Category Archives: Society

Concorde, digger wasps and sunk cost

Recently came across some interesting examples on Concorde fallacy – aka sunk cost fallacy. The fallacy which makes you look silly for all your bad investments. Not sure they teach it in management classes though, do they? They should.

Concorde fallacy means a person/organisation continue to spend/consume resources/ funds/effort on a project/product with a sole rationale that already a great deal of resources/capital/effort has been poured in, even when tangible evidences show that there is no economical viable end results. In other words sunk costs should not influence your further decisions on investments; if they do then it is sunk cost fallacy.

Now the reason it is notorious as Concorde fallacy is due to an unjustified pursuit of a failed project by French and British government. Concorde was a defense aircraft, half way through the development of which there were evidences suggesting Concorde will never be economically feasible. Despite of that, governments continued spending on it with only reason “a lot has been spent on it already”.

British Airways Concorde in 1986

British Airways Concorde in 1986 – through Wikipedia

Let’s talk about shoes – Let’s suppose you have perfectly working formal shoes. Since people around you notice that you haven’t contributed for golden arrow for a long time, and you visit a showroom to buy new ones. Now, a smart ass salesman sells you a pair double the cost of your current shoes. But on 16th day she starts to hurt your feet, but you can’t take it back since there is no visible damage on the product. What will you do?

  1. You would still throw the old, working, comfortable shoes to attic and choose to wear brand new one, because you need to utilize all money spent on it. If it continues to hurt you, Karma to blame.
  2. You would decommission newer one and continue to use older one. Again, you can blame it on karma for money wasted.
  3. Go shopping again. Golden arrow will be extremely happy and karma never gets tired of taking blame.

If you are answer is 1) sunk cost fallacy 2) poor fellow like me 3) crazy shopaholic.

Let’s come to that interesting example I promised. Concorde fallacy is not just business philosophy; it is of interest to scientists as well. Apparently it’s not just humans who display such behavior; there are examples from biology books too.

Sphex (aka Digger wasps) insects are known to defend their nests with disproportionate amount of energy and rigor that they had spent to build them. In other words, for these wasps under attack, it would be wiser to forfeit and build a new nest, leaving pride aside. May be bad education on economics, eh?

(On related notes to wasps, but not on sunk cost itself)

Lets give it to them, digger wasps aren’t exactly the brightest folks in insect kingdom. They are known to show OCD as well. They are so much concerned about security of their nest, they become obsessive and compulsive. This is straight from Wikipedia:

Digger wasps - through wikipedia

Digger wasps – through wikipedia

Some Sphex wasps drop a paralyzed insect near the opening of the nest. Before taking provisions into the nest, the Sphex first inspects the nest, leaving the prey outside. During the inspection, an experimenter can move the prey a few inches away from the opening. When the Sphex emerges from the nest ready to drag in the prey, it finds the prey missing. The Sphex quickly locates the moved prey, but now its behavioral “program” has been reset. After dragging the prey back to the opening of the nest, once again the Sphex is compelled to inspect the nest, so the prey is again dropped and left outside during another stereotypical inspection of the nest. This iteration can be repeated again and again, with the Sphex never seeming to notice what is going on, never able to escape from its programmed sequence of behaviors.

Quotes on policing wives

Here you go, couple of quotes on wives!, How she should behave and how not:

कार्येषु मन्त्री करणेषु दासी रुपेषु लक्ष्मीः क्षमया धरित्री
स्नेहेषु माता शयनेशु वेश्या षट्कर्मनारी कुलधर्मपत्नी

Translation : Work efficiency like a counselor, work ability like a maid, as beautiful as goddess Lakshmi, forgiveness like earth herself,  friend like a mother, and in end of the day like a courtesan – are the six expected virtue of a wife.

Not too bad eh? wait for it..

विवादशीलां स्वयमर्थचोरिणीं परानुकूलां पतिदोषभाषिणीम्
अग्राशिनीमन्यगृहप्रवेशिनीं भार्यां त्यजेत्पुत्रदशप्रसूतिकाम्

Translation : One who pick the quarrel, one who steals her own money, one with infidelity, one who talk about the faults of her husband, one who eats before her husband (?!?) should not be accepted, even if she bore 10 sons for you.

Please note: these were written roughly couple of millenniums ago. So, please consider the social context of 200 BCE before (or while) judging. I am still searching for sources, perhaps its the same guy who wrote women don’t deserve freedom.

And a sexist advert to go by the post. 

vintge sexist adverts

vintge sexist adverts

Service charges, taxes and Facebook hoaxes

Every time I dined out, which is pretty much every weekend, I ended up paying ~30% extra on items, which I did not fully understand. There were VAT, service charges, service tax and on top there is tip! 30% is huge amount, it can easily buy me couple of coveted dishes, for which I generally have ‘reserve’ apatite even after a full meal.  I paid every time and returned hungry.

Recently came across a facebook post telling me what I did was wrong! Full content of the facebook post is pasted bottom of this post. It claimed India restaurants charge service taxes on top of total bill amount rather than just service charges.  This is that hallelujah moment, where you realize you’ve been cheated but you are not alone.  Generally I don’t believe facebook posts, but this post is telling me just what I wanted to hear.

So basically, so far I understood:

  • Service charge is optional
  • Service tax is on service charge rather than full amount.

Next first thing I tried is one of those fact checking sites, like this one. Unfortunately Hoax or Fact site declares it FACT! But if you see the explanation is about service charges rather than service tax it self.

But all joy was short lived when I read what I did not want to hear. Apparently bill was right, they were according to law, which include “don’t dine outside”. read this for complete understanding on service tax   – Service Tax in Restaurants – What the law really says!

1) Service portion in an activity wherein goods, being food or any other article of human consumption or any drink(whether or not intoxicating) is supplied in any manner as a part of the activity, at a restaurant – 40 %

2) Service portion in outdoor catering wherein goods, being food or any other article of human consumption or any drink(whether or not intoxicating) is supplied in any manner as a part of such outdoor catering – 60 %

Finally, let me summarize

  1. Service tax and service charges are two mutually exclusive overheads on your bill
  2. Service charges are ‘almost’ mandatory tips, will be distributed with all employees of restaurant (technically).
  3. Restaurant has obligation to let you know that there will be service charges, even before you dine/order. In case no such display or abysmal service, you can refuse to pay that (technically)
  4. Service tax, on other hand, goes directly to government, will be 40/60% either on top of total food bill, which includes VAT.
  5. Never trust facebook post on first look.

Happy dining out with your inflated bills !

—————————————————————————————————————————–original content

Interesting. I find restaurant bills often so confusing. I just give up and pay the amount shown n the bottom line. Perhaps we shouldn’t.

Incidentally, I also resent the inclusion of Service Charges in restaurant bills, because it assumes that I was satisfied with the service. Just a matter of principle. Service Charge should be something I leave behind at my personal discretion. I recently demanded that the service charge be removed as the service was non-existent. After a short – very short! – Discussion, it was removed. About Service Tax….. Be aware

service tax

service tax

This happened at the restaurant. Let me explain. We had been to several restaurants recently. I observed that “service tax” was being misused in the way it was being charged to customers.

Let me give an example.
- – - – - – - – - – - – - – - – - – -
Food and Beverage = Rs. 1000.00
Service Charges @ 10% = Rs. 100.00
Service Tax @ 4.94% = Rs. 54.34 (on F&B + Service Charges)
VAT @14.5% = Rs. 145.00
Total = Rs. 1299.34
As per the definition – “Service Tax can be charged ONLY for the services provided to the customer”.

Now, see what is happening here in the above example. Service Tax should be charged only on the Service Charge amount i.e Rs.100 ONLY, and NOT on the entire amount (1000+100). In this example, the customer should be charged only Rs 4.94, whereas he has been charged Rs. 49.00 extra. Where does this money go? Only the restaurant owner and the chartered accountants who work for them know.

• So, I have started asking them the questions – and am surprised to see the reaction from famous restaurants. Either they say: “Sir we cannot change the format of the bill – so , we will recalculate and tell you the revised amount. You may pay only that.”


• “Sir, you do not need to pay the Service Tax amount itself”!! I now have 3 to 4 restaurant bills, but for which I have paid only the service tax on the service charge and NOT on the total amount.

Every bill MUST carry the TIN number and Service Tax Number, if they charge it. So . . . , I ask for the Service tax number if it is not available in the receipt that they provide.

As we cannot go to any government official and ask them to get this right – because of our system. Please remember – we cannot change any political leader – but we can change ourselves. If we change ourselves – things will change. Please do share this with every one of your friends and known people. Ask for the right tax calculation and Pay only the tax which is supposed to be paid. Verify every bill and receipt that you make payment on.”Please share if you think its worth”

How to survive Arnab Goswami through logical fallacies

As you already might have guessed, I am a regular viewer of the the Newshour by Arnab Goswami, and a big fan. It is a ‘complete’ show. There are multiple reasons I choose to watch this – It provides good entertainment, alternatives are poorly scripted; also in a weird sense, this is a kind of adventure sport, for panellists.

Surprisingly though, there is not even a single guide available on how to survive his show. I expected at least a book in market, something like “Arnab for dummies”, nope! So I thought I’ll write one, not book, a post. If you happened to be invited to his show please feel free to use any of these.

BTW, if you do not know Arnab Goswami, please go back into your cave and close the rock door properly. I heard spiders are good protein. For others, let’s start.

Arnab Goswami

Arnab Goswami

Right, Thumb rule is, there is no correct way of doing it. However, there are several wrong ways.

  1. You can never win an argument, you can only survive it. So stop trying to convince him, it will never work.
  2. Do not practice! In fact, you don’t even need to know what the discussion is all about. He will set the premise, then he will ask what “nation needs to know”.
  3. Never ever ask for a proof. If it exists, he has seen it. As it was famously described before by media crooks -  every piece of document, including your bus ticket will have to go through his desk. Stamped.
  4. Use the words he uses, he may show mercy on you. ‘National’ television, you’re ‘exclusive’, etc. While there, don’t use the words ‘paid’ and ‘media’, or ‘you’ and ‘PR agent’ in same sentence. Prostate exams seem better than what follows.
  5. Use this as final resort, only if you are cornered. Close your ears and eyes and sing a song, need not be a patriotic song, even Sheela Ki Jawani should work.
  6. If that doesn’t work, use your rugby skills

I will update the list as and when I find more, but as of now above should help you through half an hour of his show.

On a different note, below are some rhetological fallacies I noted. This is in general, rather than Arnab’s show. These are real fallacies, I did not make any of these.

  1. Burden of proof – It’s not my job to find proof, it’s yours. E.g. Give me proof for something I claimed
  2. Special pleading – pleading for exemption without justifying the exemption. E.g. Give them time, they will prove eventually, so don’t scrutinize.
  3. Insufficient sample – broad conclusion on a tiny sample E.g. The latest ‘ground-breaking’ survey had “..about 2000 people – was small and was concentrated on the 18-45 age group”
  4. Relative privation – argument on existence of severe, but unrelated, problems. E.g. How can Madhuri Dikshit and Salman Khan can attend a show while people don’t have blanket in refugee camp.
  5. Appeal to accomplishment – because of his credentials! E.g. have you ever read Arvind Kejriwal’s Resume?
  6. Nazi card – simple branding. e.g. we are liberals, by definition we are open to all ideas except anything remotely right.
  7. Appeal to ridicule – E.g. Idea of abolishing income tax is ridiculous, we don’t even need to talk about it.
  8. Appeal to nature – argument solely dependent on the topic being ‘natural’ or ‘unnatural’. E.g. Homosexuality is unnatural.
  9. Appeal to novelty – better because it is modern. E.g. since it is written in books before
  10. Appeal to fear – fear towards the opposing idea e.g. FDI in retail will bring devastating impact in economic fabric
  11. Appeal to the majority – Since majority seems to think so, must be true E.g. majority is gullible
  12. Cherry picking – celebrating on few features of an achievement while ignoring significant information of related cases or data that may contradict that position. For example Delhi water problem solved!
  13. Appeal to ignorance – because it is not proven false; so true. e.g.  You did not give him a chance yet, he can do wonders.
  14. Appeal to common sense – I cannot imagine how this could be true, therefore it must be false. E.g. I can’t imagine how such a big actor can drive over people sleeping on footpath.
  15. Hedging – using words with ambiguous meanings, then changing the meaning of them later. E.g. we said we will live like common man alright, we also agreed to end VIP culture. But that simply means we won’t use beacons, but gas guzzling SUVs stay. Apparently practising austerity is not for common man.
    More will be added here.

Delhi free water – 5 things wrong with it

Delhi government under Arvind Kejriwal has kept its first promise, while media is watching it closely. Or is it other way round? – Since media is watching Delhi government kept its first promise?

Delhi water problem

Nothing will change for these, who actually need water (image credits to

By free water and cheaper electricity, as I understood, as supposed to be achieved through the efficiency through bringing down corruption, fixing wastage, suppress mafia and improve operations scientifically. Apparently answer is none of the above, instead it’s a socialistic populist freebie.

I am not impressed so far, in fact I am worried on what’s coming next. Here, let me list down 5 things which, I think, are wrong by the way it is implemented

  1. Some detailed, the money for free water is taken out of from the profits made by delhi Jal Board in past years. The Idea is, profit out of public money, should go back to public, for free! Remember India 40-50 years back? Never_dream_of_profit policy? This is version 2.
  2. What happens after this profit in coffer wears out? They either will have to stop free-water flow or raise money through taxes. Either way, won’t be free anymore!
  3. What about houses which aren’t in water grid? They don’t have free water now anyway, later point these guys need to pay for something they aren’t exactly benefitting from. Double trouble!
  4. One of the feature least thought about is, If a meter consumes even a litre more than ‘free’ limit, entire consumption is charged! There are no slabs. This means dilwale Delhi people can no longer host any guest who baths daily.
  5. Free-water does not translate to availability of it. Honestly, I still wonder, what is the bigger problem in Delhi? Not having water round the clock? Or paying for the service who brings it to you?

A tick on free water, electricity next. Without even an audit, 50% tariff reduction is written on stone. Let’s see how they mess this up?