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Why Does This Professor Want Schools To Ditch Calculus For Statistics?

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Arthur T Benjamin, a renowned mathematician and writer, makes a case for teaching Statistics over Calculus in schools in this TED Talk. Mr. Benjamin admits that while Calculus is a skill every Math, Science, Engineering or Economics student must pick up by the time they’re done with their first year of college, very few people use it in a meaningful way in their day to day lives.

‘Don’t get me wrong, Calculus is an important. it’s one of the great products of the human mind. The laws of nature are written in the language of calculus. And every student who studies math, science, engineering and economics must definitely learn calculus. But i’m here to say that as a professor of Mathematics, that very few ppl actually use Calculus in a conscious, meaningful way in their day to day lives.’

The professor also stressed on the applications of Statistics in daily life, stressing on real-world issues like the 2008 Financial Crisis.

‘On the other hand, Statistics is a subject that you could and should use in your lives. It is about risks, rewards, randomness and understanding data. if everyone knew about Probability and Statistics, we wouldn’t be in the economic mess that we’re in today.’ 

As Benjamin says in the video, if Statistics and Probability is taught properly, it can be a lot of fun. After all it’s the mathematics of games and gambling. It’s analysing trends and predicting the future he explains. Well, we’re sold on his point. Brb, we’re off to open our Probability books.

 

5 Books About the 2008 Financial Crisis That Every Economics Student Must Read

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Noted Macroeconomics Expert and Resident Faculty at Meghnad Desai Academy of Economics, Professor Indradeep Ghosh,  is currently leading a group of five students from Jai Hind College on a focused reading of 5 books about the 2008 Financial Crisis. The group meets every Saturday for 90 minutes.

The meetings began on January 9 and will occur every Saturday through May 28. Reading is assigned ahead of time that everyone completes and comes prepared to discuss. The objective is to help students learn about the 2008 Financial Crisis from the writings of eminent economists who have thought about the crisis and written book-length reflections on the various questions and issues raised by the crisis.

An equally important objective is for students to develop the ability to read and think critically, as not all of the authors on the reading list agree about the causes of the crisis, nor do they necessarily offer the same solutions for avoiding future crises – so students will learn how to weigh the authors’ arguments and choose for themselves which arguments are the most convincing.

The authors include U. Chicago economist and current RBI governor Raghuram Rajan, Nobel Prize winner and New York Times columnist Paul Krugman, and  Financial Times columnist Martin Wolf, among others.

Here are the list of books used during the program:

Fault Lines – Raghuram Rajan

Fixing Global Finance – Martin Wolf

End this Depression Now! – Paul Krugman

Enigma of Capital – David Harvey

Economics Rules – Dani Rodrik

So, why don’t you participate remotely by putting these books on your reading list? Get going!

Neeraj Hatekar Weighs In On This Year’s Union Budget

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Neeraj Hatekar, Director of Dept of Economics at Mumbai University and visiting faculty at Meghnad Desai Academy of Economics weighed in on this year’s Union Budget. Here’s what he had to say.

I think there were three or four challenges before the Finance Minister. Firstly the crisis in the rural sector because of three years of consistent drought. Second, the stagnation in the manufacturing sector and private investment and the third would be the bad balance sheets of banks. 

He has tackled the first issue fairly well – by encouraging expenditure on rural development and I’m happy about the changed attitude the government has shown regarding MGNREGA. The manufacturing sector investment has only been partly tackled because if we generate more rural income there’ll be more of a demand for a manufacturing sector which plays a big role in relieving rural distress by creating jobs on its own which one does not see very strongly.

Lastly, they’ve done virtually nothing for banks’ balance sheets. One was also looking for some steps towards a bankruptcy law. There was some intent about increasing the tax net and taxing the super-rich, but it is only intent. The noise is there, but one doesn’t see anything concrete. 

#ShareTheLoad – an Indian ad campaign is making news worldwide!

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#ShareTheLoad, an Indian advertising campaign created by advertising agency BBDO India for the washing powder brand Ariel has struck a chord worldwide. The advertisement questions the practice of assigning laundry duty to the women of the house. It reasons that in a time where so much emphasis is given to women and their independence, the duty of doing laundry must be equally shared with the man of the house too.

The advertisement takes the emotional route to address the problem. We see a father plead guilty to his daughter for unknowingly encouraging this act of gender discrimination. The resolution in the end encourages Indian families to stop knowingly / unknowingly discriminating women and urges them to #ShareTheLoad.

The advertisement won high praise from Sheryl Sandberg, Chief Operating Officer of Facebook and committed writer-activist who spoke about the campaign on Facebook. Here’s her quote:

This is one of the most powerful videos I have ever seen – showing how stereotypes hurt all of us and are passed from generation to generation. When little girls and boys play house they model their parents’ behavior; this doesn’t just impact their childhood games, it shapes their long-term dreams.

In this ‪#‎SharetheLoad‬ campaign, Ariel IndiaP&G, and BBDO Worldwide show how fathers and husbands can take small steps (like doing laundry) to create more equal homes. They won a ‪#‎GlassLion‬ at the 2015 Cannes Lions International Festival of Creativity for earlier work on this campaign. The real win is the way they are changing stereotypes and showing that a more equal world would be a better world for all of us.

Well, it’s a wonderful sign to see Indian advertising hogging the limelight for the right reasons, no?

5 Things We Liked In This Year’s Union Budget

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This year’s Union Budget has received mixed reviews from critics and the general public. But like year’s budget, this budget too has some positives that we can look at. We’re listing five of them below:

No tax exemptions

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Unless you earn more than INR 1 crore every year, you will continue to pay the same tax as before. Wait. That’s not all. If you’re earning INR 5 lakh per year or less, then you are eligible for a tax exemption of INR 3,000. Hey, that’s a small but sweet amount to save for your birthday, no?

Now is the time to buy that home

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If your home costs INR 50 lakh or less, then you are eligible for a tax break of INR 50,000 per annum if you loan up to Rs 35 lakh from the bank.

It’s also the time to start-up and zoom off

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If you start-up now, you get a 100% tax exemption for profits made during the first three years of your company’s operations. That’s a pretty sweet deal. Get cracking on that long-pending idea now!

Cooking gas for families below the poverty line

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The Modi government is launching a new initiative to provide cooking gas to BPL families with support from the states. Additionally, LPG connections will be provided under the names of women members of family: A sum of INR 2000 crore has been allocated for 5 years for BPL families.

ATMs will become more accessible

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A year ago, the government ensured a record number of bank accounts were opened under the Jan Dhan Yojana. Now they’re doing the next logical thing by increasing the number of ATMs, micro-ATMs in post offices over the next three years.

What did you feel about the Union Budget? Tell us in the comments section below.

Here Is Why Now Is The Best Time To Do A Postgraduate In Economics

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Governor Rajan Inaugurating Meghnad Desai Academy

Here are a quick list of frequently asked questions about a postgraduate degree in Economics.

Why study Postgraduate Economics?
A globalised workplace is opening up many opportunities in the corporate world which require a thorough background in economics & finance. Today’s jobs require the ability to work with & analyse large datasets, understand the implications of policy changes on an economy, industry, or firm and be proficient with concepts in finance. In addition, critical thinking and strong reading & writing skills are essential for success.
Meghnad Desai Academy of Economics is offering a full time one year Postgraduate Program in Economics, jointly with the Department of Economics (Autonomous), Mumbai University. Students will get an opportunity to specialise in any one of the following three areas – Data Analytics, Finance or Public Policy.

Who has designed the curriculum?
The course has been developed under the supervision of the Chairman Lord Meghnad Desai, (Professor Emeritus, LSE) and by renowned economists & financial professionals – Dr. Ajit Ranade (Chief Economist, Birla Group), Dr. Tushar Poddar (Chief India Economist & MD, Goldman Sachs) & Mr. Niranjan Rajadhyaksha (Executive Editor, Mint).

Tell us about the Program.
The Course begins in July 2016 with a five week Foundation Course, which serves as a bridge course in Mathematics/Econometrics and Intermediate Economics.
In Semester 1, students study three courses – Applied Microeconomics, Advanced Macroeconomics and Econometrics in Business . These courses equip students with the necessary framework to analyze problems in the real world.
In Semester 2, students are offered electives in 3 areas – Finance, Public Policy and Data Analytics. Students can elect 4 electives and choose to specialise in any one area. You can visit this link to know more.

Does the Academy offer any short term programs?
We have recently launched a summer program in Mathematics and Statistics for undergraduate students. The program will begin on 25th April and end on 31st May. For more details, visit here.

What are the different initiatives being taken at the Academy to provide real-world training?
We introduced the following three innovations in our Core Program:

Case Studies – to reinforce the understanding of concepts, our faculty have designed case studies such as
1) Korean vs. Indian Growth Experience
2) Japan’s Lost Decade
3) Eurozone Crisis

Through discussion of case studies, students build on their communication skills, analytical skills and critical thinking.

The Economics Lab is an innovation where a prominent professional economist delivers a talk on a concrete real-world problem that he or she has grappled with. To give you a few examples –
Dr. Ajit Ranade, Chief Economist, Birla Group conducted a lab on Cartels, Collusions and Anti-competitive practices.

Dr. Tushar Poddar, Chief Economist & MD, Goldman Sachs conducted a lab on Forecasting GDP.

Dr. Mridul Saggar, Adviser, International Department, RBI conducted a lab on Monetary Transmission in India.

The Speaker Series enable students to encounter exciting intellectual developments in the discipline of economics and finance. Previous speakers include:

Dr. Arvind Subramanian, Chief Economic Advisor to GOI conducted a session on ‘How India’s Economic Survey in Conducted.’

Dr. Tom Richardson, IMF Resident Representative in India conducted a session on ‘India & the World Economic Outlook’.
Dr. Pravin Krishna, Professor, John Hopkins University, conducted a session on ‘The World Trade System’.
Dr. Mangal Goswami, Deputy Director, IMF –Singapore Regional Training Centre conducted a session on ‘Detecting Financial Fragility’.
Mr. Raghav Narsalay, Managing Director, Accenture Institute of High Performance conducted a session on ‘Innovation and its impact on national and business strategy’.

To discourage rote learning, students are assessed at regular intervals through written assignments and problem sets, as well as class discussions which form part of the overall grade.

What skills does the Program aim to develop?
The Program develops research capabilities, quantitative tools and software skills that are needed to succeed as an economist, analyst, data scientist, and various other roles in the financial sector and beyond. Students enhance their communication skills through class discussions, research papers and presentations, where they are trained to present complex information in a concise manner.

Who are the faculty members?
The faculty members of the academy comprise of a mix of both academics and industry practitioners, trained from reputed institutes such as MIT, Cambridge, Warwick and the IMF.

Faculty members include –

Indradeep Ghosh – Associate Professor MDAE, PhD MIT , earlier Assistant Professor Haverford college for 8 years.
Neeraj Hatekar – Director & Professor Econometrics, Mumbai University, PhD Mumbai University.
Abhinay Muthoo – Head of Department of Economics, University of Warwick, Co-Director of Warwick Policy Lab (WPL), University of Warwick, PhD Cambridge.
Lord Meghnad Desai – Chairman MDAE, Professor Emeritus London School of Economics, Life Peer, British House of Lords
Dr. Mangal Goswami – Deputy Director, IMF – Singapore Training Institute. Previously desk economist for IMF member countries

When will the Admission Process begin?
The Academy is looking for its second batch of students for the Academic year 2016-17, commencing July 2016. Admissions are currently open and the last date to submit applications is 30th April. To apply please click here.
What are the career prospects post the Program?
Amongst the many options available, students can look forward to a career as:

1. Market Economists – Commercial and Investment Banks
2. Analysts – Treasury, Rating Agencies, Banks, consultancies.
3. Data Scientists for Big Data
4. Research – think tanks
5. Economic Journalists
6. Finance related roles

What kind of placement assistance does the Academy provide?
To ensure job readiness, our placement office has also taken a number of steps

Live projects – Companies like First Rand bank, Accenture, IDFC Institute, Net Core, Aon Hewitt, Observer Research Foundation and Axis bank have employed our students for live projects.

We have invited speakers from top and middle management to speak about areas, which our students found interesting:

‘An Introduction to Exchange Traded Funds’ – Mr. Sanjiv Shah (Co-CEO, Goldman Sachs Asset Management)

‘How to manage your career’ – Mr. Yousuf Syed (Head, Investor Relations – Fixed Income, Axis Bank)

‘Career Opportunities in Consulting’ – Mr. Roopank Chaudhury (Partner, AON Mclagen)

‘A day in the life of’ – these sessions were introduced to give students a flavour of what a typical day looks like in the life of their chosen profession.

Corporate Mentorship Program – Each student at the Academy has been assigned a corporate mentor in order to aid them in making academic and professional choices.
For more information:
Website: www.meghnaddesaiacademy.org
Email: info@meghnaddesaiacademy.org
Phone: 022-60126001

Dr. Raghuram Rajan’s Explanation Of Rising Dosa Prices Show His Grasp Of Economics

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At a recent event, Raghuram Rajan was quizzed about his much-acclaimed ‘Dosanomics’ to explain the economic scenario of our country. Sana Nazar, the girl who asked him the question put it this way:

I am a dosa lover and I am fascinated by your Dosanomics. You taught us to protect ourselves and you taught us that lower interest rate with a lower inflation rate is better than higher interest and inflation rates. But in real life, when it comes to the dosa, its price goes up when the the inflation rate goes up. But when the inflation rates comes down, the dosa prices don’t. What is happening to our beloved dosa, sir?

Rajan’s answer was measured and thorough. He cited the Balassa-Samuelson Effect to support his answer. He spoke about how there has been no technological advancement in preparation of Dosa. A dosa maker ‘still puts the same maavu on the tawa and spread it around’, while in a separate industry, a bank clerk can service more people using the advancement in technology. So, the wage one pays a dosa maker will always go up as he can always use his time to apply for a job in areas where productivity has gone up, he said.

Well, we’re glad that an institution as important as the RBI is under you, Mr. Rajan. Thank you for teaching us economics lessons in your own unique style.

Was The JNU Debacle Really About Free Speech? Tell Us.

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Source: AP Photo / Tsering Topgyal)

In the wake of the JNU ‘anti-national’ debate that has been grabbing media headlines for the last two weeks, Meghnad Desai Academy of Economics asks writers to debate if The JNU Debacle was about free speech.

Entrants can submit their 500-word essays on / before 15th March 2016 to info@meghnaddesaiacademy.org to stand a chance to win cash prizes of INR 5000 for the best article and INR 2500 for the runner-up.

The best entry will also be published on the much-followed Meghnad Desai Academy newsletter and website.

We wish all the participants good luck.

JNU Debacle - Competition

 

No, a diamond is not forever. We’ll prove it to you.

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The idea that diamonds rare and valuable, and are essential signs of wealth, esteem, and financial well being is a fairly recent development. The price (or value) of any object is governed by two forces – its supply and the demand for it in the market. Let’s look at both these factors to delve deeper into diamond pricing.

Until the late 19th century, diamonds were found only in a few river beds in India and in the jungles of Brazil, with the entire world production of gem diamonds amounting to only a few pounds a year. In 1870, however, huge diamond mines were discovered in South Africa, where diamonds were being scooped by the ton. Suddenly, the market was filled with diamonds. The British financiers who had organised the South African mines quickly realised that their investment was endangered; the diamond price depended entirely on its scarcity. And thus was created an entity called De Beers Consolidated Mines, Ltd – a company that would control production and go on to perpetuate the illusion that diamonds were scarce.

Here’s how De Beers controlled the diamond supply chain. They owned most of the diamond mines. For mines that they didn’t own, they bought out all the diamonds, intimidating or coercing competitors who tried resisting their monopoly.

They then transferred all the diamonds over to the Central Selling Organisation (CSO), an authority of independent companies which they indirectly controlled.

The CSO sorts through the diamonds, puts them in boxes and presents them to the 250 partners that they sell to. The price of the diamonds and quantity of diamonds are non-negotiable – it’s take it or leave it. Refuse your boxes and you’re out of the diamond industry.

For most of the 20th century, this system controlled 90% of the diamond trade and has been solely responsible for the inflated price of diamonds.

Now, let’s talk about the demand for diamond. We buy diamond because Mr. Gerold M. Lauck from N. W. Ayer & Son, an advertising agency in USA told to way back in 1938. Post the great depression, diamond sales were plummeting in the USA. Even Europe, on the verge of war was not looking very attractive to De Beers. And so, N. W Ayer & Son were brought in with the objective of positioning diamond as a status tool.

Movie idols were given diamonds to use as symbols of indestructible love. In addition, the agency suggested offering stories and society photographs to selected magazines and newspapers which reinforced the link between diamonds and romance. Stories stressed on the size of diamonds that celebrities presented to their loved ones, and photographs would conspicuously show the glittering stone on the hand of a well-known women.

Diamonds were everywhere. Fashion designers spoke on the radio about the “shifting trend towards wearing diamonds”. A robust campaign to sell diamonds aggressively was conceived. It was then that one of the most recognised slogans of 20th century pop-culture – “A Diamond is forever” was created.

This campaign still powers the demand for diamond today. What De Beers sold was the idea of eternal love using a stone.

So next time you head over to buy a ring, ask yourself this question – Are you really buying something that lasts forever? Or are you buying an idea sold by a smart advertising man?

Why Do We Fall For ‘FREE’ Stuff While Shopping?

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What is it about anything that is free that makes it so attractive?

How do we explain why people pile up their plates with an extra helpings for food at a buffet when they are already full? Or why people line up to get a free calendar during Diwali at their grocery store? Or why startups today are burning investment money by giving FREE first transactions to acquire customers? Let’s explore with the help of behavioural economics.

It’s no secret that getting something for free feels very good. Would you buy something that is discounted from Rs 20 to Rs 10? Maybe. Would you buy it if it was sold for Rs. 5? Maybe. Would you grab it if it were discounted from Rs 20 to zero? ABSOLUTELY YES!

To start with, getting something for free has it’s downside.  Imagine going to a sports store to buy a pair of nice white socks – the kind with nice padding, toweled from inside and good quality material. 20 minutes later you find yourself walking out with a pair of socks that has no padding and not toweled from inside and yet cost as much as the better quality socks. What made you buy it? Most likely the allure of a ‘FREE 1 Plus 1 Offer!’

What is it about ‘FREE’ that makes it so attractive?  Here’s the answer to it.

Most transactions have an upside and a downside, but when something is free we forget the downside. ‘FREE’ gives us an such emotional charge that we perceive what is being offered us as immensely more valuable that it actually is.

Why? Humans are intrinsically afraid of loss. The real allure of ‘FREE’ is tied to this fear. There’s no visible possibility of loss when we choose a ‘FREE’ item. But if we choose an item that is not free, we feel there’s a risk of having made a poor decision – again the possibility of a loss looms large in our head.

For this reason, in the land of pricing, zero is not just another price. Zero is in a category of it’s own.

Here’s a quick question before we wrap up: Suppose Shopper’s Stop is offering a free gift certificate worth Rs 1000 on every store visit during weekdays. However, if you visit on a weekend, you’ll get vouchers worth Rs 1500 on purchase of Rs 200. When do you think most customers will go?

A quick calculation reveals that visiting on a weekend and paying Rs 200 will still give you a better deal (Rs 1300) over visiting on weekday. And yet studies show that most customers are likely to visit on a weekday to claim their totally ‘FREE voucher worth INR 1000’.