Less-Than-Fully-Accurate Predictions of Technology

From the Scientific American website: "Use It Better: The Worst Tech Predictions of All Time." Whenever I see a list like this, I always wonder what predictions or assumptions which we all embrace today, will turn out (perhaps even in the relatively short-term) to be utterly wrong.

- Rick

The Mathematics of Serial Killing?

When I first saw this article, "Math formula may explain why serial killers kill," on foxnews.com earlier today, I was more than skeptical. The article describes research on the spacing between murders of a 1980s serial killer. "The researchers found that the seemingly random spacing of his murders followed a mathematical distribution known as a power law." The article also says that "The finding suggests an explanation for why serial killers kill."

Now, lots of natural and human-oriented things and processes have been empirically linked to a power law: wealth, city population, the occurrence of earthquakes, etc. In a power law, the frequency of something varies according to some characteristic of that thing.

The power law is so prevalent, in fact, that one wonders whether there might be some yet-unknown law or factor that causes its emergence naturally and frequently.

What concerned me in the first two paragraphs of the above article was the reference that the power law finding might represent an "explanation" for serial killing. An empirical finding that data follows a power law can be interesting - but how could it be explanatory without understanding the natural forces, if any, that might lead to frequent emergence of the power law?

Nevertheless, I admit - I found the rest of the article highly interesting and compelling...

- Rick

A List to Avoid

Here's a list you don't want to be on: Business Insurance's 2011 Insurance Fraud Hall of Shame.

- Rick

Apps for Actuaries

The Society of Actuaries now has a website devoted to mobile resources, called "Apps for Actuaries." Inevitable, I suppose - but still interesting!

- Rick

Human Probability Assessments II

Another quote from the 2011 Annual Question of Edge.org. This time, it's from Antony Garrett Lisi's contribution, "Uncalculated Risk":

“We humans are terrible at dealing with probability. We are not merely bad at it, but seem hardwired to be incompetent, in spite of the fact that we encounter innumerable circumstances every day which depend on accurate probabilistic calculations for our well-being… This blind spot in our collective consciousness – the inability to deal with probability – may seem insignificant, but it has dire practical consequences. We are afraid of the wrong things, and we are making bad decisions… We are especially ill-equipped to manage risk when dealing with small likelihoods of major events.”

- Rick

Human Probability Assessments I

Here's a quote that I just cited in a paper I submitted a couple of days ago:

“People are bad at assessing probabilities. They are bad at it not just because they are bad at addition and multiplication. Rather, people are bad at probability in a deep, intuitive level: they overestimate the probability of rare but shocking events… Conversely, they underestimate the probability of common, but quiet and insidious events… When it comes to understanding probability, people basically suck.”

The quote is from Seth Lloyd's "Living is Fatal" contribution to Edge.org's 2011 Annual Question: What Scientific Concept Would Improve Everybody’s Cognitive Toolkit?

Edge.org asks such a question each year, and collects responses from over 100 selected contributors. Very interesting browsing, and very thought-provoking.

- Rick

More Media Attention on Actuaries

The Society of Actuaries' webpage has a link to an article on an Alabama TV station site regarding "2012 Top Paying Jobs." Here's the "money" quote (pun intended):

"And the top job in 2012, are the people like Lee Bowron, an Actuary. As a consultant, he crunches the numbers on financial risk for insurance companies...
Fact - actuaries have the potential to make 137-thousand a year."

Of course, this is really a meaningless statement. Saying "potential" is like saying that one could earn "up to" 137 thousand a year - virtually any number fits the statement. Also, there are lots and lots of actuaries who make well over 137K - in fact, I wonder where they even got that number, and what kind of statistic it represents.

Also, the starting salary mentioned in the article for actuaries seems low.

- Rick

Data Mining in Insurance

On page C5 of today's WSJ is a short item regarding the hiring of a Chief Science Officer by Chartis, the largest insurance firm in the AIG group. The goal of this new position and unit is to perform "technical pricing" on the voluminous risk management data that AIG has collected globally over the years. This data mining effort will include investigations into possible better loss forecasts and pricing of commercial property-casualty insurance lines of business.

Data mining is something that quite a few current actuarial science students will end up being involved in at some level.

- Rick

Corporate Pension Funding

A new report from actuarial firm Milliman Inc. says that the funding status of large corporate defined benefit pension plans deteriorated during last year. As of December 31, 2011, the Milliman 100 Pension Funding Index, which reflects the funding status of the 100 largest U.S. corporate pension plans, indicated a funding ratio of 72.4%, for a total funding deficit of $464 billion.

The funding ratio and the deficit numbers are highly sensitive to economic conditions, including interest rates and invested asset performance.

- Rick

Twins are More Likely Than They Used to Be

A new report from the National Center for Health Statistics (part of the Centers for Disease Control and Prevention) finds that "In 2009, 1 in every 30 babies born in the United States was a twin, compared with 1 in every 53 babies in 1980." The twin birth rates rose by particularly large amounts amongst women over 35 and, especially, women over 40. I would certainly presume that much of that increase is due to the development, and greater availability and effectiveness, of infertility treatments over the last three decades.

As the data brief concludes, "The study of multiple births is important because of their elevated health risks and accompanying greater health care costs. The rise in twinning has influenced the upward trend in key infant health indicators such as preterm and low birthweight rates during the 1980s and 1990s."

- Rick

Can You Increase Your Intelligence?

This posting on the Scientific American Blogs suggests yes...

- Rick

Leadership

From Forbes.com, one person's take on how to be persuasive in business. Some nice insights and anecdotes.

- Rick

2011: A Record Year for Insured Catastrophe Losses

A posting today from Business Insurance notes that, according to Munich Reinsurance Co. research, "2011 was the costliest year on record for insured natural catastrophe losses... Insured losses from natural catastrophes totaled about $105 billion..." The article says that about two-thirds of the losses were from the Japan and New Zealand earthquakes (although the posting then says that the two earthquakes caused $53 billion in damages, which is more like one-half, but perhaps I'm missing something).

Here's a link to a press release from Munich Re regarding their research.

- Rick

Our Data Runneth Over

An article, "So, What's Your Algorithm," from today's Wall Street Journal discusses the opportunities associated with enormous databases, and the need for people with analytical skills who can develop appropriate algorithms. "... analytics harvested from massive databases will begin to inform our day-to-day business decisions. Call it big data, analytics, or decision science." The amount of data out there is truly staggering.

A great opporunity for actuarial science majors, math and statistics majors, and others with quantitative and analytical skills to have an important impact on the future.

- Rick