A liberal and critical blog by David Allen Green
Well, to me the article seems amazingly incompetent and ignorant :)Firstly, I see absolutely no evidence of someone threatening to sue some mathematicians (from the university I happen to have never heard of) for speaking out against something they don't really know. (I seriously doubt the have seen the internal models used at GS or RBS).Secondly, the maths can't be wrong as such. There is no debate here which method is "more true" or "less true" and there are no conflicting theories (as may be in natural sciences, let alone social sciences). There might be an error in calculations/derivations/logic, but that's an entirely different matter. If a person doesn't understand this they should not write about anything concerning maths whatsoever.The real issue is not in the models and formulas, but in how you use them. You can't criticise arithmetic because someone takes 2 apples adds 2 oranges and tries to claim that the sum is 4 watermelons just because 2+2=4. The problem in the City and on the Wall Street was not the maths and the formulas, but the assumptions which went into those formulas, and the way the results were used. And by the way, this is exactly why I can't really see how academics can possibly "speak out". Because they normally have no idea what data were analysed to get the the parameters of the models - simply because the data is usually proprietary or cost a lot of money. And when you look at the academic papers, they are very often not directly applicable in the industry because the data they require simply don't exist, or is very noisy/unstable/unusal conditions don't apply. So the real issue here has almost nothing to do with mathematicians or mathematics. It's about management decisions. As an example of a good journalism (and also discussing the same issue of what went wrong) I highly recommend Michael Lewis's article on AIG in Vanity Fair - http://www.vanityfair.com/politics/features/2009/08/aig200908
Veronica is spot on. As Myron Scholes (he of the Black-Scholes formula for pricing options) said recently (words to the effect of -I don't have the precise quote to hand) the maths is fine but the data is terrible.The article also refers to winning the Nobel Prize for Mathematics. As many of you are probably aware, there is no such prize. The nearest equivalent is the Abel Prize (which after a 100 year delay finally started to be awarded in 2003). Black and Scholes (like John Nash) won the Nobel Prize for Economics.
I'd like to comment on this country's Court Of Appeal-Great judges and great system of justiceTell Simon that he has our full support for the oral renewal. You must keep fighting. This is the one decision Eady definitely got wrong this year
Gosh, its not the greatest article ever, but I certainly don't agree with some of the criticisms above. First of all, just because no-one has actually threatened anyone, doesn't mean that the fear of being sued for libel is not real. Who wants to be the first to criticise when the libel laws are so skewed in the UK.Secondly, just because you have not heard of a university doesn't mean it isn't real and/or respected. Herriot-Watt (and no, I did not study there) is a well known university.Anonymous.... the article doesn't mention a Nobel Prize for Mathematics, it mentions a prize for Economics, which is how the 'Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel' is more commonly known.
"Anonymous.... the article doesn't mention a Nobel Prize for Mathematics, it mentions a prize for Economics"It does now. He must have had his error pointed out and gone back and changed it.
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