The math that ruined your world

And I don’t mean high school algebra.

Here’s an article from the excellent writer Felix Salmon over at Wired Magazine on the mathematical formula that has ruined your economic world.

Maybe you’ve been hearing people talking about problems caused by “financial innovation” or “financial engineering” or “risk models.” Salmon’s article explains what that all really means.

Though it’s not the main focus of the article, one part dealt with something I’ve been thinking about:

Academia could never compete with the enormous salaries that banks and hedge funds were offering. At the same time, legions of math and physics PhDs were required to create, price, and arbitrage Wall Street’s ever more complex investment structures.

As I wonder where our economy will grow from here, I think it will be helped enormously by some of our smartest people getting out of the financial sector and into other industries.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s