From zombies to misbehavers

Incumbents fight hard to keep status quo in place. And when you have devoted your working life to an idea, you fight harder to keep that idea in currency, no matter what newer evidence shows. Richard H. Thaler, professor at Booth School of Business, University of Chicago, in his new book, Misbehaving: The Making of Behavioral Economics, is calling the end of the tyranny of neo-classical economics and has built the theoretical base for a more pragmatic version of the dismal science that is no longer that dreary.Misbehaving is actually a text book in disguise. It attacks the supremacy of the standard economics that is the basis for most economic policy and builds a theoretical framework for behavioural economics—the new strand of economics that understands that human beings are not machines when they take economic decisions, but humans with all our wonderful flaws.

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Money on a single screen

I find myself buying more and more on the Internet. I’m not alone—there are 39 million Indians who bought stuff worth $3.8 billion (according to Chicago-based management consultancy, A.T. Kearney’s report) via this new medium in 2014. The process is smooth and fast. Returns happen quickly and companies are usually alert to consumer complaints. But I don’t have a similar experience with my financial life online. It took me a long time to sync my accounts so that the insurance transactions and investments are now easier, yet it is still very clunky and to get an overview of my financial life I need to go to various sites and collect data that is not so easily downloadable in a similar format. And try changing a bank account and see what loops your request goes through. There are third-party sites that offer to do this for you but I’m not sure I want to link my various accounts to that of one bank or firm.

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That terrible 70s feeling again. This time in Ulip rules

The Insurance Regulatory and Development Authority of India (Irdai), in its draft Investment Regulations released on 2 July 2015 (http://mintne.ws/1dJok3K ) , has proposed that the unit-linked insurance policy (Ulip) investment rules be modified and that at least a quarter of the assets under management be invested in central government securities (G-secs). This is a strange time for such a 1970s kind of a proposal. The 70s, if you remember, was the decade when state control took on harshly repressive tones. As a Financial Express editorial points out, this draft flies in the face of the attempts to make institutional investing more market-linked. For instance, there is pressure to get the Employees’ Provident Fund to invest more in the stock markets and to remove the restrictive 50% in equity investment threshold in the National Pension System. At such a time for the insurance regulator to announce a rule that hobbles investment choices of households is strange.

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