditure on travelling and renting hotels etc… Company-Investor meetings too can take place online with ease. All on the FB platform.

Am i missing something here or is facebook just another offshoot of the capitalist society.

Analysts and Journalists

I had earlier written the following two posts on analysts….1) Analysts and film critics 2)Analysts are like actors… continuing the trend… in this post i speak about how analysts are more like journalists.
Well for starters… what’s the job description of a journalist?? Fact finding, reporting and analysis are the 3 main tasks a journalist performs…. ditto for analysts. The difference lies in the treatment given to the facts. Analysts, doing justice to their title, do some analysis which at times involves number crunching and result interpretation. They then take it forward by giving such information to the market which they need or will need to value a business decision.

Words not in this year’s dictionary

• Investment Banks
  • Lehman Brothers
  • Bear Stearns
  • AIG
  • Merrill Lynch
  • Its a long list… find the others here
• Subprime
• Mortgage crises
• CDO
• Bonus/Increment
• Raju
• Dubyaman
• Madoff
• ******* (can’t say here…. for work related reasons… )
• ioweyou (we have switched to much better expensure)
• India TV (well at least it won’t be in my dictionary-for the crappy news whatever it broadcasts)

The list is endless… will write more bout it in later posts…pour in ur (yes u, 4 the very few of the elite crowd who read this blog…)  suggestions for the list

Analysts are like actors

I had earlier written a post Analysts and Critics, comparing analysts with critics. This time, I’m upgrading Analysts to Actors. The trait I’m referring to here is the capability to enact multiple roles. An actor gets to play different roles across different films/plays. Similarly an Analyst gets to track different sectors. He gains expertise over various sectors before finalizing upon the one suitable for him (just like an actor). Film release day is one of the biggest days for an actor. Similarly, earnings release, M&A announcement and report publications are the biggest days for an analyst.

For eg. Aamir plays different roles such as – cop, student, cricketer (yeah he played that too, and it’s not lagaan), farmer (this one’s from lagaan), businessman, teacher, guide, taxi driver and the list goes on…. On the other hand, an Analyst i know has tracked various sectors… Metals and mining, IT services, biotechnology, Banking, Retail.. and has gained expertise in each of them.

But one thing separates the two…. paparazzi…..