Storytelling in Economics with Tim Harford (3-2-1 by Story Rules #99)
Whoa, it's number 99. The big 1-0-0 is looming on the horizon. I'm thinking of a special announcement for the milestone. Stay tuned!
Last week progress on the book was better. I am writing the last couple of chapters and in parallel have started doing a complete read-through and edit of the existing chapters. It's a fun process!
And now, on to the newsletter. (which without any conscious plan, has become an Econ-focused issue!)
Welcome to the ninety-ninth edition of '3-2-1 by Story Rules'.
A newsletter recommending good examples of storytelling across:
(For previous editions, you can check out the archive on my website)
Let's dive in.
?? 3 Tweets of the week
Hahaha, this is so insightful and funny. Please let's not become these kinds of people!
Mumbaikars - please visit and share your experience. Would love to visit when I get the chance.
Haha, maybe a tad harsh on intellectuals? But yes, the idea is to say hard things in a simple way.
?? 2 Articles of the week
This long article pays rich tribute to ex-Prime Minister Manmohan Singh on an under-rated ability - to find and nurture talent and recruit them to work for the country.
The tributes to Manmohan Singh often boil down to his brilliance and decency. But, what many miss is his ability and power to build collaborative networks. Singh understood that lasting change comes not from solitary genius, but from creating ecosystems of excellence that outlast any individual. In placing talent above ideology, expertise above authority, and mentorship above credit, he developed a model of institutional change that ensured that for the next thirty years RBI governors, CEAs, and the top minds in economic policy were handpicked by him.
For instance, Montek Singh Ahluwalia, author of the famous M Document, was a Manmohan Singh mentee:
Singh was excellent at identifying young talent, most famously Montek Singh Ahluwalia. Before Montek and Isher Judge would go on to marry, they met Manmohan Singh in Delhi in 1970. At the time, Singh was a professor at the Delhi School of Economics, known for his work on India’s exports.
...
During his tenure as chief economic advisor (CEA) to the Government of India, Singh’s relationship with Ahluwalia deepened. Their conversations in Washington D.C., where Ahluwalia worked at the World Bank, became more frequent. When the position of economic advisor at the Finance Ministry opened, Singh saw an opportunity. He guided Ahluwalia into the bureaucracy, marking their transition from mentor and mentee to colleagues.
Another mentee, economist Shankar Acharya remembers how Singh would guide young Indian economists abroad:
Shankar Acharya recalls the annual International Monetary Fund (IMF) and World Bank meetings in Washington, D.C.—both in autumn and spring—where Singh made it a point to meet young economists. He listened to them. He learned about their work. He discussed the possibilities available back home, within and beyond the government. His efforts led to a steady inflow of Indian talent. Acharya himself, after completing his PhD at Harvard and working at the World Bank, returned to India. He would eventually work his way up the Indian bureaucracy to serve as CEA under Singh as finance minister.
Other folks who Singh inducted into public service: Rakesh Mohan, Arvind Virmani, Jairam Ramesh.
And it's not as if it was smooth sailing with the existing bureaucracy:
These appointments to the Planning Commission faced resistance from bureaucrats. They were skeptical about placing such junior economists in senior positions. But Singh’s judgment was vindicated. Their immediate contributions were significant, and their subsequent achievements changed the course of India’s economy.
Singh was able to balance the needs of the country with that of the individual:
When Mohan asked whether to stay in India after a three-year assignment in the early 1980s, Singh advised him to return to the World Bank to gain more experience and financial security before considering government service. He gave that advice to many others returning to India—the best way to have a long and honest career in government was to have other means of financial security. Singh could see beyond immediate interests to focus on what would serve both the individual and institution best in the long run.
Sure, Singh had his failures, especially in the UPA second term (2009-14), as Ram Guha argues in this critical piece. But all in all, we were lucky to have a leader like Manmohan Singh when we needed him.
The US Dollar has seen strong appreciation against all currencies in 2024, with the trend accelerating after Trump's election win. While the pressure is being felt on all emerging economy currencies, it seems like India is doing a lot more to arrest the rupee's fall.
领英推荐
In the past few months, the RBI has spent around $70B from India's forex reserves, with the fall being $6B in the last week alone. Why is the RBI spending such high amounts to protect the rupee from depreciating? Should it not let the rupee fall a bit and let exporters become more competitive?
In this fascinating piece, former CEA Arvind Subramanian (with economist Josh Felman) ponders on this question almost as a mystery.
They examine various hypotheses and rule them out:
Hypothesis 1 - It happened accidentally (there was no official policy): I was shocked to see this could also be a hypothesis. But, the authors reject it saying that since 2022, the RBI has intervened repeatedly on both sides of the market.
Hypothesis 2 - RBI wants to avoid inflation from higher costs of imports (especially oil and fertilisers): The authors reject this saying that global oil and fertiliser prices came down by 30% in late 2022 and have not been a problem since.
Hypothesis 3 - The government prefers a strong rupee for political reasons: But the RBI had managed a semi-flexible rupee policy for seven years under this current government upto late 2022. What changed then?
They then come to their final hypothesis - that there was a steep increase in ECBs (External commercial borrowings - dollar loans from outside India) starting early 2023. Why would Indian companies take on dollar-debt despite the significant exchange rate risk? The writers make an intriguing point that it was the RBI's peg (or decision to defend the rupee) that enabled these firms to take that leap.
The catch? The authors say that overall private investment did not take off, which means that firms merely used this RBI "subsidy" to substitute expensive domestic borrowing with cheaper foreign credit.
And now if the RBI allows the rupee to depreciate, it would put massive stress on these firms...
The impact of defending the rupee? Among other things, an erosion in our export competitiveness...
Phew, these are complex decisions!
?? 1 long-form listen of the week
(Someone shared this with me - I forgot who. Sorry!)
Tim Harford is perhaps one of the best storytellers in economics - and in this interview, he shares some of his approaches and tips to the craft.
I love how he uses a simple contrast between numbers and words to explain why we should not distrust all stats just because some people obfuscate and lie with data:
"Harford: There's a famous old quote, sometimes attributed to Mark Twain, sometimes attributed to Disraeli, I don't think it was either of them. “There are three kinds of lies: lies, damned lies and statistics.” I mean, this is, that's a 19th century quote. So people are suspicious of statistics. They think that statistics can be used to lie to them. And of course they can. But it would be weird if I were to publish a book about language that was titled How to Lie with Words and I just said to everyone, "Oh, you need to be careful of words 'cause people, people lie with words." And everybody just said, "Oh, yeah. Words.. we're not having anything to do with words in the future, because people sometimes tell lies", it would be absurd.
Because of course, words are useful for so much more now than lying, even though they are, of course, used for lying. And it's the same with statistics. Statistics are absolutely vital, both for communicating facts about the world and for discovering facts about the world. And I think part of the problem is that we feel maybe wrongly that we have the capacity to tell the difference between truth and lies when they come in the form of words. But when they come in the form of statistics, a lot of us feel helpless. And we just go into this reflexive defensive crouch and we just say, "Oh, I guess I'll just disbelieve any statistical claim." And that feels kind of smart and savvy, but actually, you're turning your back on some really important stuff if you do that.
Tim makes a key point - storytelling is not just about clarity, you also need to get the audience curious:
Harford: ... it's not enough to just explain it clearly, you have to be more than be clear. You have to actually awaken people's curiosity. You have to get them interested and, and get them realizing there's a gap in their knowledge that they perhaps, you know, never even realized. "Oh, hang on. I've never even thought about, uh, you know, how, how does stuff actually come from China and how does the shipping industry work," for example...
(By the way, in my book, there are separate sections for storytelling techniques around clarity and curiosity!)
If you make it interesting, you can explain anything, however technically difficult:
Harford: I think Orson Welles said something along the lines, I quote him in the book, he said, um, "Don't worry about an audience not understanding something. Audiences can understand anything, the problem is to interest them. But once you interest them, they can understand anything in the world.”
Tim distinguishes between 'anecdotes' and 'examples' versus, what he considers as a 'story':
Harford: But I think a lot of people in nonfiction, a lot of people doing business writing, a lot of people doing journalism, when they say story, what they mean is anecdote or example. Like, "I need to give you an example of this thing that I'm talking about." And that's fine. I mean, it's great to have an example. It's great to have an anecdote. That's not the same thing as a story. That's more like, "I'm just gonna give you something concrete to catch your interest or, so that you understand what it is that I'm saying." And that's totally fine. But a story is keeping your interest sustained for page after page after page, minutes after minutes after minutes of audio. And that, that's a different thing".
For me, what Tim is referring to is the 'narrative' - which can include anecdotes, examples, data points etc.
But these are just semantics. A story, by any name, will still be as engaging!
That's all from this week's edition.
Ravi
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Cover Image credit: Photo by iStock Photos on Unsplash