The Lighter Side



To celebrate the weekend, MBE digs up an interesting piece of finance trivia each Friday, looking at the lighter side of...

DATA PROTECTION...breaking the last privacy taboo

25th May 2018

GDPR has arrived (read our take on it here), and gleefully ignoring all the “Click here to stay in touch with us” emails over the last few weeks has gotten us thinking about privacy at work and, more specifically, the last great privacy taboo: salaries.

Traditionally, salaries have remained confidential at all costs (no pun intended!), with some companies even banning their employees from sharing their remuneration information with their colleagues.
And there are negative impacts to making salary information public: salary differences may be valid, but not so easy to explain and, knowing you are earning less than others has a negative impact on performance and self-esteem.  Transparency without a clear formula for salary calculation could lead to awkwardness, resentment, loss in productivity and a decrease in morale.

There are, however, benefits to salary transparency, including: acting as protection against gender and racial bias, fostering a higher degree of trust and accelerating the recruitment process as the salary is not a mystery.
There are two general approaches to pay transparency; a third approach blends the two.

Process transparency. With this approach, people know how salaries are derived, what the ranges are for each position and what it takes to earn more.

Full-salary transparency. This approach involves letting employees—and in some cases the public at large—know exactly how much everyone at the company earns.  It is the approach followed by Whole Foods, and social media marketing company Buffer.  Buffer has even made their salary formula – along with their spreadsheet of everyone’s salaries – public on their website (see it here).

If companies are considering the transparency route, there are a few guidelines to follow: communicate and train employees, stay up-to-date with competitive salaries, streamline differences as much as possible and provide a lot of context regarding how salaries are calculated.

Read this article for more information and enjoy a spam-free weekend!

Click a story below for more Lighter Side fun... around for a good time and a long time

DATA VISUALISATION...a statistic paints a thousand pictures

CORE READING...literally, for literary actuaries

LIFE-SAVING know something, John Snow

OFFICE HYGIENE...just when you thought it was safe to go back in the water (fountain)

LADS Culture...actuaries are doing it for themselves

FORMULAIC CINEMA...when maths is your jam

BANKNOTES...the price of beauty

EFFICIENCY...showing bad design the door

INCLUSIVITY...horrific honorifics

OPTIMISATION...death of a (travelling) salesman

SIX APPEAL...when numbers are in their prime

COMMODITIES...the Hunt to monopolise silver can't make this stuff up to relate to different teammates

LIGHT...and the SADder side of winter

SUPPLY AND the humble turkey defies economics

PRODUCTIVITY...and the myth of multi-tasking

CONSEQUENCES...keeping your eyes on the prize

UNDERWRITING...a selfie paints 1000 words

SALAMI SLICING...delicious and malicious

CONCENTRATION RISK...don't quit your daydream

DATA...overcoming the HiPPO in the room

PUSHKIN...the poetry of Markov Chains

FRAUD DETECTION...more adventures in randomness

PATTERNS...fooled by (non)-randomness

COMMUNICATION...what's your passive aggressive weapon of choice?

OFFICE SURFING...and we don't mean the web

ROBOTICS...DANCE of the machine

POLYANI'S AI learnt human judgement

CIRCULAR THINKING...the time pi was nearly changed to 3.2

GENDER-NEUTRALITY...the right words for the job Donald Duck came to love maths

PYTHAGORAS...and the only US president to prove a theorem

RATIONAL NUMBERS...and irrational mathematicians

MACHINE LEARNING...on a budget

HEAT...what doesn't kill you makes you live longer

CURRENCY...what makes gold...golden

TRADING...hands move pretty fast

BENEFITS...a welfare state of mind

BALANCE...a nod to accountants

PRESCRIBED READING...some novel ideas

BUBBLES...sending economies up the (Mississippi) River since 1720

UNCERTAINTY...the spectrum of not knowing's all fun and stats until someone gets hurt ousside, howbow dah

BANANA REPUBLIC...more than just a clothing brand

MISSED OPPORTUNITIES...what a bunch of Yahoos!

START-UPS...the good, the bad and the weird

DIGITAL TRANSFORMATION...5 pitfalls to avoid

CLAIMS...Stress testing goes live

TEAMWORK...Bezos gives us a pizza his mind

NICKNAMES...they're tiny, they're toonie, they're all a little loonie

HYPE...and the technology you love to hate

TRADITION...actuaries and the City

OFFICE CULTURE...let us eat cake is in the i of the beholder square is human

FATHER CHRISTMAS...and the gift of mathematics

LONGEVITY...women (and children) last please

FADS...slide into my office

BENEFITS...give us this day our daily beer

MUNDANITY...even poets need a pension

DB SCHEMES...when in Rome, retire like a soldier!

SECURITY...don't make your password a fail word

CROSSWORDS...angry elements of speech are puzzles? (10)

BIRTHDAYS...making probability theory a piece of cake

ALGORITHMS...sorry to burst your (filter) bubble

EULER...going around in (crop) circles

BALANCE...when IQ is not enough

COUNTING...(eenie, meenie, miney, mo)*3*5

CHEMISTRY...and the pursuit of happiness


INSURERS...the phoenix from London's ashes

DESIGN...Office space in the space age err(or message) is human

TRENDS...the race against time

EXPERIMENTS...the lean mean bean machine

CHAOS...and the maths of butterflies

ASTRONOMY...and its link to actuarial science onions, they have layers a sweet tooth made a car company more lean

ENTREPRENEURS...coining the term, so to speak

WEATHER a potential gold mine entered the deep freeze

FOOTBALL...vive la France!

TIGER's a jungle out there

RUBIK'S CUBES...the surprising bestseller

ARBITRAGE...the daddy of all insurance blunders

BUDGETING...a shock to the system

MARKOV CHAINS...a Monopoly on statistics

FOOTBALL...putting the 'odd' in odds

WORK... the origins of May Day

COMPUTERS...can't live with them...

PERCEPTION... gorillas that we miss

FORENSICS... who let the docs out?

GRAVITY... fakes and ladders

FORECASTING... a warning from The Bard

GENDER EQUALITY... and parental (leave) guidance

TIME MANAGEMENT... You say tomato, I say pomodoro

CALENDAR YEAR RATE INTERVALS... let's all meet up in the year 8000

STANDARDISATION... When more haste meant less speed

LIMITS... The science of friendship

ANTICI... pation

MNEMONICS... easy as pi

THE FUTURE... when artificial intelligence gets real

Archives: Q3 to Q4 2015

Archives: Q1 to Q2 2015 around for a good time and a long time

18th May 2018

With certain royal nuptials taking place this weekend, wedding fever has gripped the globe.  But for every happy occasion, there is always an actuary around to provide a reminder of mortality – the Memento Mori of the modern world, if you will.

It is well known that the mortality rates between the wed and the unwed differ significantly.  The two main theories explaining this difference are.  The first is the selection effects of marriage on mortality (since healthy people are more likely to marry than frail people, married people have lower death rates than unmarried people).  Therefore, these theories assume that the reason married people live longer than unmarried people is due to health status, rather than their marital status.  The other theory is focused on the protective roles of marriage over mortality.  One such mechanism operates by reducing stress and stress-related illness and through familial social integration.  Another mechanism works through provision of care in times of illness or poor health. Being married may lead to health maintenance behaviours and discourage risky or unhealthy ones.

The idea that marriage can affect your health, for good or bad, is probably as old as marriage itself, but in the 18th Century some mathematicians started to actually crunch the numbers, comparing life spans of married and unmarried people.  They found the first evidence that your life partner dying increases your own risk of dying. It’s come to be known as the “Widowhood Effect.”

The pattern indicates a sharp increase in risk of death for the widower, particularly in the three months closest thereafter the death of the spouse. This process of losing a spouse and dying shortly after has also been called "dying of a broken heart".  Becoming a widow is often a very detrimental and life changing time in a spouse's life, that forces them to go through changes that they may not have anticipated to make for a significant amount of time. Responses of grief and bereavement due to the loss of a spouse increases vulnerability to psychological and physical illnesses.

Psychologically, losing a long-term spouse can cause symptoms such as depression, anxiety, and feelings of guilt.  Physical illness may also occur as the body becomes more vulnerable to emotional and environmental stressors.
Although there have not been many studies, the phenomenon is one of the best documented examples of the effect of social relations on health.

So, although married people tend to live longer, it’s not all moonshine and roses.  So, singletons, take heart – by escaping the Widowhood Effect you can be here for a good time and a long time.

DATA VISUALISATION...a statistic paints a thousand pictures

27th April 2018

Visualisations are more than just pretty pictures and visual aids which make learning easier.  Many people dismiss data visualisation, believing that all important information can be divined through statistical analysis. 

But visualisations can, indeed, add insights not captured in the stats.  An effective tool to demonstrate this is Anscome's Quartet.  Developed by F.J. Anscombe in 1973, Anscombe's Quartet is a set of four datasets, where each produces the same summary statistics (mean, standard deviation, and correlation), which could lead one to believe the datasets are quite similar. However, after visualizing (plotting) the data, it becomes clear that the datasets are markedly different.  The effectiveness of Anscombe's Quartet is not due to simply having four different datasets which generate the same statistical properties, it is that four clearly different and visually distinct datasets are producing the same statistical properties.  In contrast, the "Unstructured Quartet" on the right in Figure 1 also shares the same statistical properties as Anscombe's Quartet, however without any obvious underlying structure to the individual datasets, this quartet is not nearly as effective at demonstrating the importance of visualising your data.

Now, AUTODESK Research has developed a technique for coming up with these types of datasets – those which are identical over a range of statistical properties, yet produce dissimilar graphic.

Recently, Alberto Cairo created the Datasaurus dataset which urges people to "never trust summary statistics alone; always visualize your data", since, while the data exhibits normal seeming statistics, plotting the data reveals a picture of a dinosaur.  AUTODESK Research then created The Datasaurus Dozen, which show 12 different visualisations, all with the same summary statistics as the Datasaurus itself.

Article and images sourced from the AUTODESK Research website.


CORE READING...literally, for literary actuaries

13th April 2018

 Whether you are reading this from a place where the winter is just beginning, or from a place where the winter never seems to end, it’s a good time of year to cosy up with some soul-nourishing, actuarial reading material…and we don’t mean ActEd notes.

A few years have passed since we spoke about fictional actuaries and actuarial issues in pop culture and Jane Austen, so we thought it would be a good time to refresh our reading lists.

Why not pick up The Actuary: A Rural English Mystery by K.T. Bowes?  It’s the story of Emma, a young mother raising her son in terrible poverty, when she runs into her former Russian lover, Rohan.  When the glamorous Rohan's work as an actuary spills over into his personal life, Emma finds herself at the centre of a dangerous conspiracy that will leave her in the hands of ruthless men.

Or, if you find the idea of a thriller revolving around a charismatic actuary a bit far-fetched or overwhelming, bite-sized doses of literary actuaries pop up in the most unexpected places.  Even the highly acclaimed James Joyce novel Ulysses includes a reference:

“And he had experience of the like brood beasts and of springers, greasy hoggets and wether wool, having been some years before actuary for Mr Joseph Cuffe, a worthy salesmaster that drove his trade for live stock and meadow auctions hard by Mr Gavin Low's yard in Prussia street.”

The title alone of Jose Saramago’s novel, Death at Intervals, hints at actuarial themes (the unenlightened might consider our career choice a morbid one), and indeed, there is explicit reference to actuarial science:

“Among the journalists who knew their actuarial calculus, there were some admiring murmurs and a brief flutter of applause which the president acknowledged with a brief nod.”

Another example may be found in Rachel Kadish’s The Weight of Ink, in which the main character, having been on the receiving end of a less-than-romantic marriage proposal, retorts:

“Don’t young men woo with talk of love?  Or am I so outside the world of love that I’ve failed to note that men in this land propose like actuaries?”

(Although, during the 1600s, when the novel was set, the word ‘actuary’ probably referred to officials who recorded the decisions, or acts, of ecclesiastical courts, so we will let Kadish off the hook this time!).

Have you come across similar actuarial gems in your reading?  Let us know so we can them add to our collection of non-core reading.


LIFE-SAVING know something, John Snow

23rd March 2018

 Many Londoners may walk past the John Snow pub in Soho and assume it is the work of a passionate Game of Thrones fan, but it’s actually a memorial to a physician who developed an ingenious mathematical device to prove the water-bourne transmission of cholera.

In September 1853 a cholera outbreak had decimated Soho, killing 10% of the population.  Doctors believed that the disease was spread by "bad air" emanating from the stinking open sewers.

For all its progress, nineteenth century London was a filthy city.  No sewerage system meant that waste was thrown into cesspits or open sewers that regularly contaminated drinking water supplies. Doctors blamed the regular outbreaks of disease in the city on the stench, believing the miasma theory of disease, which held that disease was spread through "bad air".

But the physician John Snow had his own ideas and realised that data would prove his theory that the disease spread through water.

John Snow's map. Each bar represents a death at an address.
The curve marks points at equal distance from the Broad Street pump and another pump.

Snow created a map showing the geographic spread of deaths in the outbreak.  Each bar on the graph represents a death at that address, showing as many as 18 people dying in particular households.  This representation of the data shows that most of the deaths were tightly clustered around the water pump at 40 Broad Street (now Broadwick Street) in Soho.  Snow's research had led him to believe that the Broad Street pump was the source of the disease, and the data backed up that theory. But how could he show that it was most likely that this particular pump was the source when there were other pumps nearby?

His next step was to represent the time it took to travel to the Broad Street pump on his map and to calculate who was most likely to use each water pump in the area. Snow drew a curve on the map that marked the points where the Broad Street pump was at equal walking distance from neighbouring water pumps. The Broad Street pump was the closest source of water for those who lived inside this curve. Almost all the deaths marked on the map lay inside this curve and anecdotal evidence explained the few cases that did not.

This mathematical device is called a voronoi diagram. Suppose you have a number of sites (such as the water pumps in Snow's maps) spread out over an area you can map. The dots on a voronoi diagram represent these sites and the points on the edges on the diagram are exactly those points that are equidistant between two (or more if you are on a corner of a region) sites. The edges divide the diagram up into regions, or cells that enclose all the points that are closest to the site in that particular region. Voronoi diagrams are widely used to study spatial relationships, for example to study competition between plant species and to model economic markets.

A voronoi diagram. Image by David Austin

This convincing mathematical analysis of the cholera outbreak in Soho convinced the authorities that Snow's theory that the disease was transmitted through water was correct. The handle to the Broad Street pump was removed and the outbreak died away, though Snow himself said that by that time the disease was already on the wane as people had already fled the area.

Either way, Snow's mathematical evidence that cholera was water-bourne is one of the founding moments of epidemiology and the use of mathematics to understand disease, one of the greatest advances in medicine that has saved millions of lives.

Adapted from this article.


OFFICE HYGIENE...just when you thought it was safe to go back in the water (fountain)

16th March 2018

 In case you don't have enough to worry about at work…

Mashable used the ATP test (a process of rapidly measuring actively growing microorganisms through detection of adenosine triphosphate, or ATP) to find the ten dirtiest commonly-used objects in a modern office environment.

Here is the list – spoiler alert: stay away from anything with buttons.

1.    Coffee pots
2.    Computer mouse
3.    Toilet seats
4.    Vending machines
5.    Water fountains
6.    Refrigerators
7.    Keyboards
8.    Microwaves
9.    Taps
10.   Phones

Invest in some anti-bacterial wipes and become the most popular person in the office!

bank note

LADS CULTURE...actuaries doing it for themselves

9th March 2018

 In celebration of yesterday being International Women’s Day, we thought we’d dig through the old IFoA archives and see what women actuaries were up to back in the day…

The honour of being the first female actuary is usually ascribed to Lucy Jane Wright, who was made actuary of Union Mutual Life in Boston on 2 May 1866.  But women were only admitted to the Institute in 1919.  So, the first woman to qualify through the Institute was Dorothy Davis, who qualified as FIA in 1923. The first female to qualify in the Faculty was Jessie Ruthven Carmichael in 1933.

By the early 1950s, there were nine female Fellows of the Institute of Actuaries and they decided to set up, the Lady Actuaries Dining Society, which, ironically, became known as LADS.  They also set up a series of tea parties for women students and qualified actuaries.

They had two primary goals.  The first was to provide an opportunity for women actuaries and students to get together and exchange views to combat any loneliness a woman professional might feel when working in what was a very male-dominated environment.  The founders acknowledged that attendance at sessional meetings or SIAS meetings might be uncomfortable if a woman didn’t know anyone.

The second aim was to not be something – to not be a women’s section of the profession.  It was very important that they were part of the profession and equal to any other actuary.  This principle led to events being held on evenings when no full profession events were being held.

The founders also took opportunities to build relationships with women actuaries in other countries, which led to countries like Germany, Switzerland and Australia, having similar events.

Unfortunately, the LADS was wound up in November 2011, with a final reception at Staple Inn.  The theme was a celebration of the life of Ada Byron, the first computer programmer. 

Although the profession has changed to include a much higher proportion of women over the last 60 years, the equality cause could always do with a little push…LADS 2.0 in 2018?  What do you say?

bank note

FORMULAIC CINEMA...when maths is your jam

2nd March 2018

Ever been in the mood to spend an evening with a group of people who like maths as much as you do?  Well, look out for your next Mathsjam – coming soon to a pub near you!

MathsJams are gatherings for like-minded mathematically inclined people with an interest in problem solving and puzzles. They hold monthly meetings and weekend events in various locations around the world.
At a recent Mathsjam in Antwerp, participants tried to deduce movie titles from this list of mathematical formulae…how many can you solve?


bank note

BANKNOTES...the price of beauty

23rd February 2018

There may not be a gold standard for beauty, but there may be a banknote standard for beauty, which is set by the judges of the prestigious International Bank Note Society (IBNS) Bank Note of the Year award.
Uganda, Kazahkstan, Trinidad and Tobago and New Zealand have all won the award in recent years.  What makes one banknote more exceptional than another?

For the Bank Note of the Year Award, IBNS members are encouraged to decide based on a set of specifications. These include the artistic merit, design, use of colour, contrast, balance, and security features of each nomination.
A new banknote may need designing as part of a mandatory project, in that the notes are being converted to polymer, or it may be that a traditional note is merely being updated. Nevertheless, deciding on the theme of the note is a crucial initial stage.

The designers can then begin preparing sketches and mood boards and discussing the look and feel of the note. A lot may depend, however, on the country the note is being designed for, as there might be a colour or style which isn’t suited.

Alongside the theme, it’s also important for designers to understand the security and manufacturing features required, as the note undergoes multiple printing processes and details may shift depending on where the elements are layered on the notes.

Attention to detail is a key component of the design process. For example, the Fabric of Scotland banknotes, nominated for the 2016 IBNS award, include animals, textiles and fonts specific to Scotland, and the designers worked alongside experts and academics to ensure absolute accuracy in their visual depiction.

Once a design is rubber-stamped by a senior associate at the bank, the next stage is to prepare the note for manufacturing. Various specialist designers at the banknote manufacturers are in charge of that task, including a team to draw up the watermark.  These are artists who understand the different shades of grey to produce a mould for the watermark.

The arrival of polymer notes means there’s a window of opportunity for banknote designers. Colour palettes can be more vivid and durability will be enhanced. Yet the future of banknotes remains uncertain as technology advances.

Well, while we still have banknotes, it helps to have something pretty to look at as we wave goodbye to our hard-earned cash!

Adapted from this article.


EFFICIENCY...showing bad design the door

16th February 2018

How many times have you tried to pull a door that should be pushed?  And of those times, how often have you felt stupid for doing so?  Chances are, you almost always blame yourself for these types of errors, the ones that hamper efficient use of everyday objects.  But, as we know from the world of process improvement, if you cannot figure out how to work something, it’s probably the design’s fault, not the user’s.

This idea, that technological gadgets, household appliances, doors, cars, anything and everything should be clearly understandable to a casual user if the design’s purpose is to encourage use and efficiency, is explored in Donald Norman’s The Design of Everyday Things.

Bad design can be downright dangerous.  Pulling a ‘push’ door doesn’t cause much more harm than a temporary ego bruise in most circumstances, but consider the following scenario, described in Norman’s follow-up book, Emotional Design:

"Fire," yells someone in a theater. Immediately everyone stampedes toward die exits. What do they do at the exit door? Push. If the door doesn't open, they push harder. But what if the door opens inward and must be pulled, not pushed? Highly anxious, highly focused people are very unlikely to think of pulling. When under high anxiety—high negative affect—people focus upon escape. When they reach the door, they push. And when this fails, the natural response is to push even harder. Countless people have died as a result. Now, fire laws require what is called "panic hardware." The doors of auditoriums have to open outward, and they must open whenever pressure is applied.

Similarly, designers of exit stairways have to block any direct path from the ground floor to those floors below it. Otherwise, people using a stairway to escape a fire are likely to miss the ground floor and continue all the way into the basement—and some buildings have several levels of basements—to end up trapped.

What else can we learn about efficient design by looking at doors?  Well, numerous things, which we have learned to interpret sub-consciously are communicated to a user by the design of a door. The location of a door knob, for examples, indicates whether the left or right side of the door is the side it opens on. A push bar indicates that the user needs to push, a door handle indicates the user needs to pull. A push bar that does not indicate which side the door swings open on is flawed because users can potentially use it incorrectly. The only way to teach someone using a misleading push bar is force of habit, which takes time and familiarity.

Good processes often induce a desired type of behaviour via their design – and this technique can be found in design of everyday objects as well.  Consider a physical constraint that makes it impossible to do something, like trying to push an automatic revolving door (doing so makes it stop).

The same principles of good design apply to systems, processes and everyday objects – gives one new-found respect for the humble door, doesn’t it?


INCLUSIVITY...horrific honorifics

2nd February 2018

“It’s always been done that way” is never a valid reason to maintain the status quo.  And the use of gender-specific pronouns and honorific titles is no exception.

It took a good few decades to make “Ms” happen, but now it is an ingrained part of our lexicon.  Once these things take hold, one questions why it took so long to do – why should a woman’s marital status be of any consequence when the same distinction isn’t made for a man?

Now, we are progressing a step further – a gender neutral title option has been adopted by many UK institutions, making us question the need to specify gender at all.

In March 2017, HSBC took to the idea enthusiastically and launched 10 gender-nonspecific title options for its customers.  Those who do not identify as Ms, Miss, Mrs or Mr, for any reason, may now be addressed over the phone or in branches as: Mre (an abbreviation for mystery), (Msr) (a combination of Miss and Sir), Ind (short for individual), M, Myr, Mx, Sai, Ser, Misc (stands for miscellaneous), and Pr (an abbreviation for person).

HSBC might have taken the idea to the next level, but the most widely-accepted option, Mx, has been offered for years by a number of UK institutions, including, to name a few:
- Government and local authorities (The House of Commons, Her Majesty’s Passport Office, NHS)
- Banks (Barclays, Halifax, Santander)
- Utilities (Scottish Power, EDF Energy)
- Education (Universities of Oxford, Cambridge, Imperial College)
- Miscellaneous (Boots Advantage card, Nectar loyalty card, Network Rail)

So, as the wheels of change are turning, forward-looking companies – in their roles as businesses and employers – are taking small steps towards inclusivity.  But here’s an idea…why not save ourselves the hassle and do away with honorific titles completely?


OPTIMISATION...death of a (travelling) salesman

26th January 2018

Long before computers were a thing, they were already giving us problems.

The Traveling Salesman Problem (TSP), first formulated in the 1800s, asks the following question: "Given a list of cities and the distances between each pair of cities, what is the shortest possible route that visits each city and returns to the origin city?"  This seemingly simple question is important in operations research and theoretical computer science.

Although having much earlier origins, the problem was first considered mathematically in the 1930s by Merrill Flood who was looking to solve a school bus routing problem.  Hassler Whitney at Princeton University introduced the name travelling salesman problem soon after.

It is used as a benchmark for many optimisation methods. Even though the problem is computationally difficult, a large number of heuristics and exact algorithms are known, so that some instances with tens of thousands of cities can be solved completely and even problems with millions of cities can be approximated within a small fraction of 1%.  In fact, margins are so small, that a few years ago there was much excitement when a team of researchers from Stanford and McGill universities broke a 35-year record relating to the TSP by four hundredths of a trillionth of a trillionth of a trillionth of a trillionth of a percent.

While the problem is easy to state, and — in theory at least — it can be easily solved by checking every round-trip route to find the shortest one, as the number of cities grows, the corresponding number of round-trips to check quickly outstrips the capabilities of the fastest computers. With 10 cities, there are more than 300,000 different round-trips. With 15 cities, the number of possibilities balloons to more than 87 billion.

So although the advance was too minuscule to have any immediate practical significance, but it breathed new life into the search for improved approximate solutions.

Now, how can we apply this logic to our daily commutes?


SIX APPEAL...when numbers are in their prime

19th January 2018

Can mathematics be sexy?  In the sense that sex is Latin for six, then definitely!

Prime numbers have always held a mystique for mathematicians: they are the building blocks of all other numbers and hold great practical value in the fields of communications and computer science.  Of particular interest (to those interested) are the patterns within prime numbers, with mathematicians throughout history hoping to unlock some kind of hidden formula.

Alphonse de Polignac proposed one such pattern in 1849: there are infinitely many cases of two consecutive prime numbers with difference n, where n is a positive even number.  In other words, pick any even number and there will be an infinity of primes that you can add to it that will result in another prime but no other prime number will fall in between.  Primes with a gap of 2 are called twins, those with a gap of 4 are cousins, while a prime gap of 6 makes for very sexy primes.

Sexy primes come in pairs, e.g. (5,11), (7,13), (11,17); triplets, e.g. (97,103,109), (101,107,113), (151,157,163) and quadruplets, e.g. (61,67,73,79), (251,257,263,269), (601,607,613,619). 

In an arithmetic progression of five terms with common difference 6, one of the terms must be divisible by 5, because the two numbers are relatively prime.  Thus, the only sexy prime quintuplet is (5,11,17,23,29); no longer sequence of sexy primes is possible.

So, numbers may not be the most glamorous entities in the world, but, if you catch them in their prime, they may just be sexy – in their own way.


COMMODITIES...the Hunt to monopolise silver

5th January 2018

What do you do when you have more money than you know what to do with?  Try to monopolise a commodity apparently.

Silver Thursday was an event that occurred in the United States in the silver commodity markets on Thursday, 27 March 1980, following the Hunt brothers' attempt at cornering the silver market. A subsequent steep fall in silver prices led to panic on commodity and futures exchanges.

Nelson Bunker Hunt and William Herbert Hunt, the sons of Texas oil billionaire Haroldson Lafayette Hunt, Jr., were members of the fabulously wealthy family upon which the TV series Dallas was rumoured to have been based.  For some time before Silver Thursday, the brothers had been attempting to corner the market in silver.  In 1979, the price for silver jumped from $6.08 per troy ounce on 1 January 1979 to a record high of $49.45 per troy ounce on 18 January 1980: an increase of 713%. The brothers were estimated to hold one third of the entire world supply of silver (other than that held by governments). The situation for other prospective purchasers of silver was so dire that on 26 March 1980 the jeweller Tiffany's took out a full page advert in The New York Times, condemning the Hunt Brothers and stating "We think it is unconscionable for anyone to hoard several billion, yes billion, dollars' worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver".

But on 7 January 1980, in response to the Hunts' accumulation, the exchange rules regarding leverage were changed, when COMEX adopted "Silver Rule 7" placing heavy restrictions on the purchase of commodities on margin.  The Hunt brothers had borrowed heavily to finance their purchases, and, as the price began to fall again, dropping over 50% in just four days, they were unable to meet their obligations, causing panic in the markets.

The Hunt brothers had invested heavily in futures contracts through several brokers, and when the price of silver dropped below their minimum margin requirement, they were issued a margin call for $100 million. The Hunts were unable to meet the margin call, and, with the brothers facing a potential $1.7 billion loss, the ensuing panic was felt in the financial markets in general, as well as commodities and futures. Many government officials feared that if the Hunts were unable to meet their debts, some large Wall Street brokerage firms and banks might collapse.

To save the situation, a consortium of US banks provided a $1.1 billion line of credit to the brothers which allowed them to pay the brokers, which, in turn, survived the ordeal.

In 1988, the brothers were found responsible for civil charges of conspiracy to corner the market in silver. They were ordered to pay $134 million in compensation to a Peruvian mineral company that had lost money as a result of their actions. This forced the brothers to declare bankruptcy, in one of the biggest such filings in Texas history.

Read more about this fascinating family here.

entertainment can't make this stuff up

15th December 2017

Christmas time is here again and that means lots of time off work to spend with family and veg out in front of the TV.  Need some playlist inspo?  Why not put on some edutainment and watch some finance-related movies?

A wide range of websites, from imdb to the CFA Institute’s blog, have come up with their top picks for (mostly white collar crime-related) movies that every finance professional should watch.  Here are Investopedia’s top 10:

10. The Big Short
This movie follows a few savvy pros as they become aware of the housing bubble that triggered the financial crisis in 2007-2008, before anyone else. It's known for its clever way to break down sophisticated financial instruments by, for example, having Selena Gomez explain what synthetic CDOs are at a poker table.

9. Barbarians at the Gates
A largely forgotten 1993 TV movie centred on the leveraged buyout (LBO) of RJR Nabisco.  Audiences will be shocked and amused at the incompetence and greed of Nabisco’s CEO, F. Ross Johnson and the behind-the-scenes negotiations and skullduggery around this famous LBO.

8. American Psycho
A violent and thought-provoking thriller set in the back drop of finance, Christian Bale plays a wealthy investment banker with a dark secret. While there is very little actual finance in this movie, American Psycho does shed light on the surreal world inhabited by finance’s elite class, and the utter disconnect they have among themselves and with reality. 

7. Glengarry Glen Ross
This movie focuses on a team of downtrodden real estate salesmen whose morals have been utterly eroded after years of working for their unscrupulous company. This movie showcases the greed and underhanded tactics that sales positions may be exposed to, as well as the pressure exerted on sales people by their superiors.

6. Rogue Trader
This movie tells the story of Nick Leeson, a trader who single-handedly caused the insolvency of Barings Bank, the world’s second oldest merchant bank. A rising star on the Singapore trading floor, Leeson blew up as quickly as he rose, hiding enormous losses from his superiors in carefully hidden accounts, eventually leading to the mother of all failed trades on a short straddle position on the Nikkei.   Leeson’s story makes for a great lesson in risk management and financial oversight.

5. Trading Places
This modern day take on The Prince and Pauper features Eddie Murphy as a streetwise con artist who gets tricked into becoming the manager of a commodities trading firm, while unwittingly replacing his successor, a blue-blooded executive played by Dan Aykroyd.

4. The Wolf of Wall Street
This movie is based on real life events around the infamous Stratton Oakmont, an over-the-counter brokerage firm, and a pump and dump scheme that helped IPO several large public companies during the late 80s and 90s.

3. Boiler Room
Boiler Room is set in the absolute lowest rung of the financial ladder: the pump and dump scheme. While Boiler Room is a work of fiction, pump and dump firms are very real, as are the pain and suffering they inflict upon their victims. Boiler Room serves as a warning for those starting to invest in the stock market, and to stick to transparent, solid companies based on sound fundamentals.

2. Margin Call
Perhaps the most financially accurate movie on the list, Margin Call takes place over the span of 24 hours in the life of a Wall Street firm on the brink of disaster (modeled closely after some of the large bulge brackets).

1. Wall Street
Originally crafted to show the excess and hedonism associated with finance, Wall Street still wields incredible power as a recruiting tool for traders, brokers, analysts and bankers nearly 30 years after it was made.

management to relate to different teammates

8th December 2017

Every team is made up of different personality types, and some demand more time and attention from the leaders who manage them than others. Although there’s no hard and fast management strategy that fits every kind of employee, there is a rough framework managers can use to decide how to direct their energy toward getting the most out of all the personalities on their teams. Here’s a quick rundown of eight of the most common personality types and how to manage each one.

These noticeably talented people, come up with ways to improve how their jobs are done, mostly independently. It’s clear these stars will be moving on to bigger and better things in the future.
Leadership Strategy: Promote internally to help advance them towards their goals. Acknowledge their reliable performance and reduce the amount of supervision you provide these few—it’s better spent elsewhere.

These aren’t your team’s top innovators, but they’re among its most competent: amazing producers who rarely complain and never seem to need much assistance. You can always count on them to get their jobs done on time and well. They enjoy their jobs, have been doing them well for years, and seem content to stay in them just about indefinitely.
Leadership Strategy: Nurture in place. As a manager of this personality type, your goal is to keep them feeling valued and happy in their current role while also finding new challenges to help them continue to grow at their own pace.

These people may produce above average results, but they consume a lot resources to do it. Not only do they frequently need help fixing problems and figuring out how to do their jobs, they’re regularly asking for more support, budget, or staff.
Leadership Strategy: Wean patiently. Encourage more independence by challenging them to solve problems they would otherwise pass on to someone else.

These team members produce strong results but also make a lot of noise delivering them. They barrel through any hurdles and step on a lot of toes.
Leadership Strategy: Reduce the friction. “Steamrollers” take some coaching to become better collaborators and more sensitive to the company culture. Show them how to temper their approach to get the same results while reducing the toll their actions take on others.

Stowaways show up to work, but that’s about it. If they don’t bother you as a manager, it’s only because they’re comfortable producing the bare minimum to stay out of trouble.
Leadership Strategy: Engage with them to get more than they’re used to delivering. Increase the amount of time you spend with them, discussing the responsibilities of the job and the support they need to do it.

These people are highly engaged, like coming to work, and bring lots of energy to the office. They come up with all kinds of ideas for extracurricular activities and run with them in a visible, all-consuming way. The problem is you don’t see any real results in the main responsibilities they were hired to perform.
Leadership Strategy: Refocus. Get these team members back on track tackling their core duties. Assess why they aren’t focused on the right things.  Recognise their contributions to team morale, but remind them of what they’re there to do and turn the focus on their progress on business-related work.

The 10% of your team that consumes 90% of your leadership capital. These people claim to work hard and long and make sure everyone knows it, but they still don’t get their jobs done properly. You have to double-check everything they do. Their work is often late, incomplete, and sometimes flat-out wrong. They’ve proved they don’t have all the skills they need for the job they’re in.
Leadership Strategy: Fill in the skill gaps. Your need to get these people out of the “square peg” box in the short-term, either by helping them rapidly improve their skill-set or redeploying them to another role they might be better suited to.

On paper, these workers have all the required skills. But in practice, they just don’t get results. They seem to be content knowing how to do their job instead of actually doing it. You frequently have to push them and check on their progress.
Leadership Strategy: Motivate. They might not look it, but sometimes the slackers are your potential high-risk, high-return leadership investments. The main thing holding them back may be motivation, so if you can figure out how to excite and inspire them, you may be able to turn lead into gold.

Adapted from this article.


LIGHT...and the SADder side of winter

1st December 2017

While the Southern Hemisphere is enjoying the benefits of longer days and warmer temperatures, Northern Hemisphere dwellers are no doubt feeling the darkness creeping in more and more with each passing day.  How does a 3pm sunset affect productivity levels at work?

Some research suggests that people are more productive during winter, due to the lack of more attractive options outdoors.  Because workers have no interest in going outside, they focus more on their work, making them more productive.  It was found that workers were more productive in the time it took to complete their tasks.

But if that’s the case, why do many of us feel less productive when the weather is miserable?  And why do some researchers estimate that lack of productivity during the winter costs the economy billions of dollars each year?
Perhaps we are less active, eating worse, and getting less vitamin D, all of which may explain a loss of productivity, but the most obvious answer is the lack of light.

When the sun is up, it signals to your body that you should be awake. When it’s dark out, your body thinks that it’s time for bed and automatically starts winding down.

The fact that you don’t get much sunlight in the winter actually tricks your body into thinking that it’s time for bed more, making you more tired, hence less productive.

Natural lighting renovations have been shown to result in happier workers, less absenteeism, and fewer illnesses, and, because better lighting encourages satisfaction among workers, it also results in increased productivity.

But in the winter months, when there is very little natural light to go around, not only are we deprived of its benefits (often resulting in SAD, or Seasonal Affective Disorder), but, we are also subjected to the productivity-zapping effects of artificial lighting. 

If the lighting is too dim, it can cause eye strain and headaches because the eyes are forced to work much harder in order to see. Dim lighting can also result in drowsiness and lack of focus, which would obviously have a negative impact on employee motivation.

On the other hand, lighting that is too harsh, such as some florescent lighting, can also cause eye strain, and is cited as a trigger for migraine headaches.  Harsh lighting also makes it more difficult for the eye to focus.

Of course, the best alternative to harsh lighting and dim lighting systems is natural light itself.  But, in the meantime, while we eagerly await the other side of the solstice, perhaps sunlight-simulating lamps should become part of standard-issue office equipment…just to make us feel less SAD.


SUPPLY AND the humble turkey defies economics

24th November 2017

Thanksgiving is a US holiday during which people consume huge quantities of turkey, stuffing, cranberry sauce and pie.  From watching movies like The Addams Family Values we know a bit about the history of the holiday, but the food – especially the turkey – is an essential part of Thanksgiving.

One of the stranger things about this holiday, however, is that it seems to defy the most basic principle of economics: the price of turkey in the US actually goes down a few days before everyone starts cooking – which is when demand for the bird is at its highest.

Apparently, this happens every holiday season: The price falls just before Thanksgiving and stays low until Christmas. For example, in the average year, November’s price per pound for turkey is about 10 percent lower than the price in September.

In general, when there is a limited quantity of something to sell and demand for the product increases, so does its price.  Hence exorbitantly expensive red roses on Valentine’s Day.

In more formal economic language, the demand curve for turkeys shifts outward at Thanksgiving, which means people at this time of year are interested in buying more of these birds regardless of the price.  Even the most casual shopper in food stores this week can observe this increase or shift in demand as more people are buying turkeys to cook.

So why the discounts?  Because for this time of year, not only does demand for turkeys increase, but the supply of turkey increases too.  Even shops that don’t usually stock turkey may do for the holidays. This boost in supply drives prices downward.

This works for the sellers because they are interested in maximizing profits through volume – not in maximizing the revenue they get from selling each bird.

Turkeys are not very profitable items, even at full price.  Sellers, however, know that people coming in to buy turkeys are likely to purchase other items, too, such as seasonings, disposable roasting pans and soda. The other items are where stores make their money, since the profit margins on these items are much higher than on frozen turkeys.

How does this dramatic increase in supply happen?  Turkeys are slaughtered continuously throughout the year and then put into cold storage.

Turkey stocks slowly build up each year until they reach a peak in September.  Between September and December, turkey stocks plummet as shops buy them up and put them on sale. Then farmers, processors and wholesalers slowly rebuild their stocks for the next year’s holiday season.

The 500 to 600 million pounds of turkey in cold storage by the end of each summer means there are almost two pounds of turkey for every non-vegetarian person in the US.

Wonder what the pilgrims would have to say about that…


PRODUCTIVITY...the myth of multi-tasking

17th November 2017

Just look at anyone trying to walk and text at the same time (especially when they are blocking your path) and you will know what researchers have been trying to tell us for a good few years now: productive multi-tasking is a myth!

It turns out that 98% of the population doesn’t multi-task very well. Only about 2% are good at multi-tasking and these “supertaskers” are true outliers.  As for the rest of us, what we think of as multi-tasking is actually just shifting back and forth from one task to another, such as typing an email and then listening to that conference call conversation, then back to our email.  Chances are, we miss out on the parts of the conversation that happen while you we type the email.
According to the American Psychological Association's overview of multitasking research, there are three types of multitasking:

  • Performing two tasks simultaneously
  • Switching from one task to another without completing the first task
  • Performing two or more tasks in rapid succession

The problem with trying to multi-task is that we lose efficiency to the “switch cost” of shifting back and forth between tasks.  Each time we do it, it takes our brain some time to refocus.  So while it might seem efficient on the surface, it isn’t – studies show that multi-tasking can reduce productivity by as much as 40%.

To be fair, some of us have a harder time avoiding the multitasking menace than others.  A University of Utah study identifies four types of people with a greater tendency to multitask:

  • You’re approach-oriented or reward-focused. You consider the possible benefits to multitasking and are attracted to the higher potential rewards it represents.
  • You’re a high-sensation seeker. You need constant stimulation, and enjoy the novelty of switching to new tasks.
  • You’re convinced you’re part of the 2%. Those who think they’re good at multitasking are more likely to engage in the behaviour more often than those who think they’re just average at it. But, as we saw, our perceptions of our own abilities are usually inaccurate.
  • You have trouble focusing. If you’re prone to distraction or have trouble blocking out external stimuli, multitasking may be harder for you to shake.

So how can we start clawing back that 40%?  How can frustrated leaders get people to focus during meetings when the thought of firing off a few emails or scrolling through Twitter at the same time is so tempting?  How do we shift habits from multi-tasking to “single-tasking”?

 Start with small steps.  Implement a code of conduct during meetings.  Be strict with yourself and dedicate time to new, complex tasks, leaving the multi-tasking to easier, familiar tasks. 
And please, please, please do not text and walk.


CONSEQUENCES...keeping your eyes on the prize

10th November 2017

Decisions, decisions…pizza or burgers?  Gym or sleep?  To be or not to be?  Founder of one of the world’s largest hedge funds, Ray Dalio, has some advice on how to approach the confusing and often irrational world of decision-making.

In our hunter-gatherer days it made sense for short-term impulses to take precedent: not reacting to impulses inspired by fear or anger could lead to death in the wild, but that’s no longer the case. In a modern society, short-term decisions are no longer always the most optimal.
How we feel about something in the moment isn’t always the best predictor of how we’ll feel about it over a period.  One of the things that differentiates people who consistently align their actions and decisions with what they want and people who don’t is not just long-term thinking, but also a form of high-level thinking.

As Dalio says:
“People who overweight the first-order consequences of their decisions and ignore the effects that the second- and subsequent-order consequences will have on their goals rarely reach their goals.”
“For example, the first-order consequences of exercise (pain and time-sink) are commonly considered undesirable, while the second-order consequences (better health and more attractive appearance) are desirable... If your goal is to get physically fit and you don’t ignore the first-order consequences of exercise [...] and connect your decisions with their second- and third-order consequences, you will not reach your goal.”

Makes sense, but not always so easy to put into practice.  One method that may help is the 10/10/10 method.  Next time you feel a slight conflict about a decision or an action ask yourself three questions:
How will I feel about it in 10 minutes?
How will I feel about it in 10 months?
How will I feel about it in 10 years?

A little weekend motivation to keep your eyes on the prize!


UNDERWRITING...a selfie paints 1000 words

3rd November 2017

AI, machine learning, robotics…so many buzz words and so little time!  The future is here and it’s coming for the world of insurance.

Earlier this year, several life insurance companies started testing technology from a company called Lapetus Solutions, which uses facial analytics and other data to estimate life expectancy. Lapetus says its product, Chronos, would enable a customer to buy life insurance online in as little as 10 minutes by sending in a photo of themselves and without taking a life insurance medical exam.

A selfie reveals more than whether you’re having a good hair day. Facial lines and contours, tiny droops and dark spots could indicate how well you’re aging, and, when paired with other data, could someday help determine whether you qualify for life insurance.

Many life insurance companies are exploring how to use additional data, statistical models, artificial intelligence and other techniques to help make quick decisions to ease the policy buying process and boost sales. Consumers don’t like the wait on the typical application process, which can take weeks and often requires a medical exam.
If Chronos were to be adopted, here’s generally how it would work:

You’d upload a selfie to the insurer online and answer health and other questions. The facial analytics technology would scan hundreds of points on your face and extract certain information, including your body-mass index, physiological age (how old you look) and whether you’re aging faster or slower than your actual age.
The program can detect makeup, but not plastic surgery and it verifies identity by comparing the photo to the one on your driver’s license.

The insurer would combine the results with your application answers and, if it chooses, any other information it typically pulls. If approved for coverage, you could buy a policy immediately online.

Lapetus is also exploring how facial analytics may identify early signs of diseases such as diabetes, heart disease or dementia. And it’s developing a feature that it says will be able to tell whether someone ever smoked. Among the clues are early signs of crow’s feet around the eyes and under-eye bagging.

The technology revolution seems set to shake up over the insurance industry – but don’t worry, there’s still some time left to perfect your pout.  Say cheese!


SALAMI SLICING...delicious and malicious

27th October 2017

Sometimes, the beauty of the finance world is in its creative ways of naming boring or unpleasant concepts.  Salami slicing, also known as penny shaving, is the fraudulent practice of stealing money repeatedly in extremely small quantities, usually by taking advantage of rounding to the nearest cent in financial transactions. It would be done by always rounding down, and putting the fractions of a cent into another account. The idea is to make the change small enough that any single transaction will go undetected.

The con artist, for example, a bank employee, would transfer a few cents from hundreds of thousands bank accounts.  Because the account owners won't notice the transaction or won't care about the missing money, the con artist tends to go undetected.

Variations on this theme include: the con artist taking percentages of cents that should just be rounded up or down, the con artist faking the transactions to 'test' accounts or, in non-financial situations, the con artist stealing a large object one piece at a time.

This scam seems to be a popular theme in the movies and TV series.  Radar shipped a jeep home one part a time in M*A*S*H, a story line perhaps borrowed from the Johnny Cash song "One Piece At A Time”.  The films Superman III, Office Space, Ghost In The Shell and Hackers all mention the swindle, stealing one penny at a time.

In real life, Micheal Largent of the US used this method to steal $50,000 over six months.  He was caught because he opened accounts in the fictional names of characters from King of The Hill, a show created by Mike Judge, the director of Office Space.

In 1997, Willis Robinson reprogrammed the till at the Taco Bell he worked so that a taco which cost $2.99 was only charged at 1 cent on the internal computer.  The customer pays full price, the till is still balance and Robinson got to keep the difference.

In 1998 four men were charged with fraud for allegedly installing chips in petrol pumps that cheated customers by overstating the amounts pumped by a small amount.

So keep a close eye on your pennies and your cured meats – every bit counts!


CONCENTRATION RISK...don't quit your daydream

20th October 2017

It’s 3.15pm, you’ve hit the post-lunch slump, and you are rereading that IFRS17 paragraph for the twentieth time but may as well be the first.

The internet is bursting with advice on how to concentrate on a difficult or boring piece of work amidst a sea of distraction, but it may not all be realistic or palatable.  Here are a few seemingly counter-intuitive ways – backed by science, apparently, and that don’t involve turning off your social media – to bring back your focus.  It’s worth a shot, right?

Zone out
There is a growing realisation among psychologists that we spend an awful lot of time daydreaming (up to 50% of our waking hours!), which suggests that mind wandering is not so much a glitch, but rather a key part of the system itself that can help our brains function.

So if it’s going to happen, then why not schedule it at a convenient time? Psychologists have distinguished between deliberate and accidental mind wandering, and say that only the accidental kind is bad for getting stuff done. People who slot in their daydreaming when they know that it won’t matter – when doing mindless admin, for example, suffer less than those whose minds skip off without their permission.

Muck about
Sharing jokes and viral videos with your colleagues is often seen as the ultimate distraction for procrastinators, but some psychologists think that they might actually help put us in the right mental state to get on with work.
This is because, no matter how much you love your job, staying focused on something difficult requires willpower. According to a recent study, a good way to boost your reserves of willpower is to have a good laugh. Creating a culture of fun in your team would be one way of helping you to boost your work productivity.

Make it harder
To concentrate properly you must get rid of all external distractions, right? Actually, according to one influential theory of attention, the opposite is true.

‘Load Theory’ is the idea is that there is a limit to how much information from the outside world our brains can process at any one time – once all of these processing ‘slots’ have been filled, the brain’s attention system kicks in to decide what to focus on.

Experiments suggest we might be better to work not in clean, tidy and silent surroundings, but in those that are messy and confusing. It works because once all the perceptual slots have been taken up, the brain has to pour all its energies into focusing on the most important task. Distractions simply get screened out.

Stop working
When you’re up against it, taking a break might be the last thing on your mind. But there is evidence to suggest it can actually help you get more done.  The challenge is working out when to take a break, for how long, and what to do with that downtime.

Exercise, meditation and a good old dose of caffeine may all be good options.

Don’t try so hard
When you need to focus for long periods, less is more, according to some studies, which found that the most successful strategy for staying on course was to focus for a while, and then to take a short break before going back to concentrating. People who tried to be ‘on’ all the time made more mistakes overall.
Similarly, other research found that people’s attention resources stretched a little bit further when they were simply told to back off and think about something else instead of concentrating fully.

This, in fact, may be the most useful outcome of all the research into focus. The more we know about the brain, the clearer it is that stress is the enemy of concentration. So take the time to do whatever it takes to feel calmer and more in control, and, with luck, the work will take care of itself.

Adapted from this article.


DATA...overcoming the HiPPO in the room

6th October 2017

There’s no need to go on an expensive safari holiday to see some wildlife – you may be lucky, or unlucky, enough to spot a hippo next time you enter the boardroom!

In this context, HiPPO stands for the “Highest-Paid Person’s Opinion” and they bring with them all the destructive potential of the notoriously aggressive water-dwelling mammal.   The term is used to describe the tendency of lower-paid employees to defer to higher-paid employees when a decision has to be made.  It can also be used to describe an organisation’s reliance on human instinct rather than data in the decision-making process

Life is full of innovation-choking Hippos, in business, politics and social circles and some companies, like JC Penney, learnt about the danger they pose the hard way.

Hilda Burke, an integrative psychotherapist, says: “There is a belief that if you agree with the ‘leader of the pack’, in this case a Hippo, that you won’t be exposed, and that you are automatically protected by the weight his or her opinion carries.  Using the jungle analogy, if you’re riding on a hippo’s back, the chances are that you’re pretty safe.”

It’s unhelpful, though. “Work is a habitat threatened and encroached upon by job and economic uncertainty. I imagine it can be mapped on to our evolutionary survival instincts,” she says. “But I wonder how far you can really go by just echoing a Hippo’s opinions and passing them off as your own, and indeed, what the price is within ourselves for being so adapted that we no longer can discern what our own thoughts, ideas and feelings are.”
Instead of relying on Hippos, Google’s A/B testing approach may be a better idea.  It involves taking alternative options that seem worth comparing, and testing to see which performs better. Hippos are nearly extinct in the tech world, where bright ideas are always A/B tested. For instance, personalised “impulse buy” ads on Amazon when you reach checkout were almost killed off by an over-enthusiastic Hippo before the developer A/B tested it, and won his superiors over. Now Hippos are extinct in Amazon’s jungle.     

So what to do if you’re a lower-paid junior with a bright idea in the meeting room? Try to conduct an experiment to test it out.  Even hippos can’t argue with data.


PUSHKIN...the poetry of Markov Chains

29th September 2017

Actuaries learn many useful and widely-applicable nuggets of wisdom during their years of study.  Not really.  But it is always interesting to come across broader applications of very specific concepts, no matter how useless they appear to be.

One is example is the original story of the Markov Chain.  A Markov Chain is a stochastic process for which one can make predictions for the future of the process based solely on its present state just as well as one could knowing the process's full history, hence independently from such history; i.e., conditional on the present state of the system, its future and past states are independent.

You probably knew that.  But did you know that Markov founded this branch of probability theory by applying mathematics to poetry?

Suppose you are given a body of text and asked to guess whether the letter at a randomly selected position is a vowel or a constant. Since consonants occur more frequently than vowels, your best bet is to always guess consonant. Suppose you are told whether the letter preceding the one you chose is a vowel or consonant. Is there now a better strategy you can follow?

In 1913, A.A. Markov was trying to answer the above problem analysed twenty thousand letters from Pushkin's poem Eugene Origin. He found that 43% letters were vowels and 57%, consonants. So, in the first problem, one should always guess "consonant" and can hope to be correct 57% of the time. However, a vowel was followed by consonant 87% of the time. A consonant was followed by a vowel 66% of the time. Hence, guessing the opposite of the preceding letter would be a better strategy in the second case. Clearly, knowledge of the preceding letter is helpful. The real insight came when Markov took the analysis a step further.

Markov investigated whether knowledge about the preceding two letters confers any additional advantage. He found that there was no significant advantage to knowing the additional preceding letter. This leads to the central idea of a Markov chain - while the successive outcomes are not independent, only the most recent outcome is of use in making a prediction about the next outcome.

Now, how about introducing a course in Russian literature into the actuarial syllabus?


FRAUD DETECTION...more adventures in randomness

22nd September 2017

Last week we shared some tips on how to spot a fake “random” number.  On the same theme, have you heard of Benford’s Law?

Benford’s law is a distribution that the first digits of many data sets conform to.  It’s a non-uniform distribution, with smaller digits being more likely than larger digits and can be used as an indicator of fraudulent data, and can assist with auditing accounting data.

Accounts receivable, accounts payable, sales and expenses data are generally based on values from two types of variables being multiplied together i.e. prices and quantities.  Alone, these variables are unlikely to conform to Benford’s law, but are likely to when multiplied together.

If some accounting data is expected to conform to Benford’s law but doesn’t, it might provide a good reason for further investigation. 

The distribution table looks like this:
First Digit      Probability
1                        0.301
2                        0.176
3                        0.125
4                        0.097
5                        0.079
6                        0.067
7                        0.058
8                        0.051
9                        0.046

The distribution formula is as follows:

Benford's Law can most simply be explained with the following picture:

The underlying premise is that the subject population of quantities, expressed in the base 10 and more or less arbitrary units, will be fairly evenly distributed on a logarithmic scale.  This is confirmed by the fact that the exponents on these constants are fairly uniformly distributed. As a result, the probability of the leading digit being "d" approaches:

For more explanations on why Benford’s Law works, click here.


PATTERNS...fooled by (non-)randomness

15th September 2017

People make up “random” numbers for all kinds of reasons, ranging from the innocent (coming up with some dummy data to use in a maths example) to the less innocent (fake expenses for a tax return).  Either way, they tend to fall into unconscious patterns when creating these numbers and there are a few tell-tale signs of how to spot them.

For instance, here is the invented amount of a bad cheque from a US embezzlement case: $87,602.93.
How can you tell it’s fake?  Look at the following patterns:

Descending sequences
In the made-up number, 8 is followed by 7, and then 6. Descending runs of two, three or four consecutive digits are more common in fabricated data. This reflects the way our brains are wired, favouring consecutive digits. Ascending sequences (eg 2345) are also more common.

Missing zeros
Another tip-off is the avoidance of round numbers and the use of 0s in general. Zeroes ought to account for about ten per cent of the digits in large, unrounded numbers, but this is generally not the case in fabricated random numbers.

Repeated strings
Those making up numbers fall into mental ruts and repeat digit sequences. The crook who made up the fabricated number 8760293 overused both 87 and 93 in the amounts of his bad cheques.

Missing repeats
Two-digit repeats (such as 44 or 77) are fairly common in genuinely random numbers, seeing as there is about a one-in-ten chance that a given digit will be followed by itself. But the people who fabricate numbers usually totally avoid repeating the same digit two (or more) times in a row.

Just a few tricks to help you avoid being fooled by “randomness”!


COMMUNICATION...what's your passive aggressive weapon of choice?

8th September 2017

Ah, the technology age!  It’s brought with it its own conventions, rules and language – and we aren’t talking about coding.

The tone of the humble work email is a language we are all well-versed in, although we may not always be conscious of it.  Battles have been lost and won using passive aggressive phrasing.

Recently, writer Danielle René decided to ask her Twitter followers to share the best weapons in their verbal communication arsenal, tweeting: “What is your favourite phrase to use in a professional clap back? Mine is ‘per my last email…’.”

The question got everyone talking – and it seems that people are throwing out passive aggressive assaults left, right and centre.

Here are some of our favourites:
•    “‘Respectfully’ – followed by something ‘very direct that may or may not be perceived as respectful.”
•     “For clarity I’ll reiterate”
•    “As previously stated”
•    “Just so we’re on the same page”
•    “please let me know if I’ve misunderstood”
•    “Third request”
•    “Correct me if I’m wrong but here you stated…”
•    “See below”
•    “Any updates on this?”
•    “In the future…”
•    “Not sure if my email made it to you as I haven’t heard back”
•    “Thank you in advance for your co-operation”
•    Instead of: "Hello Karen," use "Karen,"
•    “Gentle reminder”

Happy emailing!


OFFICE SURFING...and we don't mean the web

1st September 2017

Health warning to all the cubicle dwellers out there: they say sitting is the new smoking.  While a brief period of sitting here and there is natural, long periods of sitting in front of spreadsheets day-in and day-out can seriously impact your health and lifespan: prolonged sitting increases the risk of heart disease, diabetes, obesity, and more.

We’ve all heard the warnings, and some of us have been introduced to the concepts of standing, treadmill or even cycling work stations.  But even these alternatives put strain on your feet, legs and joints.  So what’s the solution?  One entrepreneur believes that we should be surfing our way out of desk-related health woes…
Joel Health of FluidStance developed surf-inspired boards to use at the office.  They take up less space than a treadmill, but allow much more movement than a standard sitting desk or what would be achieved standing all day.

A 2015 study published in the Annals of Internal Medicine states that more than half of the average person’s waking hours are spent sitting. Hence, all those sitting hours each day negatively impact your health - even if you are exercising regularly.

The idea of the boards, which can be used for standing or sitting, is to get people moving all day long while taking calls, sending emails, etc.  Designed as a skateboard attached to a half-dome of aluminium, the American-made boards are easy to adapt to; swivelling and rotating while working at a table encourages movement even if one is sitting.

The Mayo Clinic in Phoenix, Arizona, put FluidStance’s signature product, The Level, to the test. The study found 30 subjects who used the Level, FluidStance’s flagship product, increased their energy expenditure by 19.2% compared to sitting and passed rigorous NEAT certification criteria for standing (Note: NEAT stands for the science of Non-Exercise Activity Thermogenesis, developed by Mayo Clinic.)

In an additional third-party study, two-thirds of participants reported that the Level increased the amount of time they stand at work, as well as making them feel happier, more comfortable, more productive, more focused, and feel like they have increased core strength and better posture.

“Add to all that,” Heath says, “It’s just fun. We also discovered through these studies that many users actually had fun using the board. And it’s nice to add some fun back into the workplace.”  More fun in the workplace? Sign us up!


ROBOTICS...DANCE of the machine

25th August 2017

Worried that robots are on their way to taking over the world?

Professors Andrew McAfee and Erik Brynjolfsson from the MIT Sloan School of Management have recently undertaken research to consider where “humans fit in the new world of work.”

McAfee and Brynjolfsson’s research illuminates what has been dubbed a “Cambrian Explosion” in robotics.  The original Cambrian Explosion in 500 million BCE saw the appearance of all major forms of life on earth and researchers feel we are now at a similar threshold for machines.  The research focuses on “major developments in five parallel, interdependent and overlapping areas: data, algorithms, networks, the cloud and exponentially improving hardware”—or the handy acronym DANCE.

Data: The big data era is upon us with “signals from sensors in smartphones and industrial equipment, digital photos and videos, a nonstop global torrent of social media and many other sources.”

Algorithms: Big data “supports and accelerates the developments in artificial intelligence and machine learning, [whose] results get better as the amount of data they’re given increases.”

Networks: Improvements in wireless communication means “better and faster data accumulation.” It also means “robots and flying drones can coordinate their work and react together on the fly to quickly-changing circumstances.”

The cloud: The cloud makes an “unprecedented amount of computing power available to organizations and individuals,” accelerating the robotic Cambrian Explosion.

Exponential improvements in digital hardware: If Moore’s law—the steady doubling in integrated circuit capability every eighteen to twenty-four months—is any indication, it is likely we will “continue to enjoy simultaneously lower prices and higher performance from our digital gear processors, memory, sensors, storage, communications and so on for a long time to come.”

The question of when automation might replace humans entirely is still theoretical, according to McAfee and Brynjolfsson, but in the meantime, just DANCE!


POLANYI'S AI learnt human judgement

18th August 2017

In the world of Artificial Intelligence (AI), why is it so challenging to replicate common sense, intuition, judgement…all those mystical human abilities that we know are there but can’t quite define?

What most definitions propose is that these skills relate to a human’s ability to reason beyond data and calculation – we regularly make decisions based on factors other than statistics and this skill isn’t congruent with the way we usually think about computers.

Mathematician Michael Polanyi studied the causes behind our ability to acquire knowledge that we can’t precisely explain.  Try describing the colour blue to someone – we know it when we see it but it’s not that easy to put into words.  Polanyi’s Paradox summarises the cognitive phenomenon that many times “we know more than we can tell”.

Polanyi’s Paradox has deep implications in the AI field: if we can’t explain our knowledge, how can we possibly train AI agents?

Thanks to Google, AI has evolved passed Polanyi’s Paradox.  Take the game GO, for example.  Many of the well accepted strategies in the ancient game are very hard to model as a series of rules and are typically more related with human’s intuition.  But then, between 2016 and 2017, DeepMind’s AlphaGo program regularly defeated the world’s top GO players.

AlphaGo overcame the Polanyi Paradox using some clever AI techniques.  Instead of relying on traditional symbolist’s algorithms such as inverse deduction to teach AlphaGo the rules of Go strategies, the DeepMind team used a combination of deep learning and reinforcement learning to train AlphaGo.  Initially, AlphaGo studied millions of Go games to infer hidden patterns between a specific strategy and the outcome of the game.  After that, researchers had AlphaGo play numerous games against itself to build new knowledge.

The AlphaGo example demonstrates that the way to build human-type judgment into AI systems is to design systems that learn on their own and include judgment-based decisions in the training data.

Makes one wonder about the implications for actuarial judgement…


CIRCULAR THINKING...the time pi was nearly changed to 3.2

4th August 2017

1 + 1 = 2
0/x = 0
Circumference/Diameter = 3.14159…

These mathematical equations are indisputable, right?  Apparently not.  In 1897, the legislators of Indiana tried to pass a bill that legally defined the value of pi as 3.2.

The story of the “Indiana pi bill” starts with Edward J. Goodwin, a physician who spent his free time dabbling in mathematics. Goodwin was obsessed with an old problem known as squaring the circle. Since ancient times, mathematicians had theorised that there must be some way to calculate the area of a circle using only a compass and a ruler. Mathematicians thought that with the help of these tools, they could construct a square that had the exact same area as the circle. Then all one would need to do to find the area of the circle was calculate the area of the square.

Unfortunately, it turns out that it’s impossible to calculate the area of a circle in this way. And at the time that Goodwin was toying with this problem, mathematicians already knew it was impossible: Ferdinand von Lindemann had proven it in 1882.

Did this deter Goodwin?  No way.  He persevered, and in 1894 he convinced the upstart journal American Mathematical Monthly to print the proof in which he “solved” the squaring-the-circle problem. One of the odd side effects was that the value of pi morphed into 3.2.

Goodwin then copyrighted his “proof”, planning to collect royalties from businesses and mathematicians who sought to exploit his method.

For the sake of students’ education though, he magnanimously offered to let the state use his masterpiece free of charge.  But they could only avoid paying royalties if the legislature would accept and adopt this “new mathematical truth” as state law. Goodwin convinced Representative Taylor I. Record to introduce House Bill 246, which outlined both this bargain and the basics of his method.

Goodwin’s method and the accompanying bill never mention the word “pi,” but on the topic of circles, it clearly states, “[T]he ratio of the diameter and circumference is as five-fourths to four.”  That ratio is 3.2.  It goes further to bitterly condemn 3.14 as “wholly wanting and misleading in its practical applications.”

Stunningly, the Committee on Education sent the bill out for a vote, and it passed the House unanimously. Not a single one of Indiana’s 67 House members raised an eyebrow at a proof that effectively redefined pi as 3.2.

Luckily the state’s senators had a bit more numerical acumen. By this point, news of Indiana attempting to legislate a new value of pi and endorse an airtight solution to an unsolvable math problem had become national news, and papers all over the country were mocking the legislature’s questionable calculations.
Eventually a university professor explained to the senators why the theory was nonsense and the bill was postponed indefinitely.  Goodwin’s new pi died a quiet legislative death and the Indiana legislature hasn’t tried to rewrite the basic principles of mathematics since.


GENDER-NEUTRALITY...the right words for the job

28th July 2017

Although we have come a long way, women still form the minority of “traditionally male” professions.  There are any number of reasons for this, but there may be one that has been overlooked…

According to a paper recently published in the Journal of Personality and Social Psychology, there could be a subtle gender bias in the way companies word job listings in such fields as engineering and programming.  Although legislation effectively bans companies from explicitly requesting workers of a particular gender, the language in these listings may discourage many women from applying.

The paper found that job listings for positions in engineering and other male-dominated professions used more masculine words, such as "leader," "competitive" and "dominant."  Listings for jobs in female-dominated professions – such as office administration and human resources – did not include such words.

A listing that seeks someone who can "analyse markets to determine appropriate selling prices" may attract more men than one that seeks someone who can "understand markets to establish appropriate selling prices."  The difference may seem small, but according to the paper, it could be enough to tilt the balance.  It was also found that the mere presence of "masculine words" in job listings made women less interested in applying – even if they thought they were qualified for the position.

Of course there are many other factors preventing women from entering and staying in these industries, but altering the way we use language could be one of the easiest places to start changing company culture from the outside in.

Companies in the technology world, for example, are paying more and more attention to gender diversity – and not just for altruistic reasons.  Diverse teams are better problem solvers, and enabling cross-departmental communication is easier when engineering teams are more diverse.

So eliminate key man risk, reduce your man hours, forget about the everyman, and please don’t man up.  Can we reach a non-gentlemen’s agreement on that?

maths Donald Duck came to love maths

21st July 2017

What’s more strange: the fact that Donald Duck starred in a movie about mathematics or that said movie was nominated for an Academy Award?  Donald in Mathmagic Land is a 27-minute Donald Duck educational featurette released on June 26, 1959.

In the film, Donald enters the strange Mathmagic Land with the view that maths is only for “eggheads”.  He encounters trees with square roots, a stream flowing with numbers, and a geometric bird reciting (almost perfectly) the first 15 digits of pi.

Some of the concepts explored in Donald’s journey include:

Pythagoras and music
Donald discovers the relationships between octaves and string length which develop the musical scale of today.  Next, Donald finds himself in ancient Greece, where Pythagoras and his contemporaries are discovering these same relationships by holding a musical “jam session”.

Pentagram, golden section, and golden rectangle
Donald then sees how the mysterious golden section appears in the pentagram. Next, the pentagram is shown to contain the pattern for constructing golden rectangles many times over, and how the golden rectangle appears in modern and ancient art and architecture.   The golden rectangle, by the way, is one where the ratio of length to breadth is the “golden ratio” of around 1.618.  (The every day rectangular object that most resembles this shape is, ironically, the credit card.)

Human body and nature
Donald learns how the golden rectangle and pentagram are related to the human body and nature, respectively.  The human body contains the "ideal proportions" of the golden section and the pentagram and pentagon are found in many flowers and animals.

Donald learns that mathematics applies to games that are played on geometrical surfaces, including chess, baseball, football, basketball and hopscotch.

Mental exercises
Donald plays with a circle and a triangle in his mind.  He spins them to make them respectively into a sphere and a cone, and then he discovers useful inventions such as the wheel, train, magnifying glass, drill, spring, propeller, and telescope.

Infinity and the future

Donald discovers that pentagrams can be drawn inside each other indefinitely. Therefore, numbers provide an avenue to consider the infinite.  Deep stuff!

 By the end of the film, Donald understands and appreciates the value of mathematics. The film closes with a quote from Galileo: "Mathematics is the alphabet with which God has written the universe".

Watch the full film on YouTube here…think it could count towards CPD?


PYTHAGORAS...and the only US President to prove a theorem

14th July 2017

Last week’s story revealed the dark side of Pythagoras…This week we stick with the theme of the Pythagorean Theorem.  This theorem has been proved many times, but only once by a United States President.  Five years before James A Garfield was elected president, he came up with a proof that involves a simple sheet of paper and some scissors.

Grab a piece of paper and cut two identical right triangles, trying to include one long side and one short side. Call the long side A, the short side, B, and the hypotenuse C. Place them, opposing points together, on a piece of paper so that they look like this:

Draw the third line in to make three triangles. The total area of a triangle can be calculated as one half the base times the height. Each of the original triangles has an area of ½ ab, and the third has an area of ½c^2.

A trapezoid has an area calculated by its height times one half the sum of its uneven sides. So the trapezoid has an area of ½ (a+b)(a +b).

Since these areas are the same, this leads us to an equation.
½ ab + ½ ab + ½c^2 = ½ (a + b)(a +b)

This simplifies to:
½c^2 = ½ a^2 + ½ b^2

Multiply it all by 2, and you get:
c^2 = a^2 + b^2

And that’s how to solve a maths problem, presidential-style.

Adapted from this article.


RATIONAL NUMBERS...and irrational mathematicians

7th July 2017

You may associate Pythagoras with right-angled triangles, but have you heard the rumour that he was also, you know, a megalomaniacal murderer?

Pythagoras was very passionate about numbers.  So passionate that he founded a religion called Pythagoreanism in around 500 BCE.  Pythagoras and his followers believed that numbers explained everything in life, from nature to music.  Furthermore, they were sure that everything in the universe was expressible as the result of rational numbers.

Rational numbers are numbers that can be expressed as the ratio of two whole numbers – i.e., as a fraction.  If it wasn't expressible as x/y, they didn't want to hear about it. 

Legend has it that one of the Pythagoreans, Hippasus, noticed something about the pentagram: if it's divided up, there is a certain ratio between the carved up pieces.  Hippasus found that the length of the red side divided by the green side is equal to the length of the green side divided by the blue side.  And that's equal to the length of the blue side divided by the purple side.  And none of these things are expressible as the ratio of two whole numbers.  They form the golden ratio (approximately 1.61803).


The golden ratio appears in many works of art and architecture.  It forms the background aesthetic of our lives to this day.  Hippasus announced that he'd found a way to demolish Pythagoras' religion.  Unfortunately, he made this announcement on a boat populated by only himself, Pythagoras, and some other Pythagoreans.  The story goes that Pythagoras tipped him over the side, drowned him, and swore the rest of the group to secrecy.

It's doubtful this actually happened, especially since there's another rumour that Hippasus was killed not for coming up with the golden ratio, but with the square root of two - another irrational number. (He realised there was no rational way to express the diagonal of a square with sides one unit long.) 

Still, it makes you think twice about contradicting your manager, doesn’t it? 


MACHINE LEARNING...on a budget

30th June 2017

Today’s story is hot off the press – just for the techies!

Artificial Intelligence and Machine Learning usually work best with a lot of computing power behind them to process data, compute possibilities and instantly come up with better solutions.

Most AI systems rely on local sensors to gather input, while more powerful hardware in the cloud manages the output. It's how Apple's Siri, Amazon’s Alexa and IBM’s Watson work.  It is, though, a limiting approach when it comes to applying intelligence when there isn't Internet connectivity.

Now, Microsoft researchers have figured out how to compress neural networks down from 32 bits to, sometimes, a single bit and run them on a $10 Raspberry Pi, a low-powered, credit-card-sized computer with a handful of ports and no screen. It's really just an open-source motherboard that can be deployed anywhere. The company announced the research in a blog post yesterday.

Microsoft's work is part of a growing trend of moving Machine Learning closer to devices and end users.
Earlier this month at is annual World Wide Developer's Conference, Apple announced new Machine Learning APIs (Vision and Natural Language) that allow developers to add machine learning-based intelligence to their apps with just a couple of lines of code.

Despite the differences between an iPhone and a Raspberry Pi, the trend is clear. These companies are moving intelligence closer to the local hardware and, where possible, relying less on constant access to massive data and intelligence stores in the cloud.

Often, places with no internet connectivity are where AI is needed most.  It's an approach that will make sense for smaller, sensor-based tasks that can learn by location, intention, recent action and the device data.

Adapted from this article. 


HEAT...what doesn't kill you makes you live longer

23rd June 2017

Anyone living in the UK might have noticed the balmy weather we’ve been having… Tropical temperatures may be paradise to some and the opposite to others, but love it or hate it, there’s an actuarial angle here.  Does exposure to extreme temperatures have an effect on life expectancy?

The results of a Google search on this topic are conflicting and very US-centric.  Here are some of the more interesting findings gleaned from various studies:

One study found that the immediate effects of spikes of heat and of cold lead to increases in the death rate.  The main difference is that the spikes in extreme heat tend to drop off rapidly, while the death rates associated with extreme cold tend to have longer lasting effects.  The number of annual deaths attributable to cold temperature was estimated at 1.3% of total deaths in the US.

To back up these findings, a study at Stanford University found that a warmer climate would reduce deaths markedly in the United States (a similar study in the UK found the same).  The study considered whether temperature or increases in the amount of sunlight reduced mortality but found that warm temperatures had a more significant effect than long summer days.

On the other hand, researchers from the University of Michigan, in a study published in the journal Cell, reported that worms exposed to cold temperatures demonstrate a genetic response that triggers longer life spans. The researchers went on to speculate that the phenomenon may translate to humans since similar genetic pathways are present in human beings.

Also, scientists at the Scripps Research Institute in California found that reducing the core body temperature in mice extends their lifespans by up to 20 percent. 

But then, another study showed that lab worms exposed to repeated heat shocks lived 10-20% longer.  In response to the treatments the worms generated a surge of a protective hormone dubbed heat shock protein, and that heat shock protein also increases life span. This result is as an example of hormesis, the paradoxical adaptation that makes animals live longer when they are exposed to challenges and hardships. Starvation, various toxins in low doses, infections, heat and cold can all lead to a longer life. 

So, what is the answer and, more importantly, will average temperature make it as a risk factor in the standard life insurance underwriting procedure any time soon?  Something to ponder as you soak up (cower from) those summer rays. 


CURRENCY...what makes gold...golden

16th June 2017

Wars have been waged for it, countries have been built on it and it’s been known to make grown men drool…yes, we may be talking about the allure of beautiful women, but in this context, we are talking about gold.

Humankind's attitude to gold is bizarre. Chemically, it is uninteresting - it barely reacts with any other element. Yet, of all the 118 elements in the periodic table, gold is the one we humans have always tended to choose to use as currency. Why?  Why not osmium or chromium, or helium, say - or maybe seaborgium?

Well, let’s go through a process of elimination:

We can immediately eliminate the right-hand side of the table – noble gases and halogens wouldn’t be very practical to use as currency.

The two liquid elements  - mercury and bromine - are poisonous - not a good quality in something you plan to use as money. Similarly, we can cross out arsenic and several others.

On the left-hand side of the table, the alkaline metals and earths are just too reactive (remember the fizzy chaos of dropping sodium or potassium into a dish of water in high school?).  A similar argument applies to another whole class of elements, the radioactive ones: you don't want your cash to give you cancer.  Out go thorium, uranium and plutonium, along with a whole bestiary of synthetically-created elements - rutherfordium, seaborgium, ununpentium, einsteinium - which only ever exist momentarily as part of a lab experiment, before radioactively decomposing.

Then there's the group called "rare earths", most of which are actually less rare than gold.  Unfortunately, they are chemically hard to distinguish from each other, so you would never know what you had in your pocket.

This leaves us with the middle area of the periodic table, the "transition" and "post-transition" metals.  We've got some very tough and durable elements - titanium and zirconium, for example, but they are very hard to smelt.  The specialist equipment required wasn't available to ancient civilisations. Aluminium is also hard to extract, and it's just too flimsy for coinage. Most of the others in the group aren't stable - they corrode if exposed to water or oxidise in the air.

So, what's left?

Of the 118 elements we are now down to just eight: platinum, palladium, rhodium, iridium, osmium and ruthenium, along with gold and silver.  These are known as the “noble” metals because they stand apart, barely reacting with the other elements.  They are also all rare, another important criterion for a currency.

But all the noble metals except silver and gold are so rare that you would have to cast some very tiny coins, which you might easily lose.  They are also hard to extract. 

That leaves silver and gold.

Both are scarce but not impossibly rare.  Both also have a relatively low melting point, and are therefore easy to turn into coins or jewellery.

Silver tarnishes - it reacts with minute amounts of sulphur in the air. That's why we place particular value on gold.

It turns out then, that the reason gold is precious is precisely that it is so chemically uninteresting. Gold's relative inertness means it doesn’t lose its looks, even after thousands of years.

So what does this process of elemental elimination tell us about what makes a good currency?

Firstly, it doesn't have to have any intrinsic value.  A currency only has value because we, as a society, decide that it does.  It also needs to be stable, portable and non-toxic.  And it needs to be fairly rare - you might be surprised just how little gold there is in the world (it's guesstimated that all the gold in the world would form one 20 metre cube).

But gold has one other quality that makes it the stand-out contender for currency in the periodic table. Gold is... golden.  All the other metals in the periodic table are silvery-coloured except for copper - but copper corrodes, turning green when exposed to moist air. That makes gold very distinctive.  

And, of course, gold is beautiful, which is perhaps the most powerful driver of all.

The piece above has been adapted from this BBC article. 


TRADING...hands move pretty fast

9th June 2017

If you are a fan of 80s teen movies (and, let’s face it, who isn’t?) you will remember the scene in Ferris Bueller’s Day Off where the gang visits what looks like, based on the hand movements and bad suits, some kind of psychotic corporate rave.

What is actually being depicted is the Chicago Mercantile Exchange (CME), whose trading floor operates (to a lesser extent now than then) using the “open outcry” method of communication.  It involves shouting and the use of hand signals to transfer information primarily about buy and sell orders. The part of the trading floor where this takes place is called a pit.

Since the development of the stock exchange in the 17th century in Amsterdam, open outcry was the main method used to communicate between traders. However, this started changing in the latter half of the 20th century, first through the use of telephone trading and then, starting in the 1980s, with electronic trading systems.

What we see in Ferris Bueller, specifically, is hand signaling, also known as arb or arbing (short for arbitrage).  As well as at the CME, the system is also used at the American Stock Exchange (AMEX). 
Traders usually flash the signals quickly across a room to make a sale or a purchase.  Signals that occur with palms facing out and hands away from the body are an indication the gesturer wishes to sell. When traders face their palms in and hold their hands up, they are gesturing to buy.

Generally, numbers one to five are gestured on one hand with the fingers pointing directly upwards.  To indicate six to ten, the hand is held sideways, parallel to the ground.  Numbers gestured from the forehead are blocks of ten, blocks of hundreds and thousands can be indicated by repeatedly touching the forehead with a closed fist.  The signals can otherwise be used to indicate months, specific trade option combinations or additional market information.

Be careful - hands move pretty fast...if you don't stop and look around once in a while, you could miss them!

For a tutorial on hand signalling, watch this handy video


BENEFITS...a welfare state of mind

2nd June 2017

Hard day at work?  Ever feel like just taking it easy and letting the government take care of you?  Some governments are willing to do so more than others…France, for instance, has introduced a law that gives workers the right to ignore email after 6 PM.  And Sweden continues to experiment with a six-hour workday.  Here are some more examples of countries with generous social benefits… 

The Netherlands 
You can take sick leave for up to two years and still receive 70 percent of your salary. It's the most generous sick-leave policy in Europe. 

Employers must give workers a minimum of 28 days paid vacation and up to 58 days.

The tiny Buddhist nation in the Himalayas officially keeps track of its citizens' happiness. Its Gross National Happiness Index seeks answers to questions like, "How much do you trust your neighbors?"; "Is lying justifiable?"; and "Do you feel like a stranger in your family?" 

Iceland's parental leave is among the most generous for new fathers, giving dads 120 days off at 80 percent pay. 

The Spanish have 14 public holidays—the most in the European Union.

Unemployed workers in Denmark get 90 percent of previous earnings for up to 104 weeks, the most generous unemployment benefits in the EU.

In addition to a generous parental leave policy of 158 days shared between new parents, they also enjoy shortened work hours until their child is two, and free day care.

Canada ranks among the 10 happiest nations in the world. It's in the top 10 for disposable income and the bottom 10 for employees working long hours. 


BALANCE...a nod to accountaints

19th May 2017

Yesterday the IASB issued the finalised IFRS 17 Insurance Contracts.  In honour of this international accounting event, here are some fun facts about our well-balanced colleagues…

1. The developer of modern accounting was Luca Pacioli

Italian mathematician Luca Pacioli published the first book about double-entry bookkeeping in 1494.  It described keeping accounts for assets, liabilities, capital, income, and expenses, much like the systems used today in balance sheets and income statements.

2. The world's first accountants originated in Ancient Mesopotamia
Accounting can be traced as far back as ancient Mesopotamia.  The world's first accountants worked for the temples, keeping track of taxes paid in sheep and agricultural produce for the religious authorities of the day.  In the process, many historians believe they invented the practice of writing in order to keep receipts.

3. Many accounting terms have Latin roots
For example, the word ‘debit’ means ‘she/he owes’ in Latin, while ‘credit’ means ‘she/he trusts’. The word ‘accountant’ is derived from the Latin ‘computare’, which means ‘count’.

4. Mick Jagger, Janet Jackson, Eddie Izzard and John Grisham studied accountancy
Mick Jagger didn’t get through the first year and comedian Eddie spectacularly failed all of his exams.  Unable to retake the course, he took to street-performing and worked his way up to the comedian he is today.

John Grisham, author of The Firm, has a degree in accounting from Mississippi State University.

5. Oscar winning films featuring accountants
Accountants pop up in a number of Oscar-winning films, including Itzhak Stern (Ben Kingsley) in Schindler’s List, Oscar Wallace (Charles Martin Smith) in The Untouchables, and Leo Bloom (Gene Wilder) in The Producers.

6. The Romans were obsessed with accounting
The Roman army kept scrupulous records of cash, commodities and transactions, and they computed revenue every day.

7. The founder of pottery company Wedgwood was the first cost accountant
Though better known for his pottery and ceramics business, Josiah Wedgwood is also considered the first cost accountant.

During a slump in business in 1772, Josiah began to make a concentrated effort to establish the profit or loss realised each time a particular product was sold from his factory. He recognised the sense in recording not just the cost of materials and labour but calculations for coal, storage and transport.

8. Bubble gum was invented by an accountant
US accountant Walter Diemer worked for the Fleer Corporation in the 1920s. But his big claim to fame is that he invented bubble gum.

9. There is a patron saint of accountants
St Matthew  is the patron saint of accountants, bookkeepers and tax collectors. Before becoming an Apostle, he was a tax collector in the ancient town of Capernaum.


PRESCRIBED READING...some novel ideas!

12th May 2017

It’s likely that if you’re reading this, you’ve done a lot of reading over the years, whether it’s university course notes, Act Ed files or pop-finance works like “Rich Dad Poor Dad”.  But novels and other works of fiction also have many lessons to teach about business, leadership, economics, and career development.  Below are five suggestions to get you started…

1. The Grapes of Wrath by John Steinbeck
Experiencing the effects of The Dust Bowl of the 1930s (one of the most economically and environmentally significant tragedies in American history) through the eyes of one family, readers are confronted with perspectives on capitalism, leadership structures and wealth which make them question their submission to the “Monster” of corporate culture.

2. Don Quixote by Miguel de Cervantes
Don Quixote is a 16th-century Spanish gentleman who reads so many tales of romance and chivalry that he appoints himself a knight and embarks on a journey to save the world.
Throughout the novel, Quixote embodies the spirit of an entrepreneur, who insists he can improve society even though his ideas seem unrealistic and significant obstacles stand in the way of his success.

3. The Trial by Franz Kafka
The Trial follows the incredible ill fortune of one Josef K., who wakes up one morning to discover that he's been arrested on unnamed charges. Throughout the novel, K. struggles futilely against a secretive and tyrannical court system, expending all his energy and resources building up his defence within the limits of an absurd bureaucracy.  The Trial can be read as a critique of the unwieldy bureaucratic systems that characterise any modern government – and many modern corporations.

4. Something Happened by Joseph Heller
This satirical novel by the author of "Catch-22" is written from the stream-of-consciousness perspective of businessman Bob Slocum. As the title suggests, something has happened to Slocum to undermine his sense of happiness.
It's a powerful statement on how professional success doesn't always translate to personal fulfillment.

5. The Way We Live Now by Anthony Trollope
Although the author set out to mercilessly satirize everything he deemed ridiculous about society, he saves particular ire for crooked financiers — spurred on by a series of fiscal scandals in the 1870s.

So next time you feel guilty about reading a novel instead of doing actual work on the train, just think of it as part of your “personal development plan”.

Find reading lists here and here for more bookish inspiration.


BUBBLES...sending economies up the (Mississippi) River since 1720

5th May 2017

We are familiar with the dot-com and US housing bubbles of recent memory, but in the early 1700s (1716 – 1720) two of the largest economic bubbles in history arose and burst at more or less the same time in different parts of Europe…

The South Sea Bubble was a speculative stock bubble in Britain, which was centred on the shares of the South Sea Company, an international trading company that was granted special trading rights in the South Seas (now called South America) by the British government. South Sea Company executives spread rumors that greatly embellished upon the commercial value of the company’s trading rights, which caused its shares and the shares of similar companies to soar. Shortly after the stock speculation mania swept throughout Britain, with scientist Isaac Newton and author Thomas Swift (who wrote Gulliver’s Travels) among the investors, the South Sea Bubble popped and caused a very severe economic crisis.  When Newton lost a fortune in the crash, he famously remarked, “I can calculate the movement of the stars, but not the madness of men.”

The Mississippi Bubble was a speculative stock bubble in France that occurred at the same time as Britain’s South Sea Bubble. The seeds of the bubble were sown in 1715, when France was nearly insolvent from war and sought the help of Scottish economic theorist John Law. Law decided to create a national bank that would accept deposits of gold and silver currency and issue “paper” money or bank notes in return.  Very soon, Law’s national bank began to issue much more paper currency than it received in gold and silver currency deposits, which created an inflationary economic “bubble boom”. 

One of Law’s international trading companies, the Compagnie des Indes, became one of the prime beneficiaries of the inflationary boom as its shares skyrocketed and created many millionaires (this is how the French word millionaire came about), based on the supposedly immense bounty of resources in the Mississippi Territory, including gold and silver.  For a time, it seemed as if France’s financial problems were over, until the Mississippi Bubble burst (when it turned out that France’s North American colonies along the Mississippi River were not as rich in resources as previous thought) and Law’s trading company shares and paper bank notes plunged in value and threw France into an even greater economic crisis than it had before the bubble.

Law himself was an interesting character: a financier, gambler and playboy who escaped to continental Europe to avoid imprisonment after shooting a man in a duel, he found himself on the run again after the bubble burst.  He escaped France, disguised as a woman for his own safety, and spent the rest of his life as an impoverished gambler in various parts of Europe.

Although traditionally considered a bubble, if we’re going to be technical about it, the Mississippi Bubble wasn’t actually a bubble. A bubble is primarily caused by widespread mania and speculation, followed by a brutal collapse in asset values. In contrast, the Mississippi Bubble was the result of failed monetary policies that caused excessive money supply growth and inflation.

Still not something you’d want exploding in your face though.


UNCERTAINTY...the spectrum of not knowing

28th April 2017

“There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns – the ones we don't know we don't know.”
- United States Secretary of Defence, Donald Rumsfeld

Uncertainty is a continuum that ranges from that which we are certain of at one end through to that which we are completely ignorant of at the other. This continuum may be divided into three broad categories: aleatory, epistemic and ontological uncertainty.

Aleatory uncertainty
At one end of the spectrum of knowing, we have those things that we know and are confident we know.  For example, from a safety management perspective, if there is an aleatory risk then if the system is operated for long enough all we can say is that eventually an accident will occur (based on probability).  So risk acceptance in such circumstances is really about whether the accident rate is acceptable over some defined duration of exposure.

Epistemic uncertainty
Epistemic uncertainty on the other hand represents a more general and resolvable lack of knowledge. Taking the example of a coin toss, we don’t know whether the coin is true (i.e. not biased) in the first instance, but if we start to toss the coin we immediately get a feel for its trueness.  The longer we toss the coin, the better our feel for the ‘true’ of the coin and the greater the reduction in epistemic uncertainty.

Ontological uncertainty
Ontological uncertainty lies at the far end of our continuum and represents a state of complete ignorance. Not only do we not know, but we don’t even know what we don’t know. While the truth is out there, we cannot access it because we simply don’t know where to look in the first instance.  Say you sit down to play a game of cards with some other players.  You don’t know the rules of the game, but as you play you start to get a feel for them.  Unknown to you, however, the dealer holds the single card, which she can play against a specific turn of hands.  You think you know all the cards and have correctly inferred the rules (certainly the long run of hands that you have seen supports your ‘theory of the game’), but the dealer can still play that card. This illustrates the classic decision making quandary of ‘we don’t know what we don’t know’.

All this uncertainty – a risky business indeed!

Adapted from this article by Matthew Squair

flying's all fun and stats until someone gets hurt

21st April 2017

In a normal free market economy, a customer will pay for a product or service and implicitly trust that the legal, ethical, and economic forces at play will ensure she gets it.  But, we know that airlines operate in a slightly different reality from everyone else.  In a world where people will crawl over broken glass for that slightly cheaper seat on a budget flight, it’s no wonder that overbooking is a thing and, for the most part, no one gets hurt.

In view of the recent scandal of United Airlines, overbooking on airlines has again come into an unsavoury limelight, but, infuriatingly, we can’t deny that the stats behind this practice do add up in favour of the airline…
It’s no secret why airlines overbook: there will always be a proportion of people who do not show up for a flight.  If you predict that proportion accurately, you can sell those empty seats twice.  If your estimate is slightly off, you still win by offering compensation to bumped passengers which is less than the revenue earned from the overbooking.

This TED-Ed video explains the maths behind overbooking, which takes a few factors into account:  the number of seats on the plane, the (larger) number of tickets sold, the percentage of ticketholders that will probably show up, the likelihood of each one of those percentages, and the cost of hotels and other necessary costs if all the planning goes wrong and too many people do show up.

The most frustrating part is that the data and maths could be used to ensure that the maximum number of tickets is sold with a near zero percent chance of too many people showing up.  Instead, the most profitable solutions often involve a not insignificant chance that a few passengers will be inconvenienced (or worse), because the extra ticket sales outweigh having to put someone up in a hotel now and then.

Even a simplified binomially distributed example is complicated, with the real-life maths approaching flight price modelling complexity (yikes!).  So instead of trying to understand the system, we could either try to beat it (by hoping you get bumped and claiming maximum compensation), or just try our best to show up on time, check in early, and hoping that someone else is running late.

banana ousside, howbow dah

7th April 2017

Ever since Scottish inventor John Shepherd-Barron dreamed up the concept of an ATM in his bathtub in 1967 (true story!), these magical machines have been doling out the cash like loving parents at a theme park.  The ATM was one of the first inventions to electronically automate an everyday task (and spare us the agony of dealing with actual people and restrictive banking hours), but now, with the ubiquitous popularity of card payments and online banking, what does the future hold for the humble ATM?

You may be thinking, “Wait, the ATM has a future?” It does.  For all our contactless cards and talk of mobile payments, cash is still king, and may be for some time. Cash today is used for half of all purchases under $50 in the USA and 18-to-24-year-olds are the age group most likely to prefer cash as a form of payment.
Still, times are changing.  We’re doing more and more transactions on our phones and computers, and because of costs it may actually be the bank branch whose days are numbered – and ATMs may need to use technology pick up the slack.

It’s not just evolving consumer behaviour driving these changes. Branches can account for half of a bank’s total operating costs, and when profits are down those buildings and the people who work there can become untenable. ATMs cost less, and they can already do about 60% of transactions done at the teller window.
Still, banks care about the experience; so ATMs will be called upon to do more: offer cash in a variety of denominations, allow specific withdrawal amounts and higher withdrawal limits, cash customers’ checks and enable bill paying, among other tasks.  Bank of America has even begun to incorporate video tellers into some of its ATMs, for that dash of humanity.

Another game changer for the industry, once it becomes more affordable, is likely to be robotics.  One company has built a hexagonal ATM-turned-bank branch that houses a whirling robotic arm, seemingly combining an ATM, bank teller services, safe-deposit box, vending machine and insurance office in one place.
In the midst of all this change, though, our desire to grab some cash on the go isn’t disappearing anytime soon, with experts reckoning that the chances of mobile replacing plastic are higher than any of the digitals replacing cash.

It looks like ATMs, robotic or otherwise, have not outlived their Eureka moment just yet.


BANANA REPUBLIC...more than just a clothing brand

31st March 2017

Banana republic is a political science term used originally for politically unstable countries in Latin America whose economies are largely dependent on exporting a limited-resource product, e.g. bananas.  The history of the first banana republic begins with the introduction of the banana to the US in 1870, by Lorenzo Dow Baker, captain of the schooner Telegraph. He initially bought bananas in Jamaica and sold them in Boston at a 1,000 percent profit.
American writer O. Henry (William Sydney Porter, 1862–1910) coined "banana republic" to describe the fictional Republic of Anchuria in the book Cabbages and Kings (1904), a collection of short stories inspired by his experiences in Honduras.

In political science, the term banana republic describes a servile dictatorship that abets or supports, for kickbacks, the exploitation of large-scale plantation agriculture, especially banana cultivation.  Originally it referred to the fruit companies from the United States that came to exert extraordinary influence over the politics of countries like Honduras.

More generally, it is a derogatory term for a country that is considered to have a weak economy, a dishonest or cruel government, and public services that do not work.  In economics, a banana republic is a country operated as a commercial enterprise for private profit, effected by a collusion between the State and favoured monopolies, in which the profit derived from the private exploitation of public lands is private property, while the debts incurred thereby are a public responsibility.


MISSED OPPORTUNITIES...what a bunch of Yahoos!

24th March 2017

In the Raconteur Business Transformation report, you can read all about the journey of Netflix to the entertainment giant it is today.  For example, did you know that Blockbuster passed up the opportunity to buy Netflix in 2000 in what has been awarded the dubious honour of one of the biggest corporate misjudgements of all time?

Another former tech giant that has made some forehead-slapping misjudgements over the years is Yahoo…

Back in 1998, two unknown individuals, Larry Page and Sergei Brin, offered to sell their little startup to Yahoo for $1 million so they can resume their studies at Stanford.  The company that Page and Brin were looking to sell was the soon-to-be patented PageRank system and represents the core of Google's existence.  Yahoo turned down the offer as it wanted its users to spend more time on its own platform, contrasting PageRank, which sends a user to the most relevant web site.

Yahoo had another opportunity to acquire Google. In 2002, Yahoo's CEO at the time, Terry Semel, engaged in negotiations to acquire Google, which lasted several months.  The outcome of the negotiation was Semel balking at Google's price tag of $5 billion.  Today, Google and its parent company Alphabet boast a market capitalization of more than $500 billion.

Yahoo's failed attempt at acquiring Facebook added insult to injury.

As the story goes, Yahoo was nearly able to acquire the popular social network in 2006 for $1bn, but due to a faltering stock price, Yahoo lowered its offer to $850m, allowing Facebook CEO Mark Zuckerberg to walk away from the deal.

Yahoo has made plenty of bad moves in acquiring (or not acquiring) other companies, but its crowning failure was its handling of its own potential sale.

In 2008, Microsoft, eager to compete with Google, was willing to pay $44bn for Yahoo, but thanks to what many considered gross incompetence, Yahoo's board rejected the offer.

In 2016 Yahoo announced that it would sell its core business to Verizon for about $4.8 billion.  Following this news, a number of commentators were quick to bring up that Yahoo was once the darling of the new millennium's tech future, with its market cap maxing out at over $125 billion. Now, the company would go for about 4% of that.



START-UPS...the good, the bad, and the weird

17th March 2017

The tech world was abuzz this week with news of the acquisition by Intel of Mobileye, the assisted driving software company, for $15.3 billion – the largest ever acquisition of an Israeli company.  This news correlates with the current wave of self-driving car enthusiasm, but we thought we would look at some of the quirkier start-up ideas out there…

The founders of ThinkScream hit upon the billion dollar idea of creating a dustbin that would double up as a Wifi hotspot after it’s filled with rubbish. Since then, ThinkScream has come up with a quirky variety of innovative Wifi and RFID solutions for events, festivals and retail setups.

Bird Control Group
Birds can be scary at the best of times, and when they fly near planes, they’re downright dangerous. Bird Control Group is on the front lines of defending humanity from avian assault: with lasers. The company’s silent, long-range laser systems unnerve the birds and drive them in a different direction. 

Too busy working to exercise? With Cubii, you don’t have to choose. This sleek under-desk elliptical lets busy office-jockies work up a sweat while rattling off emails…no more excuses!

Elysium Space
The company’s pioneering service will blast your remains off on a rocket, where they will either land on the moon to enjoy eternal lunar slumber or be released back into the atmosphere where they’ll burn up on reentry and give your loved ones on the ground an otherworldly moment of beauty.

The startup invites you to hire a smart, handsome, chivalrous guy to wait on you (in an above-the-belt manner – they’re very insistent about this part). There’s a wide array of suggested uses for your Manservant including a Heartbreak recovery package, as arm candy for a special event, a cabana boy for a pool party, and more. You indicate how your Manservant should dress and act and even get to pick the name he answers to.

So just because you aren’t going to be the founder of the next Mobileye, do not despair!  Even the craziest idea can make it big, so reach for the stars (hopefully not in ash form though).


SYMBOLISM...the rise and rise of @

10th March 2017

Called the “snail” by Italians and the “monkey tail” by the Dutch, it’s hard to remember (thanks to email addresses and Twitter handles) a time when the @ sign was just an obscure symbol on our keyboards. @ has even been inducted into the permanent collection of the Museum of Modern Art, which cited its modern use as an example of “elegance, economy, intellectual transparency, and a sense of the possible future directions that are embedded in the arts of our time.”

The origin of the symbol itself is something of a mystery. One theory is that medieval monks, looking for shortcuts while copying manuscripts, converted the Latin word for “toward”—ad—to “a” with the back part of the “d” as a tail. Or it came from the French word for “at”—à—and scribes, striving for efficiency, swept the nib of the pen around the top and side. Or the symbol evolved from an abbreviation of “each at”—the “a” being encased by an “e.” The first documented use was in 1536, in a letter by Francesco Lapi, a Florentine merchant, who used @ to denote units of wine called amphorae.

The symbol later took on a historic role in commerce. Merchants have long used it to signify “at the rate of”—as in “12 widgets @ $1.”  The machine age, however, was not so kind to @. The first typewriters, built in the mid-1800s, didn’t include @. Likewise, @ was not among the symbolic array of the earliest punch-card tabulating systems (first used in collecting and processing the 1890 U.S. census), which were precursors to computer programming.

The symbol’s modern obscurity ended in 1971, when a computer scientist named Ray Tomlinson, while developing Arpanet (a forerunner of the Internet) was facing a vexing problem: how to connect people who programmed computers with one another.

Tomlinson’s challenge was how to address a message created by one person and sent through Arpanet to someone at a different computer. The address needed an individual’s name, as well as the name of the computer, which might service many users. And the symbol separating those two address elements could not already be widely used in programs and operating systems, lest computers be confused.
Tomlinson’s eyes fell on @. “I was mostly looking for a symbol that wasn’t used much,” he told Smithsonian. Tomlinson chose @, and, using his naming system, he sent himself an e-mail.

He doesn’t remember what he wrote in that first email – perhaps the first hash tag?


DIGITAL TRANSFORMATION...5 pitfalls to avoid

3rd March 2017

The following piece has been adapted from 5 digital transformation mistakes to avoid, which appeared in Raconteur’s Business Transformation Report 2017.

Digital transformation is high on the corporate agenda, but for many businesses it remains a challenge. The IDC FutureScape: Worldwide Digital Transformation 2016 Predictions report has surmised that 70 per cent of digital transformation initiatives will ultimately fail because of insufficient collaboration, integration, sourcing or project management. For many businesses, the initial hurdle is to define what digital transformation means for their organisation.

This lack of a clear definition underpins five main pitfalls of digital transformation:

1. Scope creep
Large transformation projects tend to fail because of a lack of strategic vision. This means defining at the outset what success looks like. “Be clear about the key deliverables and desired output of the transformation,” advises Gordon McIntosh of P2 Consulting. “I’ve seen firms try to do too much at once and then go through a process of restructuring the initiative half way through, wasting time and money.”

2. Latest tech
Investing in the wrong technology is a major and expensive mistake. Vibeke Fennell, Director of Operational Excellence at MBE, advises companies to look at how operational processes deliver value to the customer before selecting new systems, to ensure they are fit for purpose.

3. Integration
“Most successful wholesale digital transformations are multi-vendor,” observes P2 Consulting’s Mr McIntosh. Ms Fennell of Muller Beukes Edvardsen agrees, emphasising that effective integration includes processes and people. “Digital transformation affects the whole value stream, so it’s important to consider the upstream and downstream impact of changing one particular process. If you leave a gap in systems integration, people will find a manual workaround and this will compromise the outcome,” she says, adding that an important part of transformation is removing previous processes.

4. Leadership
It is important to establish who is in charge. Digital transformation requires board-level support and effective communication. Harlex Consulting’s Mr McGrail emphasises the importance of top-down messaging driving engagement, but warns that “dislocation between the board and the rest of the organisation can undermine change because the people who are actually delivering the project don’t understand the business case”. MBE’s Ms Fennell adds: “People will either enable or disable change. On-site training support helps them adapt to new systems, but it is equally important to allow them time to see the benefits.”

5. Inconsistency
IDC predicts: “By 2017, 60 per cent of digital transformation initiatives will not be able to scale because of a lack of strategic architecture” or failure to back up customer experience with internal processes. This requires consistency across all channels. “It’s important to consider the entire chain of actions within the business that will impact the customer experience,” says Publicis.Sapient’s Mr Sutton. “You can have the best digital channel in the world, but if the execution does not enhance the customer experience, you will have failed to capitalise on the opportunity.”


CLAIMS...Stress testing goes live

24th February 2017

Ever had trouble claiming for a broken mirror or stolen laptop?  Don’t feel bad – insurance companies have had to deal with a lot worse!  Here are some of the most expensive insurance claims of all time…

The world banking crisis 2008
The insurance claims put in by businesses that were affected by the crisis ran into a staggering $21.5 trillion. The result is that we are still seeing higher business insurance premiums today, and a refusal by some insurance companies to provide cover in the event of a global market collapse.

On a financial level the attacks of 11 September 2001 cost the US billions as it waged a ‘War On Terror’, with around $40 billion paid out as a result of claims for property damage, life insurance and interruption to business.

Icelandic ash clouds
When the Icelandic volcano Eyjafjallajökull erupted in 2010 the skies across Europe and North America were suddenly empty of planes as fleets of aircraft were grounded for days due to safety concerns. The cost to the airline and hotel industry ran into around £3.4 billion of lost revenue, with many struggling to make successful claims through their insurance as the event was classified as an ‘Act of God’.

The single largest personal insurance claim
This accolade goes to the actor and comedian Rowan Atkinson (of Mr Bean fame), who, in 1997, put in a claim for $1,497,560 after he crashed his McLaren F1 sports car. The damage was so severe that it took McLaren a year to repair and rebuild the car.

Pet insurance
Many people have pet insurance to cover their furry friends in the event of illness and injury.  In 2007 this came in handy for the owners of a scientifically bred cat, who had to have renal surgery that cost approximately £13,750.


TEAMWORK...Bezos gives us a pizza his mind

17th February 2017

Once at an Amazon offsite retreat, managers suggested that employees should increase communication with each other. To their surprise, founder and CEO Jeff Bezos stood up and announced, “No, communication is terrible!”

This is in line with his two-pizza team rule: teams shouldn’t be larger than what two pizzas can feed.  When it comes to communication, this rule focuses on quality rather than quantity. Compare the interactions at a small dinner party with a larger gathering like a wedding. As group size grows, it becomes impossible to have meaningful conversations with every person, which is why people start clumping off into smaller clusters to chat.

For Bezos, small teams make it easier to communicate more effectively rather than more, to stay decentralised and moving fast, and encourage high autonomy and innovation.

The issue with larger teams isn’t quite the team size itself; it’s the number of links between people that is the problem, which may be expressed as: n(n-1)/2 (where n = number of people).
As group size increases, the links start to get unwieldy.

  • If you take a basic two-pizza team size of, say, 6. That’s 15 links between everyone.
  • Double that group for a team of 12. That shoots up to 66 links.
  • A small business of 50 people has an incredible 1225 links to manage.

What is the magic number? Bezos’s two-pizza rule works out to at most 6 or 7 non-ravenous people.   So, start thinking of splitting into subgroups when you approach double digits.

For more on the science behind the pizza rule, click here…for more pizza, click here.


NICKNAMES...they're tiny, they're toonie, they're all a little loonie

10th February 2017

Currencies around the world have some interesting nicknames - the dollar is a greenback (initially only the back of the note was printed in green) and a pound coin originally weighed one troy pound of sterling silver, giving the currency the name "pound sterling".  The New Zealand dollar is called the kiwi (for obvious reasons), and the new South African Rand notes, bearing the likeness of Nelson Mandela are affectionately dubbed “Randelas”.

The Canadians in particular have had some fun with their currency - they trade in loonies and toonies!

The Canadian one dollar coin, commonly called the loonie, is a gold-coloured one-dollar coin introduced in 1987. It bears images of a common loon, a well known bird in Canada.

The coin has become the symbol of the Canadian dollar: media often discuss the rate at which the loonie is trading against other currencies. The nickname loonie (huard in French) became so widely recognised that in 2006 the Royal Canadian Mint secured the rights to it.  When the Canadian two-dollar coin was introduced in 1996, it was in turn nicknamed the "toonie" (a portmanteau of "two" and "loonie").

There is also the relatively recent tradition of the “lucky loonie”, which entails Canadian ice hockey team players or supporters hiding a loonie in the ice in the hope that it will bring victory to their team.

So before you make any disparaging “Looney Tunes” remarks, first look at the size of the ice hockey players who take their lucky loonies very seriously!


HYPE...and the technology you love to hate

3rd February 2017

New technology launches always come with the obligatory hype.  Remember the introduction of the iPad?  We went from not knowing we needed them to not being able to live without them and now, for many people, they seem to have outlived their usefulness.

The American IT research and advisory firm, Gartner has actually branded that process as a graphical presentation and dubbed it the “hype cycle”, which represents the maturity, adoption and social application of specific technologies, and how they are potentially relevant to solving business problems and exploiting new opportunities.

An example of a hype cycle is found in Amara's law, coined by Roy Amara, and which states that:
We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run

Each Hype Cycle drills down into the five key phases of a technology's life cycle:


Technology Trigger: A potential technology breakthrough kicks things off. Early proof-of-concept stories and media interest trigger significant publicity. Often no usable products exist and commercial viability is unproven.

Peak of Inflated Expectations: Early publicity produces a number of success stories — often accompanied by scores of failures. Some companies take action; many do not.

Trough of Disillusionment: Interest wanes as experiments and implementations fail to deliver. Producers of the technology shake out or fail. Investments continue only if the surviving providers improve their products to the satisfaction of early adopters.

Slope of Enlightenment: More instances of how the technology can benefit the enterprise start to crystallise and become more widely understood. Second- and third-generation products appear from technology providers. More enterprises fund pilots; conservative companies remain cautious.

Plateau of Productivity: Mainstream adoption starts to take off. Criteria for assessing provider viability are more clearly defined. The technology's broad market applicability and relevance are clearly paying off.

Interesting…but this sounds a bit like another cycle we’ve been going through with technology for years: the Five Stages of Grief!


TRADITION...actuaries and the City

27th January 2017

Nothing – apart from the Queen, Big Ben and tikka masala, perhaps – is more quintessentially London-y than the quirks and foibles that survive as remnants of a history reaching back centuries.  Obscure and head-scratching traditions may be observed by the unsuspecting visitor throughout England (see gurning, straw bear and cheese rolling), but nothing quite matches the pomp and ceremony of the City of London itself.

Livery Companies are emblematic of the rich and idiosyncratic nature of the City.  Currently 110 in number, they comprise London's ancient and modern trade associations and guilds, with everything from card-makers to apothecaries to longbow-makers and, more recently, even actuaries, being represented.

London's livery companies (the term having originated to refer to special dress to denote status of belonging to a trade) play a significant part in City life, by providing charitable-giving and networking opportunities.  Liverymen (members) retain voting rights for the senior civic offices, such as the Lord Mayor, Sheriffs and City of London Corporation, its ancient municipal authority with extensive local government powers.

The “Worshipful Company of Actuaries”, as the livery company for the actuarially-inclined amongst us is known, was formed in 1979 and goes by the motto “Experience Foretells”, which, apart from the obvious link to actuarial work, reflects the unique combination of respect for the past and concerns for the future, on which the life of the City is based.

The Company is governed by the Court, which consists of the annually-elected Master (currently Sally Bridgeland, the first woman to hold the role), Senior and Junior Wardens, Past Masters and Assistants, and supported by a number of Committees.

The various events hosted throughout the year in fabulous guildhalls around the City present the uninitiated with strange rituals and customs which both bewilder and delight, such as the intriguingly-named Loving Cup ceremony – certainly one way to break the ice!

Membership is open to any Fellow or Associate of the Institute and Faculty of Actuaries, or similar international actuarial bodies.  So why not embrace the charm of London life and give it a go?  As they say, “When an actuary is tired of London, she is tired of life (assurance)”.


OFFICE CULTURE...let us eat cake

20th January 2017

As if we don’t have enough foes to deal with, the latest character to be vilified in the court of public opinion is none other than…the humble office cake!

 Office cake culture, which has blossomed into a firmly entrenched, almost daily way of life in many companies, has come under fire for its hazardous affect on our physical health, proving, once and for all, that nothing in this world is sacred.

 Ignoring the benefits of our daily (short)bread to our mental wellbeing, the Faculty of Dental Surgery at the Royal College of Surgeons (RCS) has warned that the growing trend in large offices to celebrate birthdays, holidays, exam passes and “just because” is contributing to poor oral health and the obesity epidemic.

 Tam Fry, from the National Obesity Forum, said of the biscuits, chocolates and cakes that perk up otherwise drab workdays that: “Such food is neither a treat nor a reward.

“You may not know who in the office is secretly dieting in which case they won’t appreciate your gesture: if you do know, you’re plainly malicious.

“If you want to give them anything, give them a smile, a hug or both!”

Other suggestions to combat the villainous Viennoiserie and diabolical donuts include:

  • Bringing nuts, fruit and cheese into work instead
  • Limiting cake days to one day a week
  • Bringing smaller sizes and lower quantities of treats
  • Faking an intolerance to avoid scorn from cake-eating colleagues
  • Taking a quick lap around the building to clear your head and resist the temptation

Celebratory celery stick, anyone?

equations is in the i of the beholder

13th January 2017

“Mathematical beauty” – the notion that some mathematicians may derive aesthetic pleasure from their work, and from mathematics in general – may seem like a bit of a stretch as a concept.  But if “Beauty is truth, truth beauty”, then it makes sense that mathematics, which is the is one of the only areas of knowledge that can objectively be described as "true" (because its theorems are derived from pure logic), should be the epitome of beauty.

And if a bevy of the world’s most desirable theorems held a beauty pageant, who would be the fairest of them all?

Euler’s identity, apparently, as decided in a poll conducted by The Mathematical Intelligencer in 1990.

Euler’s identity looks like this:


e is Euler's number, the base of natural logarithms,
i is the imaginary unit, which satisfies i squared = −1, and
π is pi, the ratio of the circumference of a circle to its diameter

In case it’s not obvious, the equation is considered beautiful because three of the basic arithmetic operations occur exactly once each: addition, multiplication, and exponentiation.  The identity also links five fundamental mathematical constants:

The number 0, the additive identity.
The number 1, the multiplicative identity.
The number π, which is ubiquitous in the geometry of Euclidean space and analytical mathematics (π = 3.141...).
The number e, the base of natural logarithms, which occurs widely in mathematical analysis (e = 2.718...).
The number i, the imaginary unit of the complex numbers, a field of numbers that contains the roots of all polynomials (that are not constants), and whose study leads to deeper insights into many areas of algebra and calculus.

Furthermore, the equation is given in the form of an expression set equal to zero, which is common practice in several areas of mathematics.

A study of the brains of sixteen mathematicians found that the "emotional brain" (specifically, the medial orbitofrontal cortex, which lights up for beautiful music, poetry, pictures, etc.) lit up more consistently for Euler's identity than for any other formula.

Stanford University mathematics professor Keith Devlin has said, "like a Shakespearean sonnet that captures the very essence of love, or a painting that brings out the beauty of the human form that is far more than just skin deep, Euler's equation reaches down into the very depths of existence".  It seems like beauty is more than skin deep after all!

automation square is human

6th January 2017

It’s 2017, the future is here and we have computers to do tasks that we are too slow, unreliable or lazy to do ourselves.  Over the last few months there seems to have been an increase in concerns around automation and what it means for our future job security.  But while these fears may be unfounded in some sectors and valid in others, a phenomenon known as the paradox of automation, where workers are denied the chance to practise their skills because computers do it all for them, has helped build a case against animation; advocating the use of our brains instead.

Driving on “autopilot”, for example, has made us lazy and dangerous drivers.  A small group of traffic planners around the world has been pushing against the usual strategy of giving drivers the clearest possible guidance as to what they should do and where they should go: traffic lights, bus lanes, cycle lanes, left- and right-filtering traffic signals, railings to confine pedestrians, and of course signs attached to every available surface, forbidding or permitting different manoeuvres.

Laweiplein in the Dutch town of Drachten was a typically “automated” junction, and accidents were common.  Frustrated by waiting in jams, drivers would sometimes try to beat the traffic lights by speeding across the junction – or they would be impatiently watching the lights, rather than watching for other road users.  With a shopping centre on one side of the junction and a theatre on the other, pedestrians often got in the way.

The late Dutch traffic engineer, Hans Monderman, the most famous of the group, decided to create the “squareabout”.  Instead of explicit efforts at control, he built a square with fountains, a small grassy roundabout in one corner, pinch points where cyclists and pedestrians might try to cross the flow of traffic, and very little signposting of any kind.  It looks much like a pedestrianisation scheme – except that the square has as many cars crossing it as ever, approaching from all directions.  Pedestrians and cyclists must cross the traffic as before, but now they have no traffic lights to protect them.  Locals think it is dangerous – but that’s the idea.

It is precisely because the squareabout feels so hazardous that it is safer.  Traffic glides through slowly but rarely stops moving for long.  The number of cars passing through the junction has risen, yet congestion has fallen.  And the squareabout is safer than the traffic-light crossroads that preceded it, with half as many accidents as before.  Drivers never quite know what will happen next, and as a result they drive slowly and on high alert.  And at the gentle speeds that have become the norm, drivers, cyclists and pedestrians have time to make eye contact and to read one another as human beings, rather than as threats or obstacles.   When showing visiting journalists the squareabout, Monderman’s would close his eyes and walk backwards into the traffic.  The cars would just flow around him without so much as a hoot.

In this squareabout, drivers are never given the opportunity to glaze over and switch to the automatic driving mode that can be so familiar. The chaos of the square forces them to pay attention, work things out for themselves and look out for each other – a lesson we should remember whenever computers threaten makes us feel inferior or obsolete.


FATHER CHRISTMAS...and the gift of mathematics

23rd December 2016

Christmas time is here again and that means that good old St Nick will have his work cut out for him.  But let’s just be realistic for a minute.  How many children would Father Christmas need to get to on Christmas Eve and would this be possible?

Philip Bump decided to quantify Father Christmas’ task, setting out assumptions, methodology and caveats to determine how many (Christian) children he would have to get to, racing west across the face of the globe to stay ahead of the sun.

He needed to figure out how many Christian children live in each country of the world.  The region being important because it would impact the feasibility of reaching them.  So, he would need the population broken down by age, religion and time zone in each country.

Thanks to the CIA, he could readily determine populations by age and religion, and, by combining the two measures, roughly approximate the number of Christians for any given age group. (For the purposes of the experiment, Bump assumed people 14-and-under receive presents from Santa).  Time zones were easily obtained via Wikipedia.

The equation was therefore: compare population of young people with density of Christianity and plot it on the globe.  From that, you've got total populations and the times at which Father Christmas should hit them.  Ignoring the mechanics of distance between houses, it seemed that the maths should have been easy.  It wasn’t.  All the complexities and oddities Bump encountered are described in his  article; but for those who prefer a bit of instant gratification, here’s the end result of his experiment:

At the time of calculation, there were just over 526,000,000 Christian kids under the age of 14 in the world who celebrate Christmas on 25 December.  In other words, Father Christmas had to deliver presents to almost 22 million children an hour, every hour, on the night before Christmas. That's about 365,000 a minute; 6,100 a second. Doable?  Well, that depends on the population distribution and his longitudinal starting point, nevermind dealing with countries with multiple time zones and different number of dark hours available in the different hemispheres...

You could read all about Bump’s experiment here…or you could stop being an actuary (just for a day), and enjoy your presents – however they were delivered.

Happy holidays from all at MBE – see you in 2017!


LONGEVITY...women (and children) last please

16th December 2016

Contrary to what insurance pricing legislation suggests, women do, in fact, live longer than men – a phenomenon that has been true for centuries and doesn’t seem to be changing.  But as male and female lifestyles converge (the backbreaking male labour of the past making way for the same sedentary jobs that women have), what other factors are at play to explain the stubbornness of the gender mortality gap?

The survival advantage of women is seen in every country, in every year, for which reliable records exist.  The difference in lifespan has even remained stable even throughout monumental shifts in society.  In 1800 in Sweden, for example, life expectancy was 33 years for women and 31 for men; today it is 83.5 years and 79.5 years, respectively.  In both cases, women live about 5% longer than men.

Factors such as smoking, drinking, and overeating may partly explain why the size of the gender gap varies so widely between countries.  In Russia, for example, men are likely to die 13 years earlier than women, partly because they drink and smoke more heavily.  But then female chimpanzees, gorillas, orangutans, and gibbons also consistently outlive the males of the group – a fact that can’t be ascribed to poor lifestyle choices.

Instead, it would seem like the answer lies in our evolution; and there are many plausible theories which could help explain this biological difference, from the benefits of having two X chromosomes to the “jogging female heart” hypothesis, to the simple fact that taller people (which men generally are), with more cells in their bodies, are more likely to develop harmful mutations and suffer worse wear and tear.

But perhaps the true reason lies in testosterone – the hormone that drives most other male characteristics.  A study of 19th century Korean court life shows that eunuchs lived for around 70 years – compared to an average of just 50 years among the other men in the court.  Even the kings – who were the most pampered people in the palace – did not come close.

Although not all studies of other types of eunuch have shown such pronounced differences, overall it seems that people (and animals) without testicles do live longer.  Sorry, guys.

Not only do women escape the risks of testosterone – they may also benefit from their own “elixir of youth” that helps heal some of the ravages of time due to the presence of the antioxidant hormone, oestrogen.

The reason for this may be a kind of evolutionary pay-off that gave both men and women the best chances of passing on their genes.  During mating, women would be more likely to go for alpha males, pumped up on testosterone.  But once the children are born, the men are more disposable; it matters more for the children that the mother’s body should be in good shape, rather than the father’s.

Now there’s some, um, ballsy water-cooler chat for you! Read more here.


FADS...slide into my office

9th December 2016

In an age where the form and function of the traditional office model is being questioned and reshaped, a number of fads, have come and gone, relegated to the “it seemed like a good idea at the time” archives.
So what are some of the trends that just didn’t make the grade?

1. Slides
Companies like Google, LEGO and Microsoft have all installed slides in some of their offices.  Sure, they look cool and provide a fun alternative to stairs for getting to a lower floor, but they can ruin your clothes and, after some initial excitement among staff, they generally quickly resort to old-fashioned staircases.

2. Treadmill desks
When sitting was hailed as the new smoking, some office furniture manufacturers came up with the treadmill desk, a modified treadmill base attached to a counter-level work surface.  To date, they haven’t really caught on.

3. Hot desking
Hot desking, the concept of not being assigned to a specific desk or computer, but rather being assigned to a different “hot desk” every day, would seem to fit right in with the “working anytime, anywhere” mentality that today’s employees seem to value.  But it turns out employees like having a desk in a familiar setting and with drawer space for storage, or even a computer, to call their own.

4. Internal grass
The trend for biophilia, or mimicking nature in office design, is gathering pace.  However, those attempting to reproduce the great outdoors in air-conditioned, hermetically sealed buildings should think again. Real lawns were a popular gimmick for a while, until people realised they couldn’t be kept alive, wilting into something brown and odorous. Synthetic astro turf doesn’t have the same appeal.

5. Exercise balls
When these big, fun, bouncy balls became popular in the gym, it was only a matter of time before their core-working, posture-enhancing benefits made their way into the office…as desk chairs.  While they might serve a purpose in pilates, they were incongruous in the office and their bold colour palette rarely went with carefully chosen decor.

So, perhaps these (and other) fads, haven’t quite taken off…we’d still like to try the slide though.


BENEFITS...give us this day our daily beer

2nd December 2016

The last few weeks have seen us travel back to Roman and medieval times to find out more about pension provision in the olde worlde.  Today’s instalment explores how feudal economies looked after their old…

In land-based feudal economies, monasteries were able to offer what was in effect an index-linked annuity, called a “corrody”.  This entitled beneficiaries to food (and, apparently just as important, ale) together with lodging over their remaining lifetimes in return for a lump sum at the outset.  Corrodies could offer basic rations or a more generous lifestyle.

In 1313 Gunvor Olavsdatter bought the luxury version from the bishop of Stavanger in Norway.  It provided not just her accommodation, but also the best-quality food and 2.7 litres of beer every day (and more at festivities).  Her ‘premium’ for these benefits was the bestowal of land “to a value of 120–130 cows” upon the cathedral.

In 1316 William de Schokerwych paid £60 for a corrody granted by the priory of Worcester in England, which included stabling for a horse, and meat and fish when they were served to the monks.  Although prices often fell as well as rising, the protection against inflation was particularly valuable since prices could spike up when harvests were poor, rising for example by a third in southern England in 1272 and 1291.

Wherever possible, older people continued to work until they became unfit or disabled. Artisans and merchants were generally better placed to do this than laborers.  This approach has echoes in modern times as well.  The obvious solution to ever rising life expectancy is to extend working lives, the more so since work is now so much less physically burdensome than in earlier times.

New annuity product idea: monthly pay cheque and daily beer…I think we have a winner!


MUNDANITY...even poets need a pension

25th November 2016

The second instalment in our examination of historical retirement provision looks at the middle ages – even Chaucer needed actuarial services!

 One of the first predecessors to the gold tables that actuaries of today know and love was the Roman jurist Ulpian’s life table, constructed in the early third century CE, which estimated life expectancies from birth to over 60.

 This table was not used for annuity functions, but rather to offer guidance on the fair division of tax burdens for heirs, legatees and tax collectors: the Roman tax authorities preferred to tax annual amounts rather than lump sums, which was apparently a less onerous procedure.

 A thousand years in western Europe medieval societies were forging new forms of pension provision, despite the lack of formal pension schemes (there has been a widespread “pensions culture” in Britain since about 1300). 

 One not so ordinary pensioner was the poet Geoffrey Chaucer, who lived between around 1343 and 1400 and was granted several pensions including a daily pitcher of wine (commuted into cash after a few years).

 Medieval pensions were funded by the church, which meant that clergymen naturally benefited, especially by the later middle ages.  In the diocese of Exeter, four pensions are recorded for parish priests between 1300 and 1420 but the number then increases sharply to 11 in the 1420s, 33 in the 1430s and then 16 in the 1440s.  In a classic non-separation of church and state, the state could also call upon the church’s resources.  Already by the 14th century the King’s clerks – the civil servants of the day – were retiring to provincial “benefices,” a term for an ecclesiastical income.

 Perhaps if people of the middle ages had taken Chaucer’s observation in The Canterbury Tales that “death is the end of every worldly pain” seriously, we would have no need for these pension provisions at all!


DB SCHEMES...when in Rome, retire like a soldier!

18th November 2016

How were pensioners looked after in the olden days?  Over the next few weeks on The Lighter Side we’ll look at how people retired at various points in history…

In the Roman empire, life expectancy was around 25 – but this was largely due to high infant and child mortality rate…so there were still quite a few people making it to normal retirement age (around 7% of the population in the first and second centuries were over 60).

Fast forward a thousand years, and this proportion was still more or less the same in medieval populations.  So these earlier civilizations also had to work out arrangements for looking after the old.  In ancient times, instead of current workers subsidising the retired (as in modern pensions arrangements), support was provided within families.  Familial obligation was taken so seriously that in Athens, in the fifth and fourth centuries BCE, children risked losing their citizenship if they did not support their parents.

This wasn’t the case in ancient Rome, but two millennia ago its first emperor, Augustus, pioneered the first state pension scheme financed by taxes.  Retiring legionaries who had served for 25 years received a generous lump sum worth 13 times their annual salary.  The scheme was financed through a new inheritance tax set at 5% of the value of an estate and a 1% auction tax.  Despite the (begrudgingly acquired) tax income, this scheme came close to bankrupting the state.

Does this sound a bit like defined benefit pension schemes from the not too distant past?  Well, Augustus' motivation was similar…employers offering pensions to long-serving workers in exchange for their loyalty.  He also launched this scheme to ensure that soldiers were loyal to Rome and not to their commanders (who had provided for their retirement until then).

Although the insurance industry, like Rome, wasn’t built in a day, it does seem (to use another cliché) that the more things change, the more they stay the same.


SECURITY...don't make your password a fail word

11th November 2016

If your mind and soul (and bank balance) are wrapped up in the internet, then your online passwords can be seen as the keys to your heart.  These days ‘password’ and ‘qwerty’ just won’t cut it to access your online accounts.  Unique and strong password creation and memorisation is a bona fide art and there are all kinds of tips and tricks to help you keep track of them.

Not too long ago, the conventional wisdom was never to write down passwords — but that was when most of us only had a few to remember. Some experts have since changed their minds. Says one: 'The probability of someone breaking into your house and stealing your written-down passwords is considerably more remote than the 1-in-3 to 1-in-4 probability that your computer will fall to a criminal’s malware'.

Password cracking software generally uses a huge dictionary of possibilities, which it tries one after another, so the key precaution is not to use an actual word as your password, which is why many sites require the use of numbers and capitals.

However, this method may be counterproductive, as, for these sites, would-be hackers could immediately eliminate all the words that are all lower case, those that contain no numbers, and those that contain fewer than the minimum number of characters; effectively making their job earlier.  The merit of these rules, though, is that they do force you to use a password which cannot be found simply by trawling through a standard dictionary.

Read some tips on how to create a password to remember here and remember the wise words of Clifford Stoll: “Treat your password like your toothbrush. Don't let anybody else use it, and get a new one every six months.”


CROSSWORDS...angry elements of speech are puzzles? (10)

4th November 2016

Carrots and peas, Romeo and Juliet, actuaries and puzzles…matches made in heaven!  Actuaries (well, mathematicians, but close enough) have been associated with puzzles for centuries – something about our competitive and dogged streak when it comes to problem-solving (or our cryptic nature in general) will not allow us to overlook the challenge of a juicy cryptic crossword clue…in fact, anyone who has studied history (or Keira Knightley films) will know that in the Second World War many of British military intelligence’s heroes, the mathematicians of Bletchley Park who broke the apparently unbreakable Enigma machine code, were crossword fanatics.

Cryptic crossword creation is both a science and an art.  There are guidelines around creating clues, for example, a good clue should contain:
1. A precise definition
2. A fair subsidiary indication
3. Nothing else

There are also well known tools and devices crossword fanatics use to crack clues, such as common abbreviations, indicators of anagrams and use of punctuation.

Some of the more ingenious clues we’ve come across include:

•Opposed to previous duck course (9)
(Answer: ANTIPASTO – Anti = opposed, past = previous, o = duck (0 in cricket); definition = course)

•Bank deposits say, key currency (5,6)
(Answer: LEGAL TENDER – LENDER (bank) deposits i.e. contains E.G. (say) ALT (key, the one on the computer keyboard); definition: currency)

•Risk acne eruption without this? (8)
(Answer: SKINCARE – RISK ACNE is an anagram for SKINCARE, which is also the definition of the clue)

Need some more procrastination?  Why not try your hand at an actuarial cryptic crossword (yes, they do exist!)?

Send in your correct answers to and the next coffee is on us!  Or, if the answers are proving elusive, email us anyway and we’ll provide some hints (don't worry, we won’t tell anyone!).

Actuarial Cryptic Crossword

(Created by Benjamin van Heerden (FASSA))



BIRTHDAYS...making proability theory a piece of cake

28th October 2016

The birthday paradox, also known as the birthday problem, states that in a random group of 23 people, there is about a 50 percent chance that two people have the same birthday.

This seems like a paradox to us – with only 22 other people in the room, finding for a 1 in 365 day (excluding 29 February birthdays) does not seem more likely than not to be possible.  But let’s dust off our Stats 101 brains and look at some probability theory…

Remember that in the scenario, there will be 23 people, each making comparisons with the 22 other people.  The total number of unique comparisons (or combinations) is thus 22 + 21 + 20 + … + 1 = 253.  So each group of 23 people involves 253 comparisons, or 253 chances for matching birthdays.
When comparing probabilities, it can be easier to look at the probability that people do not share a birthday.  The probability that a person does not have the same birthday as another person is 364 divided by 365 because there are 364 days that are not a person's birthday. This means that any two people have a 364/365, or 99.726027 percent, chance of not matching birthdays.

However, we are not looking at just one, but at 253 comparisons. Every one of the 253 combinations has the same odds, 99.726027 percent, of not being a match. If you multiply 99.726027 percent by itself 253 times, or calculate (364/365)253, you'll find there's a 49.952 percent chance that all 253 comparisons contain no matches. Consequently, the odds that there is a birthday match in those 253 comparisons is 1 – 49.952 percent = 50.048 percent, or just over half!

To find more about why this concept seems so unintuitive, read Understanding the Birthday Paradox.

filter bubble

ALGORITHMS...sorry to burst your (filter) bubble

21st October 2016

Have you ever been taken by surprise by the result of, say, a national referendum, because everyone you were exposed to on social media was planning to vote the other way?  You might have been trapped in a filter bubble.

A filter bubble is a result of a personalised search (most famously, Google’s Personalised Search results and Facebook’s news stream) in which a website algorithm selectively guesses what information a user would like to see based on information about them (such as location, past click behavior and search history). As a result, users become separated from information that disagrees with their viewpoints, effectively isolating them in their own cultural or ideological bubbles.

The term was coined by internet activist Eli Pariser who believes that these algorithms cause users to get less exposure to conflicting viewpoints and are isolated intellectually in their own informational bubble. Pariser related an example in which one user searched Google for "BP" and got investment news about British Petroleum while another searcher got information about the Deepwater Horizon oil spill.

A potential downside to filtered searching is that it "closes us off to new ideas, subjects, and important information" and "creates the impression that our narrow self-interest is all that exists", warns Pariser. It is potentially harmful to both individuals and society, in his view.  He says that "invisible algorithmic editing of the web" may limit our exposure to new information and narrow our outlook. According to Pariser, the detrimental effects of filter bubbles include harm to the general society in the sense that it has the possibility of "undermining civic discourse" and making people more vulnerable to "propaganda and manipulation".

A filter bubble has been described as exacerbating a phenomenon that has been called splinternet or cyberbalkanisation, which happens when the Internet becomes divided up into sub-groups of like-minded people who become insulated within their own online community and fail to get exposure.

On the other hand, some reports are sceptical about the extent to which personalised filtering is happening and whether such activity is beneficial or harmful. In fact, some studies show that consumers use the filter to expand their taste, not limit it.

With apologies to the Bard: bubble, bubble, toil and trouble, indeed!


EULER...going round in (crop) circles

14th October 2016

October is the month for all things creepy and there are few things creepier than crop circles…but did you know that many of them display complex mathematical characteristics?

In 2010 a crop circle based on the 'world's most beautiful maths theorem' has appeared in a rape seed field in Wiltshire.

It was suggested that the pattern had a connection to Leonhard Euler's theorem e^(i)pi+1=0 (which is thought to be one of the most beautiful theorems in mathematics), based on its binary appearance.

Researchers even said that it could have contained a hidden tune.  Historically, crop circles have been associated with diatonic scales (white notes on the piano).  These diatonic scale frequencies are encoded in each segment of the crop circle and can be played on the piano.

Another mathematical crop circle was the one carved out in a barley field, the Barbury Castle crop circle, which was a pictorial representation of the first ten digits of Pi. The image was an example of what is known as a fractal, or geometric pattern.

Our source for this story is a Daily Mail article…so you may want to cross reference before hauling out your UFO equipment for this one.


BALANCE...when IQ is not enough

7th October 2016

Traditionally, the image associated with “actuary” is one of a maths genius with less than perfect social skills.  But that is changing, especially as computers only become more powerful in their ability to do technical actuarial work – good communication is key to our profession (from exam stage to communicating to clients and board members, to winning new business).  Luckily for us, emotionally intelligent beings are made, not born, and mastering the following “soft skills” can go a long way to ensure that we look at other people’s shoes, instead of our own, when we speak to them:

Knowing how your emotions are affecting your performance; being able to make decisions based on your feelings; knowing your strengths and weaknesses and, as a result, having a high level of self-confidence.


Managing disruptive feelings, emotions, and impulses so that you can: focus on the jobs at hand; be flexible in handling change; be open to new ideas; be ready to act on opportunities.


Social awareness/empathy
Being able to put your own emotional preoccupations on hold in order to be aware of other people’s feelings, needs, perspectives, and concerns. This forms the basis of a number of competencies, enables you to help others to develop, and increases your ability to read political undercurrents.


Social skills
Being warm and friendly and thus able to persuade, build bonds, and collaborate.


And, when in doubt, throw in a corny actuarial joke to break awkward this one:
Question: What do actuaries do at parades? Answer: They waive their premiums.

The source of this article was a piece written for The Actuary magazine, available here.


COUNTING...(eenie, meenie, miney, mo)*3*5

30th September 2016

What number can you count to using your hands?  Most of us would probably say ten (for our ten fingers)…and that is how the decimal system came about.  But ancient Babylonians would argue that 60 was the logical counting base.  And not because they had 60 fingers…

The way the ancient Babylonians counted to 60 on their hands (and thus ended up using a sexagesimal system) was as follows: count three bones of each finger on one hand using the thumb on the same hand (start at the top of your little finger and count down the bones 1... 2... 3, then move on to the next finger 4... 5... 6... and so on). Having got to 12 you count this off as one '12' on the other hand and go back to the beginning. You can do this five times, with twelve bones per time and thus count to 60 on two hands without having to write anything down.

This Babylonian numbering system is the reason behind 60 seconds in a minute, 60 minutes in an hour, and 24 hours in a day. Also 12 inches in a foot, 12 months in a year, 360 degrees in a circle and any number of other imperial measurements. Babylonian advances in mathematics were probably facilitated by the fact that 60 has many divisors (1, 2, 3, 4, 5, 6, 10, 12, 15, 20, 30 and 60 - in fact, 60 is the smallest integer divisible by all integers from 1 to 6), Also, numbers which are multiples of 12 (such as 24, 60, and 144) are all also divisible by 2, 3, 4, and 6, whereas 10 is only divisible by 2 and 5 - so it's easier to count halves, quarters and thirds in a base 12 system.
So what does 111 represent in the Babylonian system?  3661 (60^2 + 60^1 + 60^0). 

Due to artefacts of their writing system surviving thousands of years, archaeologists have even found what appear to be school exercises in arithmetic and geometric problems  - we can’t help but feel for the children who had to learn their times tables to the power 60!


CHEMISTRY...and the pursuit of happiness

23rd September 2016

Feeling blue at work lately?  The solution to happiness may just come down two science – four chemicals which give us feelings of satisfaction in different ways:

Endorphins: “No pain”
Endorphins diminish our perception of pain and keep us going during work-outs, giving a “runner’s high”, and helping us to endure difficulties. Good for those late nights, 70+ hour weeks, and back-breaking middle seats.
Work example: 2am late night at the office, rushing to meet a deadline

Dopamine: “One More”
Dopamine motivates us to achieve incremental goals and rewards motivated behaviour. It makes us feel good when we check things off the “to do list” and is highly addictive.
Work example: Setting and achieving milestones

Serotonin: “Loyalty; allegiance”
Serotonin provides the feeling of significance, pride, status. It drives us to seek the recognition of others. Want to do it “for my mom, my boss, my husband.” It reinforces the sense of relationships with the group (allegiance).  It creates a sense of organisational cohesion.
Work example: making your boss proud

Oxytocin: “Intimacy and Safety”
Oxytocin creates intimacy and trust; the feeling of safety and that someone will protect you. Moms, babies, lovers feel this when they are protected and loved.
Work example: Team dinners and one-on-ones with your manager

It has been argued that these chemicals have wired us to be driven, organised, relationally-motivated creatures.  We succeed because we understand the benefits of co-operation and teamwork.  Feeling better now?



16th September 2016

Computers have slowly started to encroach on activities we previously believed only the human brain could handle. IBM’s Deep Blue supercomputer beat Grand Master Garry Kasparov at chess in 1997, and in 2011 IBM’s Watson beat former human winners at the quiz game Jeopardy. But the ancient board game Go has long been one of the major goals of artificial intelligence research. It’s understood to be one of the most difficult games for computers to handle due to the sheer number of possible moves a player can make at any given point. But earlier this year, DeepMind an artificial intelligence system created by Google beat a professional Go player at the game.

Why is this a big deal?  While computers “solved” games like draughts years ago (i.e. each possible outcome of the game has been recorded), chess has not yet been solved.  And Go is much more complex than chess – the game possesses more possibilities than the total number of atoms in the universe!   There are over five times the number of spaces on a Go board than on a chess board—361 vs. 64. The number of possible Go moves is around 150–250 per turn (in chess, the average number of moves is 37). Because an exhaustive computer program for Go must calculate and compare every possible legal move in each player turn, its ability to calculate the best plays is sharply reduced when there are a large number of possible moves. Most computer game algorithms, such as those for chess, compute several moves in advance. Given an average of 200 available moves through most of the game, for a computer to calculate its next move by exhaustively anticipating the next four moves of each possible play (two of its own and two of its opponent's), it would have to consider more than 320 billion (3.2×1011) possible combinations. To exhaustively calculate the next eight moves, would require computing 512 quintillion (5.12×1020) possible combinations. The most powerful supercomputer in the world would require 4 hours to assess all possible combinations of the next eight moves in order to make a single play.

So how did Google’s AI system come out on top?  Instead of relying on “brute force”, DeepMind used a system modelled on the human brain – building two neural networks to enable the programme to choose moves that “felt right”.  Seems like the next level of Artificial Intelligence has just been given the Go-ahead!

Read more about DeepMind here.


INSURERS...The phoenix from London's ashes

9th September 2016

London recently commemorated the 350th anniversary of the Great Fire of London, which started in a baker’s shop in Pudding Lane, quickly spread, and blazed for five days, causing untold damage to the city.  But, what rose like a phoenix from the ashes of the Great Fire was the world’s first insurance company!

One of the laws passed in the aftermath of the great fire allowed for the incorporation of an organisation to indemnify for losses due to fire.  In the year following the fire, 1667, the first actual insurance company, known as "The Insurance Office", was formed, located in a small office behind London's Royal Exchange.

To protect the buildings it was insuring, The Insurance Office formed actual fire-fighting teams. They were issued equipment and identifying badges. Their job was solely to put out fires in the buildings they insured.  Other insurance companies followed, with names like the Friendly Society and the Hand-in-Hand, and they also employed their own fire departments.

These company-owned brigades were specifically employed by their respective insurance companies.  When a fire occurred, all the nearby fire brigades would rush to the fire.  If the building wasn’t insured by their company, they'd either leave or, more likely, stay to watch the show.

The various insurance companies realised that they needed a quick and easy way for these brigades to be able to identify the houses and buildings that their employers insured.  And so they began issuing tin signs, called "firemarks," to their policyholders, which would be mounted under the eaves in the front of their houses.

The whole idea of insurer-owned fire departments wasn’t the most efficient or effect method of fire prevention.  The solution, of course, was to have municipal―not private―fire departments.  A deal was worked out, and all the insurance companies donated their equipment to the city. The city hired the firefighters, whose job was to fight fire, whether the building was insured or not.

That didn't eliminate the need for insurance, nor did it eliminate the need for firemarks. Given the choice of buildings to save, the firefighters would always attempt to save an insured building before an uninsured one.  It was customary for insurance companies to pay for ale at the local pub for any firefighters who attempted to save their insured property and to provide bonuses for those who were successful at it.

So, what happened to The Insurance Office? It eventually went out of business. The oldest documented insurance company today dates back to 1710. Originally known as the Sun Fire Office, it is now called Royal & Sun Alliance – or RSA.


DESIGN...Office space in the space age

2nd September 2016

These days we take for granted the familiar open-plan office layout in which we spend the better part of our waking hours.  But modern office design is the result of an evolution: what started out, in the early 20th century, as a design exercise in extracting maximum efficiency from an organisation and its staff has now become a much more cultured process – and the latest trend (to which many companies have not yet caught on) is to incorporate natural elements in office design.

So, how did we end up getting back to nature? The Human Spaces Report summarises some highlights from a century of workspace evolution…

1900s: steeled for a revolution
This was a time of offices like production lines, but it was the humble steel girder that was behind what we know as the modern open plan. The material allowed for much bigger internal spaces to be opened up.

1960s: Bürolandschaft and the dawn of office landscapes
The trend in this decade was to get away from topdown power to a more socially democratic layout, encouraging interaction and more human behaviour. Enter Bürolandschaft, a German concept translated as ‘office-landscape’.  It used organic groupings of desks and plants as partitions, in an effort to move away from “scientific management”. Many of the original plans resembled cell structures under a microscope, something which wasn’t necessarily accidental.

1980s: Into the box
Whilst open plan, organic spaces had emerged by the 1960s, many organisations eventually reacted to this by looking to gain back a degree of privacy on the office floor. The cubicle was implemented across many businesses – a way to stay open but also to have some personal space. It became widespread, particularly in the US, although now is increasingly looked on as an anachronism which provides neither open space nor privacy.

2000s: Coffee shops and fun
With the new millennium came a realisation that, perhaps, nobody needs to be in the office at all. The rise of coffee shops and wireless technology were just two of the ways in which employees felt freed from their cubicles, with over 95% of UK employers offering flexible working. The reaction inside the office was to make things more fun, appeal to our non-work selves and “gamify” the environment to create work and leisure time in one space. And so the stereotypes of creative companies filled with pinball machines, beanbags and pool tables were introduced.

2010s: Biophilia and collaboration
Employers and their staff realised that there’s more to well-designed offices than a games room. The most modern workplaces are high concept, encouraging a sense of community, collective problem solving and well-being. And it’s biophilic design (the idea of incorporating nature into the built environment) that can complement all of these ideas – not just because nature has an impact on our health and performance, but it encourages a ‘whole person’ view of people at work. Increasingly, workplaces are being designed with nature in mind. From some of the most impressive vertical gardens in Singapore to the green campuses at leading companies like Google and Apple, the benefits have been embraced across the working world.

So, dust off that office pot plant, connect with nature, and consider yourself on trend.

Error err(or message) is human

26th August 2016

“IS Helpdesk? Hi, my computer isn’t working.”
“Is it plugged in?”
“Of course it is, I…oh.  Nevermind.”

It happens to the best of us; and there is a special place reserved in the IT world’s cursing vocabulary for those of us who blame technology for our mistakes.  It’s called User Error.

A user error is an error made by the human user of a complex system, usually a computer system, in interacting with it. An example of this is a user mistaking their CD-ROM tray for a cupholder, or a user looking for the "any key". However, any variety of stupidity or ignorance-induced problems can be described as user errors.

There are a number of derogatory (and humorous) phrases used as slang in technical circles which imply a lack of computer savvy, asserting that problems arising when using a device are the fault of the user. Critics of the term argue that the problems are caused instead by a device that doesn't take into account human limitations and is thus designed in a way that induces errors.

Either way, we thought it would be entertaining to share some of the more colourful ones today (who knows when they may come in handy!):

  • PEBKAC: Problem Exists Between Keyboard And Chair

  • POBCAK: Problem Occurs Between Chair And Keyboard

  • PICNIC: Problem in Chair; Not in Computer

  • EBKAC: Error between keyboard and chair

  • ID-10T error: idiot error

  • Some support technicians refer to it as "Biological Interface error"

  • The networking administrators' version is referring to the cause of a problem as a "layer 8 issue" (where layer 8 is the user layer on top of the OSI model of computer networking)

  • The computing jargon refers to "wetware bugs" as the user is considered part of the system, in a hardware/software/wetware layering

  • "(It's a) carbon based error", indicates a user problem (as humans are a carbon-based life-form), as opposed to a silicon one

So if you are planning a PICNIC this weekend, don't be an ID-10T and forget to bring the (POB)CAKe.


TRENDS...the race against time

19th August 2016

They say life moves pretty fast…if you don’t stop and look around once in a while, you could miss it.  And that’s more true than ever.  In 2016, everything is faster than before: computers, cars, and even people.

Usain Bolt's gold medal sprint in 2012 came in at 9.63 seconds, beating his own time to make him faster than every Olympic medallist since 1896.  His best dash, at 9.58 seconds, is the World Record - making him the fastest person ever timed. All eyes were on his performance in the Rio Olympic Games, where he made history as the three-time gold medal holder.

But are Olympic runners getting faster with time, or is Usain Bolt just a superhuman determined to beat record upon record?

Looking at trends in men’s and women’s sprinting times, athletes do seem to be generally faster now.

There are a number of possible reasons for this: athletes have enjoyed a century of improvements in nutrition, fitness, equipment, footwear and track surfaces.  Natural influences of how and where the athlete is born have also proven to be important.  Technology has also allowed athletes to train more effectively, and helped their trainers obtain more data on their personal biology and genetics.

This has allowed them to trim fractions of seconds from their times, helping to drive averages and world records further down.
David Epstein, author of The Sports Gene, has previously said:

"Consider that Usain Bolt started by propelling himself out of blocks down a specially fabricated carpet designed to allow him to travel as fast as humanly possible. Jesse Owens, on the other hand, ran on cinders, the ash from burnt wood, and that soft surface stole far more energy from his legs as he ran."

"Rather than blocks, Jesse Owens had a gardening trowel that he had to use to dig holes in the cinders to start from. Biomechanical analysis of the speed of Owens’ joints shows that had been running on the same surface as Bolt, he wouldn’t have been 14 feet behind, he would have been within one stride."

A trend is not a trend until it has a graph; and the one below shows the number of seconds it took the gold medal winner to run 100 metres at each year the Olympic Games have been held; i.e. the race against time:


EXPERIMENTS...the lean mean bean machine

12th August 2016

Stats 101 taught us that the normal distribution can be used to approximate the binomial distribution.  You too can investigate this hypothesis with the use of a simple piece of apparatus called the Galton board (named after the English scientist Sir Francis Galton), also known as a quincunx or bean machine.

The bean machine consists of a vertical board with interleaved rows of pins. Balls are dropped from the top, and bounce either left (with some probability p) or right (with probability q = 1 – p) as they hit the pins. Eventually, they are collected into one-ball-wide bins at the bottom.

For symmetrically placed nails, balls will bounce left or right with equal probability, so p=q=1/2. If the rows are numbered from 0 to N-1, the path of each falling ball is a Bernoulli trial consisting of N steps. Each ball crosses the bottom row hitting the nth peg from the left (where 0<=n<=N-1) iff it has taken exactly n right turns, which occurs with probability

If the number of balls is sufficiently large, then, according to the weak law of large numbers, the height of ball columns accumulated in the bins will eventually approximate a bell curve.

Want to see the experiment in action but not quite ready to invest in your own bean machine?  Large-scale working models of this device can be seen in the Mathematica: A World of Numbers... and Beyond exhibits permanently on view at the Boston Museum of Science or the New York Hall of Science...or just play some good old fashioned pinball for a close (for want of a better word) approximation to the experience.


CHAOS...and the maths of butterflies

5th August 2016

Every heard of the Butterfly Effect?  No, not the Ashton Kutcher movie.  It’s the idea that an event as seemingly insignificant as the flap of a butterfly’s wings can change the course of history.

The term was in fact coined by the American mathematician, Edward Lorenz.  He was working in the field of meteorology and he realised that small changes in initial conditions in the weather could lead to vastly different outcomes a few days or weeks later.  Just because the weather conditions looked the same on two days, it wouldn’t mean that the weather could be predicted a few days later.  A very slight difference between the two days would lead to vastly different outcomes later on. This led to Lorenz using a metaphor of a butterfly flapping its wings causing a hurricane a few weeks later on the other side of the world.

Up to this point mathematicians and scientists had been used to discovering equations which exactly described the physical world, allowing it to be predicted exactly.  For example the swing of a pendulum could be predicted so precisely that it could be used in clocks.   Mathematicians expected that all systems would be the same, and that we only needed to discover the right equations in order for things like the weather to be predicted exactly.

What Lorenz showed was that in fact some systems are what we now call chaotic. This means that very small changes to the starting conditions will produce widely different results.  The weather is the most famous example of a chaotic system, however chaos crops up all over the place and can be found in areas as diverse as the human body and the stock market.



ASTRONOMY...and its link to actuarial science

29th July 2016

There’s only one degree of separation between the world’s most famous comet and actuarial science! Edmund Halley, the mathematician whose namesake was given to Halley’s Comet, developed the first mortality table based on sound demographic data in 1693. This table, along with Halley’s formula to calculate the probability of life expectancy, then formed the basis of the actuarial profession.

Halley obtained demographic data for Breslau, Poland, where detailed records of births, deaths, and the ages of death were kept (ages of deceased people were not recorded in London until the 18th century).  Caspar Neumann, an important German minister in Breslau, sent some demographic records to Gottfried Leibniz, who in turn sent them to the Royal Society in London.

Halley analysed Newmann’s data and published the analysis in the Philosophical Transactions, of which he was editor.

His second contribution to actuarial science (1705) concerned compound interest. He derived formulae for approximating the annual percentage rate of interest implicit in financial transactions and annuities.

Even though actuarial science was not his main area of expertise, he did use data and assumptions to predict that a certain comet would return in 1758 (he observed that it came around every 75 years).  When it turned out that he was correct, the comet was posthumously named in his honour.

So that explains why actuaries are always reaching for the stars!


fractal onions, they have layers

22nd July 2016

A fractal is a geometric construction that is self-similar at different scales.  In other words, a fractal shape will look almost, or even exactly, the same no matter what size it is viewed at.  If you perform a Google Image search for fractals, you will see examples in art, nature, even in vegetables.

It remains, however, an unintuitive concept.  But let us look at a famous example of a fractal: the Sierpinski Triangle.

There are various ways to construct the Sierpinski Triangle.  The first step in the geometric construction, for example, involves splitting a triangle up into four other triangles and removing the middle one.  Then split each sub-triangle into four more triangles and remove each of the middle ones, etc.

The area of a Sierpinski triangle is zero because the area remaining after each iteration is clearly 3/4 of the area from the previous iteration, and an infinite number of iterations results in zero!

When we look at the finished Sierpinski Triangle, we can zoom in on any of these three sub-triangles, and it will look exactly like the entire Sierpinski Triangle itself.  In fact, we can zoom in to any depth we would like, and always find an exact replica of the Sierpinski Triangle.

What is the significance of fractals? They have numerous implications in mathematics and topography, as well as in computer graphics applications.  But mostly they serve as a conversation starter at cocktail parties!


ice cream a sweet tooth made a car company more lean

15th July 2016

This week’s story is a well-known tale about customer service and how logical thinking can explain the relationship of things which may seem totally unrelated.

The story goes that a complaint was received by the Pontiac Division of General Motors. The customer described how every night after dinner the family would decide what kind of ice cream to have for dessert.  He would then drive in his new car to the ice cream shop to buy the chosen flavor. Every time he bought the vanilla flavor and started back home, the car wouldn’t start. If he bought any other flavor, the car started up completely fine. After many such instances, he concluded, of course, that the car was allergic to vanilla ice cream.

After several complaints to the car company, the Pontiac President decided to send an engineer to check it out. For a statistically significant number of nights, the engineer joined the man on his drive to the ice cream shop. Sure enough, when they bought vanilla ice cream the car wouldn’t start, but for any other flavor the car was fine.

Being a logical man, the engineer refused to believe that this man’s car was allergic to vanilla ice cream. He continued his visits and jotted down all sorts of data: time of day, type of fuel used, time to drive back and forth, etc.

He observed that the man took less time to buy vanilla than any other flavor. Why? Because of the layout of the shop. The proprietor had set up a separate counter near the door to serve only those customers ordering vanilla, as it was the most popular flavour.  All the other flavors were served at a larger counter near the back. Also, since the store owner was understaffed, customers wanting flavors other than the vanilla flavor had to wait for longer times. Those buying vanilla were in and out in a minute or two.

So it turned out that time, not the car, was the problem!  Now, the question for the engineer was why the car wouldn’t start when it took less time.

The answer he came up with was: “VAPOUR LOCK”. Due to ambient warm temperatures and humidity, a vapour lock formed in the new car’s carburetor when the engine was turned off. This vapour lock had enough time to dissipate if the man ordered any flavor other than vanilla. But if he ordered vanilla, he was in and out of the shop so fast that the vapour lock hadn’t had time to clear, and thus the car wouldn’t start. This phenomenon of vapour lock happens under a combination of new car, thin oil, tight engine fits and low torque starters. However, after sufficient use, say, 1000 miles, this problem disappears.

Now, if you have a sweet tooth, this is definitely an experiment you should try at home!



ENTREPRENEURS...coining the term, so to speak

8th July 2016

Have you ever wondered where the term “entrepreneur” comes from?  Neither have we, but the internet offered and we didn’t say no.

If you have ever given the question some thought, you might think the “entrepreneur” would have featured in Adam Smith’s free market masterpiece, The Wealth of Nations.  But this is not the case; the term was actually coined by one of Smith’s admirers, economist Jean-Baptiste Say.  Entrepreneur is a French word, usually translated as “adventurer”.  Say studied Smith's book and, while agreeing on all points, found that the omission of the enterprising businessperson was a serious flaw.

Say wrote that it was entrepreneurs who sought out inefficient uses of resources and capital and moved them into more productive, higher yield areas.  Entrepreneurs seek opportunities for profit and, in the process, create new markets and fresh opportunities.  By constantly disrupting the balance of competition, entrepreneurs prevent monopolies from forming and create a wide diversity of products that keep consumers consuming and producers producing.  In return for taking these risks, successful entrepreneurs like Bill Gates and Henry Ford reap fortunes far beyond those of normal agents in the economy.

Say himself, as a cotton manufacturer, was an entrepreneur.  When Thomas Jefferson read his work, he tried to convince the author to come and teach in his new nation.  Although Say never stepped foot on US soil, his entrepreneurial outlook was largely influential in the US at the time of the industrial revolution.
And that’s all we have to Say about that.



WEATHER a potential gold mine entered the deep freeze

1st July 2016

Weather derivatives are financial instruments that can be used to reduce risk associated with adverse or unexpected weather conditions.  These exotic instruments have been around for the last 20 years, and allow investors to hedge against damage caused by rain, extreme temperatures or snowfall…

But by 2013, the market in exchange traded snowfall derivatives in particular had all but ground to a halt.  What happened?

In theory, the market for snow-related weather derivatives should be huge.  Snowstorms affect a lot of businesses, and you often hear about significant financial damage caused by blizzards.  Typically, the contracts are priced based on the expected inches of snow in a particular time period in a given city.  If accumulation is greater than the set amount, the seller of the derivative has to pay out.  But if the snowfall is less than that figure, the contract will expire worthless.

So why the lack of interest?  Partly due to the lack of snow in recent years – companies generally want to protect themselves against too much snow rather than too little (large ski resorts never took an interest, perhaps because they pre-sell season tickets).

Also, Wall Street made a killing in the winter of 2011-12, which saw a record lack of snow across the US.  Since then, buyers of the contracts, who lost money on the insurance, have failed to come back.

In general, the markets for more esoteric derivatives have dried up since the financial crisis.  And, given the effects of climate change, the number of people expecting record snowfalls is rapidly shrinking.

And that’s how a potential gold mine entered the deep freeze.


yellow card

FOOTBALL...vive la France!

24th June 2016

Europe is once again gripped by football fever and Paris-based actuarial consultancy, Actuaris, has released an algorithm to determine the ranking of the teams after the preliminary rounds.

Their analysis involved the simulation of millions of possible scenarios and the (totally unbiased, of course) results placed France as the favourite to win the tournament (in 24% of scenarios), with Germany in at a close second at 22%.

Rounding up the top five are Spain, England and Belgium, followed by Italy, Portugal and Poland. Based on this data, the final will most probably be between France and Spain.

Chief executive Pierre Arnal said: “We know that the future winner and all the results of the matches have been simulated; only the probabilities of achieving these remain uncertain: it is called the glorious uncertainty of sport."

Bookmakers are predicting almost an identical outcome, although many are judging Croatia ahead of Poland.



TIGER's a jungle out there

10th June 2016

Did you know that Thailand is referred to as a Tiger Cub Economy?  No, not because of the escapades of its notorious Tiger Temple

Thailand, as well as Indonesia, Malaysia and the Philippines are all referred to as the Tiger Cub Economies.  The name was inspired by the original Tiger Economies of South Korea, Taiwan, Hong Kong and Singapore.  Tigers are important in Asian symbolism and these countries underwent rapid economic growth, accompanied by an increase in the standard of living, between the late 1980s and early 1990s, before experiencing a financial crisis in 1997 and 1998.

Tiger Cub Economies follow the same export-driven model of economic development pursued by the Four Asian Tigers.  Young tigers are referred to as "cubs", the implication being that the four newly industrialized countries which make up the Tiger Cub Economies are rising Tigers.

The Asian Tigers also inspired other economies later on; the Anatolian Tigers (certain Turkish cities) in the 1980s, the Gulf Tiger (Dubai) in the 1990s, the Celtic Tiger (Republic of Ireland) in 1995-2000, the Baltic tiger (Baltic states) in 2000-2007, and the Tatra Tiger (Slovakia) in 2002-2007.

For emerging economies in Africa, the term lion economy is used as an analogy.  Countries considered to be "Lion Economies" are South Africa, Morocco, Algeria, Botswana, Egypt, Mauritius and Tunisia.

The term "wolf economy" is used to describe Mongolia's rapidly growing economy.

On the topic of tigers, here is a bonus piece of trivia: did you know that the stock symbol for the Asia Tigers Fund, Inc. is GRR?



RUBIK'S CUBES...the surprising bestseller

3rd June 2016

Some products sell well when first introduced. Many more fail miserably. Very few of them sell so well that they fundamentally impact American culture.  24/7 Wall St. compiled a list of ten products that did just that.

24/7 Wall St. reviewed product categories that generate attention from many groups and command significant and frequently long-lasting loyalty. They then identified individual products that had the highest sales in their category. Toys, consumer electronics, books and movies can be passing interests. However, the most successful of these are the best-selling products of all time.

Some of the characteristics that these products had in common included: being innovative in their respective categories, being franchises and reaching a wide demographic.

The Best-Selling Products of All Time are:
1. Rubik’s Cube
2. iPhone
3. The Harry Potter series
4. Michael Jackson’s Thriller album
5. Mario Brothers franchise
6. iPad
7. Star Wars movie franchise
8. Toyota Corolla
9. Lipitor (a drug that lowers cholesterol)
10. PlayStation

Read more on the study here.



ARBITRAGE...the daddy of all insurance blunders

27th May 2016

In February 2015 the story broke of Max-Hervé George, the 25 year old who could one day own Aviva France.

Eighteen years before, Max-Hervé’s father took out life insurance policies for the whole family from L’Abeille Vie (which would later become part of Aviva) known as “Fixed Price Arbitrage Life Insurance Contracts”.  The terms of these contracts allowed clients to switch funds at the previous week’s published prices any time before the next price was published, even if markets moved in the meantime.  Is the stock market up this week? Just call your broker to buy it at last week’s price and pocket the difference.

This offer of hindsight investment seems ridiculous now, when information is instant and easily accessible, but thirty years ago prices for funds were published infrequently.  Trading involved calling your broker, visiting them in person, or maybe sending a fax. It could take days for the trade to be processed, during which time the market could move again.

But each week the George family would switch their money into the best fund, and Max-Hervé continues to do so, with the result being, due to compound interest and the ability to add new capital to the fund at will, that the amount due Max-Hervé may very quickly outstrip the total net assets of Aviva France…merci papa!

Read more on the story here.



BUDGETING...a shock to the system

20th May 2016

There’s a new addition to the Internet of Things (IoT), the network of physical objects—devices, vehicles, buildings and other items—embedded with electronics, software, sensors, and network connectivity that enables these objects to collect and exchange data.

A British technology firm, Intelligent Environments, has developed the world’s first Internet of Things bank account, which enables users to log into their bank and securely connect a range of smart devices.  One of these smart devices automatically detects overspending, then gives users an electric shock.  Another turns their heating down to save hundreds on heating bills. With a third of millennials too scared to check their bank account, this innovation may be an answer to budgeting woes.

The IoT Pavlok integration works in four easy steps. First, consumers log into their credit card or bank account. Second, they connect their Pavlok device and set a spending limit.  Third, when users near their self-imposed spending limit, their phone will display a notification. Finally, if users go over their limit, Pavlok will deliver an electric shock to their wrist.

If Pavolok seems a little too…shocking, the bank account also works with other smart devices, such as Google’s Nest Thermostat.  If a user’s account balance drops below their self-imposed spending limit, the bank will automatically turn the Nest Thermostat down to a user-defined temperature.  According to the Energy Saving Trust, turning your thermostat down by just three degrees will save £255 per year.

A shock to the wrist may sound a little extreme, but, as the MD of Intelligent Environments, David Webber, said: “They think it’s much better to get a little shock now, instead of a nasty one later.”



MARKOV CHAINS...a Monopoly on statistics

13th May 2016

Before we learned the ins and outs of microeconomics, the word “Monopoly” conjured images of fun, cute tokens and quality family time for some…and power struggles, tears and colourful bank notes, flung across the room in frustration, for others.

Whatever Monopoly means to you, you can use your statistical knowledge to turn the odds of this enduring board game in your favour.  Walter Hickey of The Business Insider did the maths to come up with some key strategies that you can use to crush the dreams and aspirations of your friends and loved ones:
1. Buy properties and blocks that the Chance cards send you to (these have an above average chance of being landed on)
2. Buy up properties close to Jail – it’s the space that everyone is most likely to end their turn on
3. Do the maths to figure out the most commonly landed spaces and buy them (in the American version, it’s Illinois Ave, New York Ave and B&O Railroad)
4. Your opponents will probably move seven spaces – when planning construction, keep this in mind to crush them with crippling rent
5. Build three houses at once to accelerate your return on investment

And you thought all those years of studying Markov chains wouldn’t have any practical value!

Click here to read the full article.



FOOTBALL...putting the 'odd' in odds

6th May 2016

Even the least ardent sports fans would not have been able to escape the fact that, oddly, Leicester City has won the Premier League for 2016.  On the first day of the season, Ladbrokes were offering odds of 5000/1 on Leicester to win.  You don’t have to be a football expert (or even an actuary!) to appreciate the unlikelihood of what ended up happening, but, just to put it into perspective, here is a list of things that were considered more likely to happen at that time:

  • Simon Cowell becoming Prime Minister – 500/1

  • Piers Morgan becoming Arsenal manager - 2500/1

  • The Queen releasing the Christmas number one - 1000/1

  • Loch Ness monster being discovered - 500/1

  • Triplets for Kate and William - 1000/1

  • Kim Kardashian becoming US president - 2000/1

  • Elvis being alive – 2000/1

  • Andy Murray naming his first born Novak – 500/1

  • Hugh Hefner admitting he's a virgin – 1000/1

  • Alien life discovered before 2017 – 1000/1

Bookmakers are now looking at paying out a total of £25m, with the biggest winnings reported to be a whopping £100,000.  The pay-outs break the record for the biggest loss in British sporting history, and equate to nearly half of what Leicester’s entire squad this season cost the club – a reasonable £54.4m compared to the hundreds of millions spent by the likes of Manchester United, Chelsea, Manchester City and Arsenal.  So what should we bet on next?  We may be a risk averse bunch, but, as Tom Hanks discovered, high risks can win you high returns!

Whatever the origins of the upcoming day off, we hope it’s a fun, relaxing and sunny one!



WORK... the origins of May Day

29th April 2016

This coming Monday we will all be enjoying the early May bank holiday, but what are the origins of this holiday?

Official UK bank holidays – days on which banks would be closed and thus no trading could take place – began in 1871, when they were first recognised in an Act of Parliament authored by Sir John Lubbock. He was a banker who, it is said, was so keen on cricket he chose dates when village matches were played in his home county.  In truth, "St Lubbock's Days", as they were briefly known, were all associated with important religious festivals and agricultural holidays.

May Day, however, only became an official bank holiday in 1971, but its roots as a holiday stretch back to pre-Christian pagan festivals, and the Gaelic Beltane. The familiar rituals of dancing around the Maypole and the crowning of the May Queen made it a popular seasonal celebration in medieval England.

May Day is associated with spring and fertility, the sowing of the seeds - rumour has it that Mayfair in London is named after a particularly debauched and raucous festival held during the 18th century.

The first of May is also celebrated internationally as International Workers' Rights day, which some think has marked it out as a political target.  In 2000 serious rioting broke out during the ‘May Day riots’, where masked ‘anti-capitalist’ demonstrators ransacked a McDonald’s and destroyed a number of buildings in the City of London.

Whatever the origins of the upcoming day off, we hope it’s a fun, relaxing and sunny one!



COMPUTERS...can't live with them...

22nd April 2016

Don’t think of a white bear. 

A white bear is probably all you can think of now, due to Ironic Process Theory.  Similarly, if we say: “Do not type “rm –rf“ into your operating system”, you may well be tempted to do the opposite.  But don’t. 

With this line of code you could wipe out the entire contents of your computer.  In what turned out to be a hoax (but has been known to happen before), the owner of a website hosting provider wrote on a forum called Server Fault that he had accidentally deleted the data of his company, its clients, and all his backups, essentially destroying his company with a single command.

rm –rf is a piece of code that will delete everything it is told to.  The “rm” tells the computer to remove, the “r” deletes everything within a given director, and the “f” stands for force, telling the computer to ignore the usual warnings that come with deleting files.

Reminds one of the standard mantra for computer inflexibility: "I really hate this darn machine, I wish that they would sell it. It never does what I want, but only what I tell it.”

Read the full story behind the hoax here.


PERCEPTION... gorillas that we miss

15th April 2016

As that dress proved to us in 2015, we all perceive the world differently – reality itself seems to be in the eye of the beholder.  Sometimes blindness has nothing to do with vision defects or deficits, but can manifest as a psychological lack of attention, known as inattentional blindness.

Numerous experiments have demonstrated that inattentional blindness has an effect on people’s perception.  The most famous example is the Invisible Gorilla Test, where subjects watched a short video of two groups of people passing a basketball around. The subjects were told to count the number of passes made by one of the teams. During the video, someone walks through the scene wearing a full gorilla suit. After watching the video, the subjects are asked if they noticed anything out of the ordinary take place. In most groups, 50% of the subjects did not report seeing the gorilla. This failure to perceive this anomaly was attributed to the failure to pay attention to it while engaged in the difficult task of counting the number of passes of the ball. These results indicate that the relationship between what is in one's visual field and perception is based much more on attention than was previously thought.

The “Clown on a unicycle” experiment demonstrated how cell phones contribute to inattentional blindness in basic tasks like walking: people using their phones were much less likely to notice a brightly coloured clown riding past on a unicycle than those who weren’t – no surprise to anyone who’s ever suffered from phone-induced road rage.

Inattentional blindness also has less literal implications – sometimes we are so focused on certain tasks that we don’t see the obvious problems right in front of us.  We explore how this leads companies to lock waste into their processes in this week’s instalment of our four part series: GORILLAS THAT WE MISSED and other process improvement pitfalls.


FORENSICS... who let the docs out?

8th April 2016

With the leaking of the Panama Papers being the latest scandal to rock the financial world, there is a lot of talk about financial forensics – the practice area of accounting describing engagements that result from actual or anticipated disputes or litigation. Forensic accountants often come across some colourful (and colourfully named) practices…

Cookie Jar Accounting: this delicious-sounding practice occurs when periods of good financial results are used to create reserves that bump up profits in lean years. It is used by companies to smooth out volatility in their financial results, thus giving investors the misleading impression that they are consistently meeting earnings targets.

Voodoo Accounting: this refers to creative rather than conservative accounting practices. Voodoo accounting employs numerous accounting gimmicks to artificially boost the bottom line by inflating revenue or concealing expenses or both. The origin of the term probably lies in the fact that once the accounting gimmicks come to light, the purported profits disappear like magic.

Financial Shenanigans: these are actions designed to mask or misrepresent the true financial performance or actual financial position of a company or entity. Financial shenanigans can range from relatively minor infractions involving creative interpretation of accounting rules to outright fraud over many years.

This list of dodgy accounting practices goes on: big bath charges, merger magic, and black box accounting to name a few! As amusing as these names may be, it may be best to find another way to have fun…


GRAVITY... fakes and ladders

1st April 2016

Did you know that a ladder resting against a frictionless wall will fall infinitely fast when pulled? We have the maths to prove it: Consider a ladder of length L leaning against a frictionless wall which is at right angles to the ground. You pull the bottom of the ladder horizontally away from the wall, at constant speed v. The claim is that this causes the top of the ladder to fall infinitely fast.  

The Proof:

Step 1: Let x denote the horizontal distance from the bottom of the ladder to the wall, at time t.

Step 2: As shown, let y denote the height of the top of the ladder from the ground, at time t.

Step 3: Since the ladder, the ground, and the wall form a right-angled triangle, x2 + y2 = L2.

Step 4: Therefore, y = √(L2 – x2).

Step 5: Differentiating, and letting x' and y' (respectively) denote the derivatives of x and y with respect to t, we get that y' = -(xx’)/ √(L2 – x2)

Step 6: Since the bottom of the ladder is being pulled with constant speed v, we have x' = v, and therefore y' = -(xv)/ √(L2 – x2)

Step 7: As x approaches L, the numerator in this expression for y' approaches -Lv which is nonzero, while the denominator approaches zero.

Step 8: Therefore, y' approaches negative infinity as x approaches L. In other words, the top of the ladder is falling infinitely fast by the time the bottom has been pulled a distance L away from the wall.

But we know that a ladder will not fall at infinite speed so is the maths lying to us?

Happy April Fool’s Day! Click here for an explanation of the fallacy above. Also, look at the 10 July entry in our Lighter Side archive for more mathematical fallacies.


FORECASTING... a warning from The Bard

18th March 2016

In 1599 William Shakespeare famously wrote “Beware the Ides of March” in the play Julius Caesar. But the Ides of March wasn’t just a bad day for Caesar, who was assassinated in the senate on that date, which corresponds to 15 March, in the year 44 BCE.

The “ides” (midpoints, as per the Roman calendar) of March was a traditional time to settle debts, and also used to be tax day in the USA, between 1918 and 1954.

These days, March generally means bad news for markets – in the US, at least.  Municipal markets have delivered losses each March since 2002, as investors typically unleash a wave of selling to cover annual tax bills due by the mid-April deadline.

Also, for a number of years, any advances in the US equity market that occurred in the first quarter have been more than reversed by deep “corrections” in market values that come in March.  Whether it was the Federal Reserve’s premature termination of its first round of mortgage buying in 2009, or the onset of the re-emergence of the Greek/Euro financial crisis in 2010, or the opening acts of the US debt ceiling crisis in 2011, or the re-emergence of the Greek crisis, spread to Spain and Italy, in 2012 – the result was always the same: A dip in stocks in the spring.

So it seems that the old saying, “sell in May and go away” should be replaced by a warning from a fictional soothsayer from more than 400 years ago: “Beware the Ides of March!” 

Gender Equality

GENDER EQUALITY... and parental (leave) guidance

11th March 2016

In the spirit of this past Sunday being Mothers’ Day in the UK (and International Women’s Day a few days later), this week’s Lighter Side looks at some statistics around parental leave around the world.

While maternity leave has long been an accepted standard (in varying degrees) around the world (the only countries in the world that still don’t mandate paid maternity leave are Lesotho, Papua New Guinea, Swaziland and the USA), countries are increasingly introducing paternity or shared parental leave in an effort to reduce the burden on new mothers and put an end to the enforcement of traditional gender roles. By 2013, 47% of countries in an International Labour Organisation survey had legislation on paternity leave, with 89% providing some kind of paid paternity leave.

Perhaps the best country for working parents is Sweden, where parents are treated to 480 paid days off per child. Moms and dads in the Scandinavian nation can share paid parental leave and take it any time before their child reaches the age of 8.

The worst surveyed country for paternity leave? Saudi Arabia, with only 1 day of paid paternity leave.

In the UK, parents can take up to 50 weeks of shared leave - 37 weeks of which is paid - if they meet certain eligibility criteria. Fathers are entitled to two weeks of paid paternity leave and mothers must still take the initial two weeks after birth, but they can then cut their maternity leave short and exchange it for shared parental leave.

For more statistics on parental leave around the world, look at this infographic.

Time Management

TIME MANAGEMENT... You say tomato, I say pomodoro

4th March 2016

We at MBE love Italy, pasta, pizza and pomodoro as much as we love managing our time with pomodoro technique.

In the late 1980s Francesco Cirillo created the Pomodoro technique after a long search to improve his own study habits. The Pomodoro technique is a time management method, named after his kitchen timer, which happened to have the shape of a tomato (pomodoro in Italian). This Technique allows you to transform time into a valuable ally by helping you to accomplish what you want to do and charting continuous improvement in the way you do it.

There are six stages in the technique:

1. Decide on the task to be done.
2. Set the pomodoro timer to n minutes (traditionally n = 25)
3. Work on the task until the timer rings. If a distraction pops into your head, write it down, but immediately get back on task.
4. After the timer rings, put a checkmark on a piece of paper.
5. If you have fewer than four checkmarks, take a short break (3–5 minutes), then go to step 1.
6. Else (i.e. after four pomodoros) take a longer break (15–30 minutes), reset your checkmark count to zero, then go to step 1.

So why not get yourself an official pomodoro timer (available here) and start increasing your productivity – and your colleagues’ irritation levels – today?

Calendar Year

CALENDAR YEAR RATE INTERVALS... let's all meet up in the year 8000

26th February 2016

The function of a leap year is, believe it or not, more than just an opportunity for romantic roles to be reversed every few years. It exists because a calendar year (365) days is not exactly equal to an astronomical year (roughly 365.25 days), which is why we who observe the modern Gregorian calendar need to intercalate an additional day into the calendar every four years to make up the difference – hence the occurrence of 29 February this coming Monday. 

Except that, strictly speaking, this special day isn't a quadrennial event. A Gregorian leap year is observed every four years except in century years not divisible by 400. Thus, the year 1900 was not a leap year but the year 2000 was. Why all the conditional intercalation? Because an astronomical year isn't precisely 365.25 days — it's closer to 365.2425 days, or 365 days, 5 hours, 49 minutes, and 12 seconds. The intercalated adjustments are made to ensure that the vernal equinox stays on or about 21 March every year.

Yet for all these allowances, our calendar is still inaccurate, as the astronomical year isn't precisely 365.2425 days long. A recurring margin of error is building in the leap year system that suggests it will fail — i.e., the vernal equinox will be more than a day removed from 21 March — at a particular date in the future; the year 8000.

Goes to show, the impact of rounding can be felt for millennia!


STANDARDISATION... When more haste meant less speed

19th February 2016

One of the golden rules of process improvement is: don’t automate or standardise a broken process. Did you know that there’s an instance of this happening that has probably impacted the course of history in a big way? Here are some clues: it’s at your fingertips and it starts with Q and ends with WERTY.

That’s right, the Qwerty keyboard, which has been hardwired in the brain of every typist and computer-user for almost 150 years, won its place in history by its ability to slow typists down.

The first attempt of Qwerty keyboard inventor, Christopher Sholes, was alphabetical, but the typebars clashed due to the key arrangements. So Sholes arranged them in a way to make the machine work. Frequency and combinations of letters had to be considered to prevent key clashes.

The typewriter wars heated with the appearance of typing competitions, where typists would battle it out to achieve the highest word counts. Not surprisingly, type would clash and stick. So Sholes rejigged the letters on his machine in order to keep speeds down.

In 1873, Qwerty was adopted by Remington, famous for its arms and sewing machines as well as its typewriters, and it became adopted as the basis not only for English but the majority of European languages as well.

In the early 1930s, time and motion expert August Dvorak produced an ergonomically-designed keyboard which could have spelled the end of Qwerty. Dvorak users reported faster, more accurate typing and reduced keyboard clashes. But it was too late. Qwerty was firmly entrenched in the hearts, minds, and fingers of the typing world, even though, argues comedian Stephen Fry, that the Qwerty keyboard and its inventor could be accused of "conspiracy to pervert the course of language and to limit the speed of creativity and language input, endangering billions with repetitive strain injury."


LIMITS... The science of friendship

12th February 2016

Data can tell us anything – even how many friends we should statistically have. In the 1980s, while researching why primates devote so much time and effort to grooming, anthropologist Robin Dunbar took research on the brains of primates (which held that they have large brains because they live in socially complex societies) and applied it to humans. If it was true that the larger the group, the larger the brain, what was the number of people an average person could have in their social group?  

Using a ratio of neocortical volume to total brain volume and mean group size, he came up with a number: 150. Anything beyond that would be too complicated to handle at optimal processing levels.

The Dunbar number is actually a series of numbers. The best known, 150, is the number of people we call casual friends—the people, say, you’d invite to a large party. From there, Dunbar discovered that the number grows and decreases according to a precise formula, roughly a “rule of three.” The next step down, fifty, is the number of people we call close friends—perhaps the people you’d invite to a group dinner. You see them often, but not so much that you consider them to be true intimates. Then there’s the circle of fifteen: the friends that you can turn to for sympathy when you need it, the ones you can confide in about most things. The most intimate Dunbar number, five, is your close support group. These are your best friends (and often family members). On the flipside, groups can extend to five hundred, the acquaintance level, and to fifteen hundred, the absolute limit—the people for whom you can put a name to a face. While the group sizes are relatively stable, their composition can be fluid. Your five today may not be your five next week; people drift among layers and sometimes fall out of them altogether.

The world of social media has added a new dimension to the term “friend”. Read this New Yorker article on the implications of Facebook friendships on Dunbar’s research.


ANTICI... pation

29th January 2016

Every week MBE digs up some facts to keep our minds busy over the weekend. This week’s Lighter Side features a logical fallacy that manifests in our everyday lives, namely the Gambler’s Fallacy.

It is a fallacy in which an inference is drawn on the assumption that a series of chance events will determine the outcome of a subsequent event. In layman’s terms: believing an event is “due”. In roulette it is when the ball lands on a streak of red numbers and the anticipation increases that it is due to land on a black number, even though the odds are still 50/50.

It's generally invoked when we deal with things that frighten us. People who fly a lot tend to think that, after so many flights, they're "working their way" towards a crash, even though every flight is independent of the last. People fall into the fallacy's clutches after lightning strikes and shark attacks, thinking that neither can happen in the same place twice. And, of course, if we notice we're on a lucky streak, or an unlucky one, it has to end soon or be balanced out by something good. If something — for example rainfall or temperature…or an actuarial exam pass rate – is below average for a season, people talk about it increasing soon to get the numbers up to average. We can't help thinking that, in all cases, the past explains the future.

Luckily if we identify the fallacy, we can counter it by logical thinking and realise that most events are just random.


MNEMONICS... easy as pi

22nd January 2016

Pi = 3.1415926535897932384626433832795028841971...

Mapping out the digits of pi (the ratio between a circle's circumference and its diameter) has been a major mathematical challenge ever since the invention of the wheel first stirred a real interest in circles. The earliest recorded values of pi were Phoenician (3 1/8) and Egyptian (3 13/81). Both values are accurate within a half a percent. Pi even appears in several texts in the Bible, assigned a rough empirical value of 3.

Why should you care about knowing the precise value of pi unless you are preparing for a geometry exam (and don’t have access to a calculator)?  For fun, of course!  One gentleman, Hiroyuki Goto, recited no less than 42,000 digits of pi from memory in 1995.  This record feat took him about nine hours to complete. If that challenge seems a little out of your range, you can still impress your friends by memorising a few mnemonics to help you remember the value to the first 30 or so decimal places.

In the following mnemonics, the number of letters in each word corresponds to a digit.

Seven decimal places:
How I wish I could calculate pi.

Fifteen decimal places:
How I wish I could calculate pi.
How I like a drink, alcoholic of course,
after the heavy lectures involving quantum mechanics.

Twenty one decimal places:
Now, I wish I could recollect pi.
"Eureka," cried the great inventor.
Christmas Pudding; Christmas Pie
Is the problem's very center.

Thirty decimal places:
Now I will a rhyme construct
By chosen words the young instruct.
Cunningly devised endeavor,
Con it and remember ever.
Widths of circle here you see.
Sketched out in strange obscurity.

And if you feel the need for a device for remembering thirty one decimal places of pi, try this rhyme:
Sir, I bear a rhyme excelling
In mystic force, and magic spelling
Celestial sprites elucidate
All my own striving can't relate
Or locate they who can cogitate
And so finally terminate. Finis.

The problem with this type of mnemonic is how to represent the digit zero (which occurs in pi at the thirty second place). Several people have come up with ingenious methods of overcoming this, most commonly using a ten letter word to represent zero. In other cases a certain piece of punctuation indicates a naught.

There are many stories and poems crafted in this way; Near a Raven, is poem which currently holds the record for longest pi mnemonic, at 740 digits. Cadaeic Cadenza is a short story which is longer still at 3835 decimal places, and has additional constraints.

And you thought you would be bored this weekend…


THE FUTURE... when artificial intelligence gets real

15th January 2016

At MBE we are big fans of automation, but Ray Kurzweil, Google's director of engineering, believes in it even more.  He has said that computers will be cleverer than humans by 2029, with the ability to understand what we say, learn from experience, make jokes, tell stories and even flirt (read more here).

But don’t be afraid of a robotic revolution just yet – Alan Winfield wrote a response to Kurzweil’s theory, citing a number of reasons why this will not be the case:

  • What exactly does as-smart-as-humans mean? Intelligence is very hard to pin down. Emotional intelligence is just as important as analytical intelligence, especially (and oddly) for decision making. So is social intelligence – the ability to intuit others’ beliefs, and to empathise.
  • Human intelligence is embodied. Humans’ bodies and minds have to be co-designed – you can’t have one without the other. But we really don’t understand how to do this as none of our existing engineering paradigms fit.
  • Building human-equivalent robot intelligence needs far more than just lots of computing power. It’s like saying that all you need to build a cathedral is loads of marble. You certainly do need the raw material, but without (at least) two other things – the design for a cathedral, and/or the knowhow of how to realise that design – there will be no cathedral. The same is true for human-equivalent robot intelligence.
  • The hard problem of learning and the even harder problem of consciousness. The human ability to learn, then generalise that learning and apply it to completely different problems is fundamental, and remains an elusive goal for robotics and AI. In general this is called Artificial General Intelligence, which remains as controversial as it is unsolved.

So even though 2016 promises to bring a lot of exciting technological developments, it seems that robots taking over the world isn’t one we have to worry about just yet!

Read Winfield’s full article here.

Read more of The Lighter Side from our archives:  Q3 – Q4 2015    Q1 – Q2 2015