The 007s — Week 3

Image Source: Normal People (TV Show)

This week, I devoured Sally Rooney’s Normal People in a day, played Leon Bridges’ River on loop and learnt about microinsurance. My list is an eclectic mix of things that caught my attention in between.

• Pareto Principle: The Pareto principle, also known as the 80/20 rule, is a theory maintaining that 80% of the output from a given situation or system is determined by 20% of the input. In 1895 Vilfredo Pareto, the economist who coined this term — observed that a relative few people (20%) held the majority of the wealth (80%) and developed logarithmic mathematical models to describe this non-uniform distribution of wealth. It was Dr. Joseph Juran who in 1940, named the 80/20 ratio the “The Pareto Principle.” He applied the Pareto Principle to business metrics helping to separate the “vital few” (the 20% that has the most impact) from the “useful many” (the other 80%). The principle doesn’t stipulate that all situations will demonstrate this precise ratio — it refers to a typical distribution. More generally, the principle can be interpreted to say that a minority of inputs results in the majority of outputs.
• Dunning — Kruger Effect: The Dunning-Kruger effect is a type of cognitive bias in which people believe that they are smarter and more capable than they really are. Essentially, low ability people do not possess the skills needed to recognize their own incompetence. Named after psychologists David Dunning and Justin Kruger, the effect is exhibited by people who are unaware of their deficiencies and generally assume that they are not deficient, in keeping with the tendency of most people to “choose what they think is the most reasonable and optimal option.”

• Pink Collar Work: As World War II dominated the 1940s and many men went off to war, women stepped into the jobs men left behind. As many as 5 million women entered the labour force between 1940 and 1945. In this context, the term “pink-collar worker” was popularized by writer and social critic Louise Kapp Howe in the 1970s. A pink-collar worker was someone working in care-oriented career fields or in fields historically considered to be women’s work. This included jobs in the beauty industry, nursing, social work, teaching, secretarial work or child care.
• Premack Principle: The Premack principle is a theory of reinforcement that states that a less desired behaviour can be reinforced by the opportunity to engage in a more desired behaviour. Also known as the relativity theory of reinforcement, this was originated by David Premack while studying the behaviour of Cebus monkeys. Two areas in which the application of the Premack principle has proven especially useful is child-rearing and dog training. For example, when teaching a dog how to play fetch, the dog must learn that if he wants to chase the ball again (highly desired behaviour), he must bring the ball back to his owner and drop it (less desired behaviour).

• Optical Character Recognition: Optical character recognition or optical character reader is the electronic or mechanical conversion of images of typed, handwritten or printed text into machine-encoded text, whether from a scanned document, a photo of a document, a scene-photo or from subtitle text superimposed on an image. In the 1970s, inventor Ray Kurzweil commercialised “Omni-font OCR”, which could process text printed in almost any font. In the early 2000s, OCR became available online as a cloud-based service, accessible via desktop and mobile applications.

• Microinsurance: A division of Microfinance, Microinsurance is insurance with low premiums and low coverage. Microinsurance is a financial arrangement to protect low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved. It is tailored specifically for lower valued assets and certain risks that low-income groups are very susceptible to. Some of these risks include crop insurance, cattle insurance, insurance for theft or fire health insurance, term life insurance, death insurance, disability insurance, insurance for natural disasters, etc.

• Penny Drop Verification: Penny drop is used for verification of bank accounts, which will bank to verify the bank account and then initiate the withdrawal request — the subscribers’ withdrawal amount does not get credited into the savings bank account. That’s when the ‘penny drop’ facility comes into play. Through the ‘penny drop’ process, central recordkeeping agencies check the active status of savings bank account and match the name in the bank account number with the name in PRAN (Permanent Retirement Account Number) or as per the documents submitted. The validity of the account is verified by making a ‘test transaction’ by penny dropping a specified amount into the beneficiary’s savings and matching the name based on the penny drop response.