SERVING THE QUANTITATIVE FINANCE COMMUNITY

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TidalFlood
Topic Author
Posts: 33
Joined: January 2nd, 2018, 3:13 pm

### Ethics

The after effects of hacking: https://motherboard.vice.com/en_us/arti ... ssweek2017 .

So, why would anyone do it?

bearish
Posts: 5623
Joined: February 3rd, 2011, 2:19 pm

### Re: Ethics

Do what? Hurt people? Or setting themselves up to be hurt?

ppauper
Posts: 70239
Joined: November 15th, 2001, 1:29 pm

### Re: Ethics

the motive seems to be money, except for ashley madison which seems to have been revenge by someone who spent   on a site promising him horny married women only to find out  once he'd signed up that the women weren't real

The naked pictures of Jennifer Lawrence were probably sold for \$, and that one's fairly easy to avoid, if you're going to take naked pictures of yourself, put them on a thumb-drive not in the cloud or wherever she kept them. I know it's inconvenient to pull out the thumb-drive every time you want to send naked pictures of yourself to your friends, but it's a lot safer

Otherwise, having your account hacked seems to be like having your wallet stolen. Facebook  can be used to buy games, ebay can be used to by stuff, paypal is like money, and even your email account can be used to send out a few billion spam messages before it gets closed down which is probably worth a few bucks to someone

Collector
Posts: 4650
Joined: August 21st, 2001, 12:37 pm

### Re: Ethics

Ethics in Quantitative Finance

rmax
Posts: 6080
Joined: December 8th, 2005, 9:31 am

### Re: Ethics

Ethics in Quantitative Finance

No. Nor has anyone else looking at the number of reviews on Amazon!

Collector
Posts: 4650
Joined: August 21st, 2001, 12:37 pm

### Re: Ethics

Ethics in Quantitative Finance

No. Nor has anyone else looking at the number of reviews on Amazon!
p.1: "The immediate suggestion is that the decline in financial ethics was a consequence of  quantification of finance."

True or False?

p.1: "Are there ethics in quantitative finance?"

The abuse of Gauss?

What is the ethics distribution among quants? fat-tails?  skewed? Any official list with quant's ranked by ethics? What is the most un-ethical formula in quant finance?

What is the criteria for ethics in quant finance formulas? where the model over-sold just to get academic credit? Was the model to  begin with inconsistency with empirical data and was this hidden under the carpet? Finance papers ranked by ethics?

Can ethics be quantified (plenty of hidden variables) ?

Most important do ethics come in quanta ? I think so!

rmax
Posts: 6080
Joined: December 8th, 2005, 9:31 am

### Re: Ethics

Ethics in Quantitative Finance

No. Nor has anyone else looking at the number of reviews on Amazon!
p.1: "The immediate suggestion is that the decline in financial ethics was a consequence of  quantification of finance."

True or False?

p.1: "Are there ethics in quantitative finance?"

The abuse of Gauss?

What is the ethics distribution among quants? fat-tails?  skewed? Any official list with quant's ranked by ethics? What is the most un-ethical formula in quant finance?

What is the criteria for ethics in quant finance formulas? where the model over-sold just to get academic credit? Was the model to  begin with inconsistency with empirical data and was this hidden under the carpet? Finance papers ranked by ethics?

Can ethics be quantified (plenty of hidden variables) ?

Most important do ethics come in quanta ? I think so!
I'll bite!
Your first point: How is the decline in ethics measured? I think that there have been plenty of dubious ethics operating in the sector prior to quants. Milken? Ponzi, Cochrane, the South Sea bubble.
Second point: yes. There are ethics in most things (I was tempted to write everything, but couldn't face T4A coming back with a really good counter example to my statement).

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### Re: Ethics

I'd think that one can show that ethics may be unethical on at least two grounds.

First truly ethical behavior would be paralyzing. Almost every innovation in history should have been stopped by ethical concerns (the so-called "precautionary principle") because the long-term impacts of each new invention are utterly unknowable due to fundamental scientific uncertainties, nonlinear effects, and the knock-on effects of other people's choices in how they (mis)use the innovation. If everyone really did apply ethics in all things, we'd all be living (and dying) in the squalor in the Malthusian trap of subsistence agriculture.

Second, even the golden rule of "doing unto others as we would want them to do unto us" is fraught with the assumption of a universal homogeneous utility function. But what are the ethics of asking people what they want? What if they want junk food, cigarettes, and alcohol -- eagerly trading short-term pleasure for a shorter lifespan? Isn't the offering of choice unethical? But to deny choice (i.e., the nanny state) is just as unethical.

As for quantitative finance, I'd argue that the quantification of risk and pricing of risky things is the epitome of ethical behavior. But, of course, QF involves innovation and the offering of choices which is either highly unethical or highly ethical.

Collector
Posts: 4650
Joined: August 21st, 2001, 12:37 pm

### Re: Ethics

"The financial crises that have occurred since 2006 have been associated with a degradation in financial ethics. Since the teaching of derivative pricing is often undertaken in the context of abstract mathematics, the question arises of the role of mathematics in supporting financial ethics. "

2017 Teaching Reciprocity as the Foundation of Financial Economics by Timothy Johnson

2018 Financial Models and Society: Villains or Scapegoats? By Ekaterina Svetlova (  amazon )

"Today's financial market participants seem to be madly in love with models and algorithms.  The recent McKinsey report (Crespo  et. al. 2017) suggest that the number of models used by banks to make various decisions is raising by 10  to  25 per cent annually."

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### Re: Ethics

"The financial crises that have occurred since 2006 have been associated with a degradation in financial ethics. Since the teaching of derivative pricing is often undertaken in the context of abstract mathematics, the question arises of the role of mathematics in supporting financial ethics. "

2017 Teaching Reciprocity as the Foundation of Financial Economics by Timothy Johnson

2018 Financial Models and Society: Villains or Scapegoats? By Ekaterina Svetlova (  amazon )

"Today's financial market participants seem to be madly in love with models and algorithms.  The recent McKinsey report (Crespo  et. al. 2017) suggest that the number of models used by banks to make various decisions is raising by 10  to  25 per cent annually."
Mathematics enables the computing of consequences of actions which is a prerequisite to ethical decision making. Where before the consequences and risks of actions were unknowable (and ascribed to capricious gods), today they may be estimated.

If anything, mathematics enables ethics but, in so doing, creates a greater burden on ethical decision makers. That is, it is unethical to forego the use of math now that the technology exists. Of course, nothing stops unethical people from using fraudulent models to mis-estimate risks. But that is a problem with those people, not the math. If anything, the published nature of most financial math enables public validation of the models.

Ethical decision makers must use models!

Paul
Posts: 10787
Joined: July 20th, 2001, 3:28 pm

### Re: Ethics

The problem with Marx is that he wasn't a mathematician.

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### Re: Ethics

The problem with Marx is that he wasn't a mathematician.
Indeed! And those educated in the softer disciplines hate the harder disciplines because numbers remain unswayed by clever arguments.

Collector
Posts: 4650
Joined: August 21st, 2001, 12:37 pm

### Re: Ethics

"Ethical decision makers must use models"

and models must use Ethical decision makers? or not ethical-reciprocal?

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### Re: Ethics

I'd think that models are more attracted to rich financiers than to ethical decision makers!

Cuchulainn
Posts: 62394
Joined: July 16th, 2004, 7:38 am
Location: Amsterdam
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### Re: Ethics

I'd think that models are more attracted to rich financiers than to ethical decision makers!
Especially those liberal arts types.