Lecture: “Actuarial Science analyzes statistics with mathematical models to determine probabilities. Probabilities only function meaningfully on a scale large enough to successfully absorb individual anomalies. What is an anomaly?
An means one. An anomaly is the one thing that actually happens. It is what actually happens to you or me and nobody knows what that will be. It is entirely unpredictable. Entirely. If you want to know what will happen to you, you should consult a fortune teller (pause for predicted displays of servile student amusement). If you want to know why it will happen you are in the wrong classroom, although I do not know what the right one for you would be (pause). Actuarial Science is not about what will happen to you or when it will happen or why it will happen. It is about rigging the game so the house wins more often than it loses.”
John Smith Esq. died on the courthouse steps on his way to file papers in an inheritance dispute. He was late for his appointment and was checking his papers as he climbed the steps. A man coming down the steps was trying to read a text message on his cell phone. The man bumped into John Smith, causing a (very important, original, signed, witnessed) document to start slipping from his attaché case. John Smith lurched to his left, stumbled and fell forward into Ellen Sings at Night. Ellen Sings at Night was coming down the steps with an attaché case in her left hand. In her right hand was a ceremonial pipe that had belonged to her great-great-grandfather. As she fell backward, she swung her attaché case behind her to break her fall and held the pipe out in front of her to protect it from damage. The pipe was wrapped in deerskin and the stem end stuck out slightly. Instead of putting out his hand to break his fall, John Smith clutched his papers to his chest to secure them. When he fell on top of Ellen Sings at Night the pipe stem penetrated through his left eye into his brain, killing him instantly. Ellen Sings at Night was bruised painfully by the granite steps. The (original, signed, witnessed) document blew away and was picked up several hours later by a bicycle messenger who used it to scrape dog crap off his shoe.
What were the chances of that happening, that one thing and not something else? The chances—at least by retrospective logic—were 100 percent. John Smith became dead by a complex sequence of seemingly random and unconnected events. Nobody could have predicted it but he was, nevertheless, absolutely dead. And his own final act was an acquired reaction meant to protect what he had come to value and thereby protect himself. And what could you say about that reaction except… it had apparently worked just fine until it didn’t.
Lecture: “Do not suppose it is ever about anything but profit, which we measure in dollars. Do not look for morality or justice or the illusion that you are somehow bettering human society. Do not suppose Actuarial Science is about the cold, hard facts. The cold, hard facts only exist after something has happened and it is too late to do anything about it. Actuarial Science is not about making guesses, although you will make guesses every day. You will make guesses by analyzing the flawed guesses, incomplete data, misleading statistics, superstitious beliefs and outright lies compiled by other people. Your job, as a practitioner of Actuarial Science, is not to predict what will happen. You are not a fortune teller. Your job is to rig the game so the house wins more than it loses.”
There were many witnesses to John Smith’s death. One claimed John Smith had assaulted Ellen Sings at Night and she had merely defended herself. Another claimed Ellen Sings at Night had attacked John Smith deliberately and asked whether they had searched her for explosives and automatic weapons. Even though her hair was braided in American Indian style, she looked like an Arab. The man with the cell phone had managed to read his text message while John Smith was dying, and tried to walk away from the incident. He was detained by a policewoman who was standing at the bottom of the courthouse steps and had observed the event. The majority of witnesses stated that it looked like an unfortunate accident, just one of those things.
Ellen Sings at Night answered many questions, declined medical treatment and inquired about the pipe. She was told the pipe would be released to her in due course, once the investigative protocols demanded by this unusual event had been completed. John Smith was hauled away with the pipe still stuck in his head.
Lecture: “Profit is measured in dollars, that is, a dollar sign with a number after it. The word trade implies one thing is exchanged for another thing of similar value. There is no profit in that. Actuarial Science is not about trade or commerce or free markets or supply and demand or gross national product or any other such elusive concepts that economists entertain themselves with (pause). The most efficient way to acquire profit is to deal with the dollars as directly as possible. I give you five dollars, you give me four dollars back, you make a profit. This is why the vast majority of career opportunities in Actuarial Science are in the insurance and financial sectors. These businesses strive to minimize their involvement with the inefficiencies of producing goods and services. Currency traders [sic] are the most efficient of all. They produce no goods or services whatsoever, only profit (pause) or loss (pause). In modern society these kinds of businesses constitute the house. They will hire you to help rig the game in their favor. You are here to learn how to do that.”
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