Actuarial Book Worm CONTINUED
This seemingly trivial goal had unexpected consequences for me.
And I think I am a better actuary because of it.
list. It wasn’t easy, but I am proud to tell you that I finished my
24th book on Dec. 30 with exactly one day to spare. Whew! Mission accomplished.
So why am I telling you all this? Because this seemingly trivial goal had unexpected consequences for me. And I think I am
a better actuary because of it.
The books on my 2011 reading list (see Page 29) are listed in
roughly the order in which they were read. It is an eclectic mix:
fiction and nonfiction, art and science, new works and classics.
To my surprise, I discovered many things during my reading
odyssey that were quite applicable to my work as an actuary.
Indulge me as I attempt to thread the needle on a few of these
You know that saying, “You are what you eat”? I think “You are
what you read” is equally valid. I was surprised to see how my
list so succinctly reflected my core interests and values. Inspecting the list, some obvious themes surfaced: mysteries, music, and
math. The list pretty much defines me. Looking closer, however,
I noticed a bias in my reading selection that I wasn’t aware of
(and not that my interests all seem to start with the letter M).
There was a distinct skewness toward Russian settings. By
my count, five of the plays and two of the novels had distinctive
Russian elements. Am I a product of the Cold War? Imprinted by
James Bond films? Not certain, but I never would have predicted
that result. This observation made me realize how much our
personal biases can affect what we see and the degree to which
a relatively obvious pattern can go undetected. Actuaries are not
immune to bias, and great care needs to be exerted to prevent
any bias skewing our analysis. I was surprised just how much
this pattern was hidden simply because I wasn’t looking for it—a
situation of which all actuaries should be wary.
Our bias can also cause us to see patterns that aren’t there
simply because we wish it so. This was made clear to me in one
of the books I read in which the author spent such an inordinate
amount of time demonstrating the prevalence of the golden ratio that it became clear you could infer its existence in almost
any biological measurement (height ratios, metacarpal ratios,
facial dimensions), mathematical sequence (Fibonacci), physical experiment, or even classical painting. Such overanalysis
prompts the question whether any random ratio can be found
to be prevalent in nature if you look hard enough.
The lesson for actuarial work is clear. Using data to prove a
preconceived point can be dangerous if it causes you to ignore
data that doesn’t fit, classifying it as “noise” while accepting only
that which conforms to your preferred view. Are we predisposed
to seeing one particular conclusion, or are we allowing the data
to tell us what it can?
Innovation vs. Enlightenment
Using innovative models for the purpose of advancing actuarial knowledge and improving our analysis is a good thing, but
we always need to question whether we’re getting appropriate
enlightenment from all this sophistication. For example, one
of the books I read described a scientist’s fascinating work on
geometric analysis and artistic beauty. The scientist, Stephen
Marquardt, used precise symmetry and preferred ratios to create a facial mask of perfect geometry (the eponymous Marquardt
mask) for ideal attractiveness. After overlaying his mask against
portraits of several iconic beauties, Marquardt proved beyond
a reasonable doubt that Marilyn Monroe was attractive. Great.
Is this a case of innovation without enlightenment? Perhaps. I
think most of us would consider the Marilyn Monroe conclusion
patently obvious. The parallel here to the actuarial world is that
innovation shouldn’t be something we do for our own entertainment. It needs to add value. Jumping on the latest actuarial trend
(predictive modeling, complexity science, etc.) makes sense only
if the end result gives you additional insights into your business
or measurable refinement in your estimates. Innovation is a good
thing. Frivolous innovation is a distraction and counterproductive.
A Multidisciplinary Approach
To my surprise, there was a material amount of cross-pollination
among the books that I read. A scientific book on the physical aspects of time crossed over into the world of music. A book on art,
conversely, veered into the history of modern science. And both
texts somehow ended up focusing on Albert Einstein’s theory
of relativity. It was a case of serious déjà vu. This drove home
to me how interconnected everything is. It also illustrated the
classic ripple effect in which development in one area can have
repercussions well beyond what is anticipated. In fact, more
than one book that I read made it clear that several innovations
were brought about by the application of an idea from a completely unrelated field.
This has direct significance for the world of actuarial science. If we as a profession are only looking inward, we may be
restricting possibilities and stifling advancements. As referenced above, actuaries already are working to harness scientific
achievements from other related fields. But the next original
concept may come from actuaries borrowing or leveraging ideas
from completely different disciplines. While actuaries may not
be synonymous with creativity, those who are open to activity
in other fields can generate real advances.
Discipline and Persistence
My reading schedule forced me to finally finish books abandoned years ago as not my cup of tea and gave me the motivation
to make my way through some very tough reads. In the case of
the former, I was surprised to discover how much my tastes
had changed over the years. Books that I had tossed aside now
28 CONTINGENCIES JAN | FEB. 13