Note to recruiters

Note to recruiters: We are quite aware that recruiters, interviewers, VCs and other professionals generally perform a Google Search before they interview someone, take a pitch from someone, et cetera. Please keep in mind that not everything put on the Internet must align directly to one's future career and/or one's future product portfolio. Sometimes, people do put things on the Internet just because. Just because. It may be out of their personal interests, which may have nothing to do with their professional interests. Or it may be for some other reason. Recruiters seem to have this wrong-headed notion that if somebody is not signalling their interests in a certain area online, then that means that they are not interested in that area at all. It is worth pointing out that economics pretty much underlies the areas of marketing, strategy, operations and finance. And this blog is about economics. With metta, let us. by all means, be reflective about this whole business of business. Also, see our post on "The Multi-faceted Identity Problem".

Sunday, September 16, 2012

India and Olympic sports

It has been an increasingly common complaint that Social Scientific Theories lack predictive power, but the ones I discuss below do not suffer from this problem. I can confidently state that for every year that is divisible by four, India will send a contingent to the Olympics and that said contingent will perform underwhelmingly. Furthermore, I can also quite confidently assert that there will be a general outpouring of strum und drang following each Olympics in India where journalists and everyday folks like you and me wonder if there is something we are doing wrong. Nirmal Sekhar writes about the performance of India in the most recent Olympics in The Hindu :

My dear readers, let us get real. We have failed the Koms and the Yogeshwars and the rest as much as we seem to believe that many Indian athletes have failed us. They don’t owe us as much as we owe them.

We need to follow their careers, cheer them from grassroots up, care about how they are treated by the administrators, worry about how they are ignored by the big corporate giants who would readily part with $10m for a 15-second TV ad campaign featuring a Sachin Tendulkar or a Gautam Gambhir. But we don’t.

We simply don’t give a damn most of the time and then bemoan their lack of success at the Olympics once every four years.

Believe me, it is not easy being an Indian and trying to achieve world-class feats in most sports, barring cricket, with its superb infrastructure public and corporate support and unmatched financial clout.

This is not to belittle what the Gavaskars, Kapils and the Tendulkars have achieved. But, tell me this: why is nobody canvassing for a seat in the upper house for Anand, why isn’t anyone talking about a Bharat Ratna for the genius of the 64-square game?

I must say that this piece smacks of intellectual self-flagellation but several thoughts rushed through my head - all at the same time - when I read this piece. The first thought was regarding why, despite many incentives being in place, Indian athletes do not do well at the Olympics. A second thought was whether we are really as bad as all that. And a third one was whether there is anything we can do about it. The issue of India not doing well at the Olympics has been raised often and there have been many answers proposed, none of them entirely satisfactory. Perhaps,
Olympics is not an area where India is likely to shine given the relatively poor economy. Perhaps we should simply take that in our stride and focus our attention not on our athletes but on our own health. After all, it is not the end of the world if we, as a country, do not perform well in the Olympics. The major value that society might gain through an event such as the Olympics would be the promotion of a strong culture of fitness and sports. Surely, it is not our inability to appreciate the contributions of athletes from myriad obscure and not-so-obscure sports that is the problem. Indeed, there is really no reason to believe that a chess player has an absolute entitlement to a seat in the upper house of parliament. (It is a bizarre line of argument that a sportsman should be entitled to have a place in the upper house of parliament. Wouldn't it be far more useful to advocate for an expert on policy to gain a place in the upper house? It would be far better to say that no sportsman ought to get a free pass to the parliament and, even if there is a lot of clamor for one sportsman or the other to be nominated, that does not mean that other sportsmen who are doing exceedingly well in perhaps less popular sports should also get a free pass. Anyhow, I will let that comment pass.) The problem may really be that India cannot afford to spend too much money on sport given the multitudes of other economic issues that it faces.

Why do we do so poorly at the Olympics? Many reasons have been proposed for our poor performance in the Olympics. One, the per capita GDP of India is low. People are poor. Research has shown that there is a positive correlation between the GDP of nations and their Olympic medal tallies. It would be worthwhile to look at the paper by Daniel Johnson and Ayfer Ali published in the Social Sciences Quarterly [1] to see the extent to which there is a close correlation here. (I know Ayfer Ali a bit from Harvard, but would have to say that I am not entirely convinced about the results obtained. The idea that GDP has an effect on Olympic performance seems like a sound one, however.) As GDP rises, India's Olympics performance is likely to gradually improve as well. The second reason proposed for our poor Olympic performance is that sports infrastructure in India is really quite poor. Facilities for most sports is really quite substandard and you don't have in India the sort of state-sponsored coordinated action that China is able to achieve by virtue of having a totalitarian regime. Three, it has been argued that genetics are not in favor of India for swimming events and track and field, two areas where large medal hauls can be had. Based on the superior performance of even relatively poor nations in track and field and the virtually complete absence of India in global swimming competitions, it seems that these are two areas where India will probably never achieve significant Olympic success. While many other reasons have also been proposed, none of them seem to meet the criteria of being both comprehensive and satisfactory as explanation.

I do not propose to solve the problem of India not being able to achieve Olympic glory in the space of this column. I instead plan to analyze what is going on from an economics perspective. The goals with public spending in sports and recreation are several : promoting national pride, promoting star athletes (a.k.a. assistance for a select few individuals in achieving their self-actualization needs) and the promotion of a fitness culture. The last goal might be said to be the most important one as far as the general public is concerned. The goal with all the public spending is to take a certain amount of money out of the general coffers and spread it around to a few so that greater public welfare can be achieved by those individuals directly and perhaps by the general public indirectly.

One problem with this approach of centralized planning is the problem of information. While promoting a fitness culture is important, it is impossible for the government to know who, specifically, at a given point of time T and in a specific geography G would be able to most effectively utilize a given amount of money M set aside by the government. Not only must the individual have the right types of skills and physical ability, he must also possess the right mix of determination and perseverance. He or she must be relatively free from disease, at least to the extent that he or she can compete, and if disease should strike, wind down their monetary requirements appropriately. Furthermore, he or she must have outstanding ability to play the sport competitively and excellent ability to train for it. He or she must be able to judge precisely how much and when to train. But the government is in no position to judge most of these things. The point of this is to say that if we flip the problem a bit, we might get closer to a possible solution to the problem. A partial solution to the problem might lie in giving people the right sort of tax incentives. 

Consider the Asha Silicon Valley marathon or any of the other marathons that Asha conducts. People (let us call this set of runners P) sign up to run these marathons by paying for them. Typically, they reigster for the training themselves - charging their credit cards for 2000 to 2500 dollars which goes towards compensating Asha for setting up the marathon, paying for the trainers, et cetera. The runners then ask their friends for contributions to help defray the cost. Many people that I know were able to raise the entire $2500 through their friends. So what happens to the others? Well, they pay for it themselves. $2500 is a tidy sum of money but even if the runner paid for it all out of pocket, he or she does realize a significant bit of value out of it. Now, this is where the government could come in. If the government could offer a 100% deduction for the amount contributed, it would give many more people an incentive to train for marathons. The information problem is also solved. Individual themselves are in the best position to judge whether they are going to be able to run marathons. They are often in the best position to know if they will have the determination and perseverance to do the 26 miles. I would like to therefore propose that specific programs such as the Asha marathons in the United States (but certainly not Asha marathons based in India - where corruption is endemic) be added to the list of programs that will qualify for a 100% deductible charitable contribution as long as the athlete is Indian. And, of course, it is not just marathons. One can think of some other schemes as well where tax breaks can be given so as to incentivize individuals to work to improve their own health.

With this sort of a proposal, you hope to incentivize people at the margins. And it is a pretty good deal for the government. Losing a thousand dollars in tax revenue is nothing compared to the greater public welfare obtained by having more people act to improve their own health. (Indeed, many of the existing programs to promote lesser known and obscure sports that do not directly contribute towards personal fitness in India can be entirely scrapped.) India is a very poor country. There seem to be so many other areas that call for governmental support that spending on sports seems like a good place to make budget cuts. This sort of a highly decentralized, privately financed approach to promoting fitness may be a good way to help individuals achieve their fitness goals in an economically efficient manner.


[1] "A Tale of Two Seasons: Participation and Medal Counts at the Summer and Winter Olympic Games", Daniel Johnson, Ayfer Ali, Social Sciences Quarterly, 2004.