Financial crisis has deep roots in academia

http://www.latimes.com/business/la-fi-books7-2009sep07,0,5708398.story?track=rss

Pablo Triana’s new book Lecturing Birds on Flying: Can Mathematical Theories Destroy the Markets is discussed in this business book review by the Los Angeles times. The article addresses the books subjects such as if the Nobel Prize in Economics should be abolished and the statement that “Financial models, such as value at risk and the famous Black-Scholes-Merton model, which won its founders a Nobel, have done more harm than good.”

The book is relevant to our recent discussions about the rise of mathematical models in economics. While this article refers to finance, it addresses the frequency at financial companies recruited mathematicians and physicists to provide models for trading as well as the progression that quantification becomes a consensus, until everything goes wrong.

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2 Comments

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2 responses to “Financial crisis has deep roots in academia

  1. I had never heard of this book. The argument (from the review not very new) evokes Nassim Taleb, and guess who writes the intro to the book?

    Taleb’s website is bad for your eyesight: http://www.fooledbyrandomness.com/

  2. jensen09ams

    http://www.nytimes.com/2008/08/17/magazine/17pessimist-t.html?_r=1

    Article is a bio about Nouriel Roubini “Dr. Doom”.

    “When the economist Anirvan Banerji delivered his response to Roubini’s talk, he noted that Roubini’s predictions did not make use of mathematical models and dismissed his hunches as those of a career naysayer.”

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