Implausible assumptions

Antonio Fatas has some interesting things to say about the reliance of economic models on implausible assumptions. All models rely on assumptions and economic models are known (and made fun of) for relying on very strong assumptions about rationality, perfect information,… Many of these assumptions are unrealistic but they are justified as a way to […]

Reinhart and Rogoff: was Excel the problem?

There’s a bit of a furore going on at the moment: it turns out that a controversial paper in the debate about the after-effects of the financial crisis had some peculiarities in its data analysis. Rortybomb has a great description, and the FT’s Alphaville and Tyler Cowen have interesting comments. In summary, back in 2010 […]

Modelling isn’t just about money

Last autumn I was at an actuarial event, listening to a presentation on the risks involved in a major civil engineering project and how to price possible insurance covers. It must have been a GI (general insurance), event, obviously. That’s exactly the sort of thing GI actuaries do. The next presentation discussed how to model […]

Confidence and causality

Ok, it’s a bit trite, but human behaviour is really important, and a good understanding of human behaviour is a goal for people in many different fields. Marketing, education and social policy all seek to influence our behaviour in different ways and for different purposes — that’s surely what the whole Nudge thing is all […]

Fiddling the figures: Benford reveals all

Well, some of it, anyway. There’s been quite a lot of coverage in on the web recently about Benford’s law and the Greek debt crisis. As I’m sure you remember, Benford’s law says that in lists of numbers from many real life sources of data, the leading digit isn’t uniformly distributed. In fact, around 30% […]