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The Actuary The magazine of the Institute & Faculty of Actuaries

Book review: Super Crunchers by Ian Ayres

One thing I thought I knew was that, 99 times out of 100, the explanation for something odd is cock-up, not conspiracy. In general, people just aren’t that clever. After reading Super Crunchers, I may have to revise that opinion. Some people are clever, and that cleverness can be turned into technology and sold to any company that wants to market direct to us, with the aim of extracting profit from us. They even get us to do the data entry for them — hell, that is smart.

Most of the techniques described in the book, regression analysis and randomised testing, are well known to actuaries. Indeed, many will apply them, especially in general insurance pricing. The last three chapters are probably the most interesting. ‘Why now?’ addresses how developments in technology have allowed statistical techniques to be applied on a massive scale. ‘Are we having fun yet?’ addresses fundamental questions about whether society is happy with all the datamining and data-mashing that companies are doing on individual data.

The book is US-biased, and recognition that the rules are different in the EU, as I understand it, would have been useful both for European readers and US readers needing an international perspective. The final chapter, ‘The future of intuition (and expertise)’, suggests everyone should familiarise themselves with normal distributions, standard deviations and Bayes theorem. Again, actuaries should know these, however, do we all apply them in our everyday lives to gain the advantages that Ian Ayres seems to think we can?

Apart from the lack of recognition of non-US approaches to data control, Super Crunchers’ other weakness is perhaps not addressing financial markets, where huge amounts of data can be mined to great profit. However, problems of non-normality arise here, and the area is already well covered by other texts.

As a standalone read to refresh an actuary’s basic applied statistics, or as an introduction for someone without a statistical background, this book is well worthwhile.

Super Crunchers: How Anything Can Be Predicted, Ian Ayres, published by John Murray, £7.99

To order your copy of Super Crunchers at the special price of £6.79 including p&p (RRP £7.99), please call 0870 755 2122 and quote BSH665, or order online at www.pressoffers.co.uk/bsh665. Please allow 28 days for delivery. Offer is subject to availability.