Lies, damned lies and statistics – Mark Twain
In the aftermath of 2008 financial crisis which brought the world to its knees, the blamed was placed on a wide spread range of professions. Bankers, rating agencies, stock brokers and analysts, mathematicians, central bankers, politicians… stop…mathematicians?
In 2001 Lehman Brothers CEO Dick Fuld was presented with an investment plan put together by – not sales, marketing or fund managers- bunch of PhD’s in maths and physics. It was a mathematical model on investment in real estate and how Lehman will ‘always’ make a profit. Idea was implemented, Lehman grew very big and profit multiplied. By 2008 the model unravelled and Lehman filed for the largest bankruptcy in the world.
Goldman Sachs, the high priest of investment banks, had to close its Global Alpha fund due to losses. Global Alpha was a quant fund – a fund designed and managed by computers. The logic of the computers was put together by mathematicians who wrote the algorithms. Global Alpha was a disaster and was shut down.
Maths, the queen of sciences, is the king of our lives. In the era of Big Data and Internet of Things numbers define our life. From high finance to day-to-day life, maths is unconsciously embedded in our language. Your heart beat to blood count to weather outside is expressed in numbers. Percentages, graphs, pie diagrams make mundane statistics interesting. But the truth is most fear maths. It is a dreaded subject for all but few school children and most adults. We are truly numbed by numbers. There is always an unconscious fear that our conclusions are wrong even though our calculations are right! Yes, we can be wrong with maths if interpreted wrongly just as the maths whiz kids in Lehman and Goldman.
Null hypotheses, quadratic equations, algebraic formulae, Euclid’s geometry, set theory, probability… are not the stuff that excites us every day. Though they scared the wits out of us when we were in school, we did wonder, “what is the use of cosine and such similar abstruse formulae in our future life?” Is theoretical maths useful? How to use maths correctly in our day-to-day life?
“How Not To Be Wrong – The Hidden Maths of Everyday Life” by Jordan Ellenberg, University of Wisconsin-Madison math professor is an ambitious book to present a fresh perspective about mathematics and its usage. While being lucid, abstruse, logical and argumentative, Jordan takes us through the world of mathematical thinking and those of the thinkers. While knowing how the laws of maths work in poll forecasting, lottery ticket winning and even in proof of existence of God, Jordan’s tries to change your perspective about maths in life. You may not agree but you are willing to consider that those algebra equations that cost you many a sleepless nights are real and useful!
Mathematicians surprisingly do not have the same fame and stature as a physicist or an economist. Revealing the men and women behind those complex formulae we come to know about the world of mathematics in a more humane way than before. Pascal is deeply religious, Fisher is not an amiable man and Voltaire got rich thanks to apply maths to lottery rather than essays & lectures and similar such perspectives are shared while discussing technical maths arguments through day-to-day activities and events.
Books about mathematics and statistics are popular as we like the outcome of the maths not the process of arriving at the same. We wish to know who is leading in opinion poll before the election but are not interested in the number crunching and sampling strategies that are deployed to conduct the poll and interpret the results. Numbers Rule Your World by Kaiser Fung and Signal & Noise by Nate Silver are books that give you the seat edge feeling about numbers and leave you amused.
Occasionally Jordan the maths professor takes over the Jordan the writer in the book. Abstruse formulae are discussed at length which though put in simple language slow the pace of the book. However, it is a great effort by a maths professor, whose passion to bring maths close to our day-to-day life is commendable and hence is a must read. He concludes the book with a chapter aptly titled “How to be right” arguing us to look at maths the right way for the right causes and reasons.
From Indian perspective the book is disappointing as the contribution of Indians to mathematics, discovery of zero, decimal system, numerals etc. and acknowledged by the world as very high, is limited to half paragraph in which Srinivasan Ramanujam is mentioned.
The book has been rated on an average 4 stars on 5. Four on five stars is good in qualitative sense but in mathematical terms 80% (4/5) is not a great number! Such is life.
Read the book. Don’t worry there is no test or homework!