I find the FT generally bad at risk, derivatives, credit, etc.Interesting phrase used by Gillian Tett, maybe she'd like to read "The use, misuse and abuse of mathematics in finance" Royal Society Science into the Next Millennium: Young scientists give their visions of the future Phil Trans 358 63, published in 2000, by one P Wilmott. This is the paper with the great line "It is clear that a major rethink is desperately required if the world is to avoid a mathematician-led market meltdown."I was invited to last weekend's inaugural meeting of the Institute for New Economic Thinking, funded by Soros, at Kings, Cambridge that Tett mentions. My 'takeaways' from this event were not as optimistic as hers: There wasnt much that seemed to be exactly new There was more than a whiff of arrogance about many of the speakers. Very little in the way of self doubt, they really do still believe all this stuff One of the speakers clearly thought hed solved all of econometrics. I hope no one believes him otherwise I see this leading to another mess down the line Physics envy is still prevalent. The biggest laugh was when one speaker said how physicists just had to model atoms and forces, and that economics was much harder. Well, yes, if you are aiming for the perfect model. But thats just plain silly. To me the most important point that should have come out of this conference, but didnt, was to acknowledge the limitations of economics, and, having made that acceptance, to decide what on earth economics can do that is useful and productive Nor was there any talk of robustness of modeling. Robustness is fundamental to the whole purpose of economics in my view Some of the speakers were pro maths and some con. On a positive note, a couple of speakers did comment that economists do only know a small subset of mathematical methods. A point Ive made about quants as well Observing so many economists at close hand I have to say that I wouldnt lend any of them my money. They are all far too keen on defaulting as the solution to any number of problems. And they like inflation a lotP
Last edited by Paul
on April 15th, 2010, 10:00 pm, edited 1 time in total.