The official slide into absurdity
There's been so much said about Obama prematurely winning the Nobel Peace Prize that I cannot possibly add to it. This was one of the very few times when both his detractors and his supporters were united in their recognition of this absurdity. I bet the news has given a headache to Obama and undoubtedly introduced another lofty expectation and complication in his life.
Suffice it to say that it's at times like this that I feel gratified to be working in the sciences. Sure, Nobel Prizes in the sciences have also been controversial, but nowhere as controversial as the literature, peace and economics prizes. The peace prize has officially turned into a joke and the economics prize is close to being one. But the ribosome, DNA structure, symmetry breaking in weak interactions and high-temperature ceramic superconductors have a ring of certainty and permanence that no achievement in finance or peace can have, although an achievement in literature might come close to being this way. Uncle Alby's words speak again; "Politics is ephemeral but an equation is forever"...
Labels: desipundit, Nobel Prize, Obama
posted by Wavefunction at 7:17 PM
8 Comments:
Woah woah woah!! The economics prize has been turned into a joke? They award Jim Cramer when I wasn't looking? Geithner, maybe?
No, only Merton-Scholes and Sharpe-Markowitz. But I do see a Cramer prize in the offing. Maybe he will share it with the bald CNN financial analyst dude?
Do you oppose these prizes because you thought the work substandard, or because you think work in Finance should not be rewarded?
General prizes in finance should certainly be given out with circumspection; the problem is specifically with awarding Nobel Prizes for ever changing financial models which unnecessarily give such work the false aura of certainty in the public's mind. They should have stuck with Alfred Nobel's original designations (although I would say Nobel himself made a mistake in having an award for peace)
Bank of Sweden prize for economics "in memory of Alfred Nobel" should not be compared to the science Nobel prizes. Economics is not an exact science (and can not hope to be) no matter what some of its practitioners may pretend and whatever the public misconceptions.
Merton and Scholes' prizes were deserved in the sense that their work was not inferior to many of the other "Nobels" in Economics. They provided a new way of looking at risk, and brought arbitrage at the center of the pricing of financial instruments. The work does have numerous practical applications not withstanding the misuse and abuse of ever complicated financial wizardry emanating from it. Same can be said about Markowitz-Sharpe.
Vivek you have a point. A lot of times the problem is not with models, it's with the human beings who apply them...
If you haven't read it, I could not recommend Emanuel Derman's "My Life as A Quant" enough. Derman got a PhD. in theoretical physics from Columbia and retired as the head of risk at Goldman Sachs. He has excellent thoughts on the great dangers of regarding finance as physics, a mistake that many of the Wall Street math whiz kids made. Also read his great essay on the fallacy of models:
http://www.ederman.com/new/docs/models-web.pdf
You have read 'My Life as a Quant'!!
Granted its a delightful read, but where do you find the inclination and time to read stuff so far away removed from your immediate interests. Is there any book that you haven't read? ;)
The are many fiction books I haven't read!
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