Why I Watch Cricket on Mute


Over the four-day long weekend between March 24 and March 27, two exciting cricket matches were played. The Indian cricket team won both the matches.

I saw both these cricket matches end to end, but I had my TV on mute. I do this because I strongly feel that on most occasions TV commentary does not add any value to the visuals on the screen. And honestly, if there was an option which allowed me to just listen to the noise coming from the stadium, without the commentary, I would choose it.

Most cricket commentary and analysis is full of hindsight bias. And what is hindsight bias? As Jason Zweig writes in The Devil’s Financial Dictionary: “Only perhaps a half dozen market pundits saw the financial crisis coming before 2008, but you can’t swing a Hermès necktie on Wall Street without hitting someone who claims to have predicted it. That is typical of hindsight bias, the mechanism in the human mind that makes surprises vanish. Once you learn what did happen, your mind tricks you into believing that you knew it would happen.”

Take the match between India and Bangladesh. Bangladesh had almost won the match and needed to score two runs of three balls. They lost three wickets of the last three balls and India won the match by one run. Of these three wickets, two batsman got out trying to finish the game by hitting a six.

I think the Indian captain Mahindra Singh Dhoni summarised the situation best in what he said after the match: “At times, you look to finish it with a big shot. When you are batting well, you go for it. It is a learning for him [Mahmudullah] and others who finish games. That is what cricket is all about. If it had gone for six, everybody would have said what a shot.”

The trouble is that the Bangladeshi batsman Mahmudullah got out trying to hit a six and win the game for his team. And the commentators immediately pounced on him and declared that he should not have gone for the glory shot. The Bangladeshi cricketers were also called chokers. Nevertheless, if Mahmudullah had been able to hit a six, the same set of commentators would have had good things to say about him.

As Dhoni further said:In-form batsmen often try to play big shots to finish the game. If that shot by Mahmudullah had crossed the ropes, he would have been hailed as a courageous gutsy batsman. Now he will face criticism for playing such a shot.”

An almost similar thing was at view when Virat Kohli single-handedly helped India beat Australia. After India won, the commentators kept talking about his aggression and how it helped him play the innings that he did. The point is that if he had gotten out, the same aggression would have been blamed for his and the Indian team’s downfall.

The outcome of the game determines the analysis that follows. And the confidence with which the commentators speak makes you believe that they had really seen it coming. Of course, the fact that they have played the game in the past, adds to the confidence that they are able to project. But do they really see it coming? I don’t think so.

They day batsmen get out trying to hit shots, the analysis blames them for hitting rash shots. On days these shots come off, the commentators feel that taking a certain amount of risk is a very important part of modern day cricket.

In fact, hindsight bias impact even the commentary that accompanies every ball that is bowled and not just the analysis accompanying the overall result of the match. In the India versus Australia game, I was listening to the Hindi commentary and I think Shoaib Akhtar was speaking (though I am not sure about this) at that point of time. Virat Kohli hit a ball in the air and from the initial looks of it, it seemed that the ball would not cross the boundary and an Aussie fielder would take the catch.

So the first thing Akhtar said was “Kharab shot (A bad shot)”. Just a second later the ball had sailed across the boundary, Kohli had hit a six, and Akhtar said: “behtareen shot (what a good shot)”. Akhtar’s commentary immediately took into account the end result (i.e. Kohli hitting a six) and what was a bad shot suddenly became a terrific one.

The question is why does this happen? The Nobel Prize winning psychologist Daniel Kahneman has an answer for this in his book Thinking, Fast and Slow. As he writes: “The mind that makes up narratives about the past is a sense-making organ. When an unpredicted event occurs we immediately adjust our view of the world to accommodate the surprise. Imagine yourself before a football game between two teams…Now the game is over, and one team trashed the other. In your revised model of the world, the winning team is much stronger than the loser, and your view of the past as well as the future has been altered by that new perception.”

Then there is this other point that Dan Gardener writes about in Future Babble: “After a football team wins a game, for example, all fans are likely to remember themselves giving the teams better odds to win than they actually did. But researchers found that they could amplify this bias simply by asking fans to construct explanations for why the team won.”

This is precisely what happens to cricket commentators and the analysis that they have to offer after any game of cricket is over. Given that they have offer explanations of why the team wining, actually won, they end up amplifying the hindsight bias.

Depending on the result, the commentators offer an analysis. Some of it can be as banal as the winning side fielded better, batted better and bowled better (Something that Mohammed Azharuddin used to say all the time in his post-match comments when he was the India captain).

This is not to say that this analysis is incorrect, but why do we need a commentator to tell us this. It is very obvious. On most occasions a team that bats better, bowls better and fields better, is likely to win.

The hindsight bias also impacts stock market experts and analysts who try and make sense of the stock market on a regular basis. After a crash you will hear all kinds of pundits trying to claim they had seen it coming all along. And believe me they will make a very compelling case for it.

Nevertheless, it is important to keep in mind what Jason Zweig says. As he writes: “Contrary to popular cliché, hindsight is not 20/20; it is barely better than legally blind. If you don’t record and track your forecasts, you shouldn’t say that you knew all along what would happen in the end. And if you can’t review all predictions of pundits, you should never believe that they foresaw the future.

And that is something worth remembering.

The column originally appeared on the Vivek Kaul Diary on March 29, 2016

The Former King of Good Times


Vijay Mallya must be currently one of the most hated and most discussed people in the country. He has defaulted on bank loans of around Rs 9,000 crore and left the country. At least, that is the way most people who know who he is, look at him. He has come to be associated with everything bad that is currently happening to the banks in India.

Nevertheless, he has become a victim of what is called the availability bias. Leonard Mlodinow explains this in his book The Drunkard’s Walk—How Randomness Rules Our Lives through an example.

As he writes: “Which is greater: the number of six-letter English words having n as their fifth letter or the number of six-letter English words ending in ing? Most people choose the group of words ending in ing.

Why is that? As Mlodinow explains: “Because words ending in ing are easier to think of than generic letter words having n as their fifth letter. But you don’t have to survey the Oxford English Dictionary—or even know how to count—to prove that guess wrong: the group of six-letter words having n as their fifth letter words includes all six-letter word ending in ing.

This type of mental mistake is referred to as the availability bias. As Mldowinow writes: “In reconstructing the past, we give unwarranted importance to memories that are most vivid and hence most available for retrieval.”

Mallya has become the victim of this availability bias. Whenever the topic of corporates and businessmen who have taken loans from banks and not paid them comes up, Mallya’s name comes first. Nobody talks about other businessmen who haven’t paid their loans as well.

Why is that the case? Other than being a businessman, Mallya is also a sports enthusiast and a page 3 regular, who gets regularly covered in the media. Over and above his businesses, from airlines to liquor to real estate, Mallya has also owned an IPL cricket team and a Formula One racing team. Hence, he gets regularly covered in the media and has top of the mind recall among people.

And given that he has a top of the mind recall, the media has covered his loan shenanigans more extensively than other businessmen. Hence, he has become associated with the corporates defaulting on banks loans, more than anyone else.

As Daniel Kahneman writes in Thinking, Fast and Slow: “People tend to assess the relative importance of issues by the ease with which they are retrieved from memory—and this is largely determined by the extent of coverage in the media. Frequently mentioned topics populate the mind even as others slip away from awareness. In turn, what the media chooses to report corresponds to their view of what is currently in public’s mind.”

It’s a little bit of a chicken and egg story here. Because Mallya has top of the mind recall, the media writes about him. And because the media writes about him he has top of the mind recall among people.

Vijay Mallya owes banks around Rs 9,000 crore. As on December 15, 2015, the total gross non-performing assets (or bad loans) of banks of the loans they have given to corporates, stood at around Rs 2.59 lakh crore. Mallya’s contribution to the total corporate bad loans is only around 3.5%. Hence, there are bigger defaulters out there, who the banking system and the government need to deal with, and the media need to write about. But that doesn’t seem to be happening.

This is not to suggest that Mallya is god’s gift to mankind and is being needlessly victimised. At the same time, he is nowhere the villain he is being made out to be. As Mlodinow writes: “By distorting our view of the past, the availability bias complicates any attempt to make sense of it.”

Mallya’s king of good times image, in the minds of people, is now working against him. This is not helping the former King of good times in his bad times.

The column originally appeared in Bangalore Mirror on March 23, 2016

The Halo Effect Around Prashant Kishor

prashant kishor

Prashant Kishor is currently the most famous backroom boy in Indian politics. To put it euphemistically, he is currently India’s most famous political strategist who helps Indian politicians win elections.

He helped Narendra Modi win the 2012 Gujarat state assembly elections and the 2014 Lok Sabha elections. In 2015, he helped Nitish Kumar win the Bihar state assembly elections. Given this success, currently there is a “halo effect” that has been built around Kishor, in the media.

The Bharatiya Janata Party fought the Bihar elections under the leadership of Narendra Modi. Modi was the main campaigner for the party, in the run-up to the election. The party lost badly in Bihar. Given this, Kishor is now seen as the man who first scripted Modi’s rise and then his fall. He is seen as the man who can do nothing wrong.

As Phil Rosenzweig writes in The Halo Effect…and the Eight Other Business Delusions That Deceive Managers: “Once people…believe the outcome is good, they tend to make positive attributions about the decision process; and when they believe the outcome is poor, they tend make negative attributions.”

How does this apply in Kishor’s case? Kishor has been a part of three successful election campaigns in India. Also, more than the 2014 Lok Sabha triumph, the 2015 win in Bihar has given an aura of invincibility to him, which is nothing but the positive attribution that Rosenzweig talks about.

Nevertheless, Kishor has just been a part of three successful elections in India, up until now. The point being that the sample size is very small. And small samples do give extreme results, as has been the case with Kishor.

As Nobel Prize winning psychologist Daniel Kahneman writes in Thinking, Fast and Slow: “Large samples are more precise than small samples. Small samples yield extreme results more often than large samples.”

What this means is that Kishor needs to be a part of more election wins till the tag of invincibility is ascribed to him. Also, until now he has had to hard-sell leaders like Modi, Kumar and Lalu Yadav, who were strong brands on their own.

In fact, the Bihar election win was more about Kumar and Yadav coming together, than anything else. The BJP did very well in 2014 Lok Sabha elections in Bihar because Kumar and Yadav fought the elections separately.

Of course, Kishor deserves credit for building a coherent marketing message around Kumar and Yadav, who are very distinct personalities.
Kishor’s real challenge will come in the state assembly elections in Uttar Pradesh and Punjab in 2017, where he will help the Congress party. The Congress has six members in a house of 404, in the Uttar Pradesh assembly. In Punjab it has been out of power for a while.

In these two states Kishor will have to construct a marketing message around Rahul Gandhi and the Gandhi family.  And this is where his real challenge will lie. Despite having been in active politics for close to twelve years now, Gandhi remains a weak leader and weak brand, who is not taken very seriously, in large parts of the country.

Will Kishor be able to rescue Gandhi and the Congress party? It is difficult to see the Congress party reviving in Uttar Pradesh. In Punjab, perhaps they stand a chance. Predicting how politics and elections go, is a difficult job. But one thing can be said here nonetheless, Kishor’s invincibility will surely take some beating in the days to come.

As Leonhard Mlodinow writes in The Drunkard’s Walk—How Randomness Rules Our Lives in the context of corporate executives: “Executives’ winning years are attributed to their brilliance, explain retroactively through incisive hindsight. And when people don’t succeed, we often assume the failure accurately reflects the proportions which their talents and their abilities fill the urn.”

Come 2017, something along similar lines will happen with Kishor as well. The media which is currently busy talking about his invincibility, will be busy writing about his weaknesses.

(Vivek Kaul is the author of the Easy Money trilogy. He can be reached at [email protected])

The column originally appeared in the Bangalore Mirror
on March 16, 2016

Switch off the TV tomorrow and don’t waste time on Bihar election results

A cottage industry has emerged these days around trying to predict which way the Bihar election will go. I don’t want to add to it. And this is not a column explaining who will win the Bihar elections and why. Enough of that has been written and discussed in the media.

The irony in all this is that people sitting in television studios and writing editorials in newspapers, who have never visited Bihar, are perhaps the most confident on which way the election will go. Don’t ask me how.

Nevertheless, there is some logic to it. Dan Gardner explains this in Future Babble—Why Expert Predictions Fail and Why We Believe Them Anyway: “There is a “confidence heuristic”. If someone’s confidence is high, we believe they are probably right: if they are less certain, we feel they are less reliable, this means we deem those who are dead certain the best forecasters.”

As Gardner further writes: “Another problem with the confidence heuristic is that people may look and sound more confident than they really are. Con men do this deliberately. We all do, to some degree. Of course most of us don’t do it brazenly as con men – one hopes – but we all sense intuitively that confidence is convincing. And so, when we are face to face with people we want to convince, we downplay our doubts, or bury them entirely.”

So being confident and forceful about what you say makes for good television and great reading. And that explains why people sitting in studios in Delhi and Mumbai are making the most confident forecasts about who will win in Bihar.

Research also shows that when there is a competition to make forecasts, the forecasts people make get more and more confident. as we go along.

What does this mean during election time? When every political analyst is busy making forecast, if someone wants to standout then he has to make clear and confident forecasts. And that is precisely what has been playing out in television studios up until now.

You are likely to see more of that once election results start coming in and by 10AM tomorrow morning, it will be more or less clear who is likely to form the next government in Bihar—the Nitish Kumar led Grand Alliance—or the Narendra Modi led National Democratic Alliance (NDA).

Once the results are out political analysts will offer us explanations on why the results happened to turn out the way they have. If Narendra Modi led NDA wins, then we will hear stuff like the Modi magic is still at work, people have taken Modi’s promise of a separate Rs 1.25 lakh crore development package for Bihar seriously and so on. Some cheeky analyst might also suggest that all the statements made by the “so-called” fringe elements in the ruling Bhartiya Janata Party (BJP), also helped bring in the votes.

If the Nitish Kumar led Grand Alliance wins, you will hear analysts stay stuff like there was no anti-incumbency at work. The development carried out by Nitish Kumar has worked. The women have come out in full force to vote for him given all the development projects targeted towards women Kumar carried out. And voters in state elections have once again shown that development gets you votes.

Given that it is Bihar election results that the analysts will be analysing, there is bound to be some analysis along caste lines. You are likely to hear stuff like the Muslims plus Yadavs, the base on which Lalu Prasad Yadav ruled Bihar for a long time, voted for the Grand Alliance en masse. Hence, all the statements made by the so-called fringe elements in BJP did not work.

So if the BJP wins we will be told that the statements by fringe elements may have added the icing on the cake. If it loses, we will be told it didn’t work.
Long-story short, we will be told a lot of stories explaining why things happened the way they did. As Gardner writes: “People love stories, both the listening and the telling. It’s a central part of human existence, found in every culture, in every place, in every time…For explanation-sharing to work, however, a story cannot conclude with “I don’t know” or “The answer isn’t clear.”” The narrative should be complete. Incomplete stories do not work.

Hence, there will be no shortage of explanations and stories on why things happened the way they did in Bihar. Political analysts will come up with extremely coherent reasons on why things happened the way they did. You won’t hear phrases like “I don’t know” or words like “maybe” or “possibly”. In fact, some analysts will even say stuff like “as I have been saying all along”. In case of television channels the “I” will become “we”.

Even those who get their forecast wrong (and believe me there will a lot of them) will revise their forecasts. As Jason Zweig writes in The Devil’s Financial Dictionary: “Once you learn what did happen, your mind tricks you into believing that you always knew it would happen. Contrary to the popular cliché, hindsight is not 20/20; it is barely better than legally blind.”

This tendency is referred to as hindsight bias.

Hindsight bias is also referred to as “I knew it all along effect”. As Nassim Nicholas Taleb writes in Fooled by Randomness: “Our minds are not quite designed to understand how the world works, but, rather, to get out of trouble rapidly and have progeny…Psychologists call this overestimation of what one knew at the time of the event due to subsequent information…the “I knew it all along” effect.

The Nobel Prize winning psychologist Daniel Kahneman talks about this phenomenon in his book Thinking, Fast and Slow, in the context of the financial crisis which broke out in late 2008.

As he writes: “I have heard of too many people who “knew well before it happened that the 2008 financial crisis was inevitable.” This sentence contains a highly objectionable word, which should be removed from our vocabulary in discussions of major events. This word is, of course, knew. Some people thought well in advance that there would be a crisis, but they did not know it. They now say they knew it because the crisis did in fact happen.”

Something similar will play after the Bihar election results as well. Depending on the result, people will adjust their analysis and say “I knew this will happen”.

So if Nitish wins they will say, I knew this will happen, even if they had been predicting a Modi win earlier. And vice versa.

This is not a good thing. As Kahneman writes: “What is perverse about the use of know in this context is not that some individuals get credit for prescience that they do not deserve. It is that the language implies that the world is more knowable than it is. It helps perpetuate a pernicious illusion. The core of the illusion is that we believe we understand the past, which implies that the future also should be knowable, but in fact we understand the past less than we believe we do.”

Given this, it’s best not to waste time watching all the analysis that will pour in on Bihar elections, all through the day tomorrow and on Monday.

Switch off the television.

Take your kids out for a spin.

Buy some gold for your Mother. And your wife. Or your girl-friend (It’s Dhanteras after all).

Or just pick up a good book and read.

Happy Diwali!
The column originally appeared on The 5 minute Wrap Up on Equitymaster on Nov 7, 2015

Why we buy lottery tickets

lotteryThe funny thing about memories is that we remember what we remember. And those memories may not always be a true reflection of how things may have originally happened. What we live with are our versions of how things may have really happened. And this we tell ourselves is the truth.

One abiding memory that I have from my childhood is that of my father buying lottery tickets. I don’t remember how often he did it. Neither do I remember how long he did it for. But I do remember that there was a time when he used to buy lottery tickets regularly. And in my version of this memory, I remember him beaming on days he used to buy a lottery ticket. He looked genuinely happy on those days.

And all these years later, I wonder why he smiled on the days he bought a lottery ticket, given that he never really won anything. Of course, I did not understand the reason back then, but now with some understanding of why people behave in a certain way, I do.

As John Kay writes in Other People’s Money: “A lottery ticket, which millions of people buy each week, is a wager. Cynics have advised that you would do well to buy your ticket at the last minute, because otherwise the probability that you will die before the draw is greater than the probability that you will win the headline prize.”

Jokes apart, why do individuals actually buy lottery tickets, given that the probability of winning the big-prizes on offer on any lottery, is very low. Only a few people out of the millions who buy lottery tickets regularly, are likely to win the top prize.

Psychologist Daniel Kahneman explains this in Thinking, Fast and Slow: “The possibility effect…explains why lotteries are very popular. When the top prize is very large, ticket buyers appear indifferent to the fact that their chance of winning is minuscule.”

The point being that unless you buy a lottery ticket you have no chance of winning. As Kahneman points out: “A lottery ticket is the ultimate example of the possibility effect. Without a ticket you cannot win, with a ticket you have a chance, and whether the chance is tiny or merely small matters little. Of course, what people acquire with a ticket is more than chance to win; it is the right to dream pleasantly of winning.”

And that I guess explains my father’s beaming face every time he bought a lottery ticket. In fact as Kahneman puts it: “Buying a ticket is immediately rewarded by pleasant fantasies…The actual probability is inconsequential; only the possibility matters.”

In fact, promoters, companies and governments (as is the case in India and other parts of the world) which sell lottery tickets, understand this fact very well. As Kay writes: “Promoters have learned through experience how to design an attractive lottery product. A few very large prizes establish the dream. A large number of very small prizes encourage customers to maintain the belief that ‘It could be you’.”

This structure of the lottery also explains why people keeping going back to buying tickets even though their chance of winning the big prize is close to zero. As Kay points out: “When lottery patrons lose, as they mostly do, they can sustain the dream by promising themselves that they will buy a ticket again next week. ‘It could be you’ was the well-judged slogan with which Britain’s national lottery was launched.”

So, the story and the hope of winning a big lottery continues among millions of people all over the world. And it is hope which makes a dull and dreary life, liveable at the end of the day. If that means buying a lottery ticket, then so be it.

(Vivek Kaul is the author of the Easy Money trilogy. He tweets @kaul_vivek)

The column originally appeared in the Bangalore Mirror on Oct 7, 2015