In Do the Math
How do pyramid scams work?
When did the real downturn in the economy occur?
Do inflation measures work in fast changing times?
Are reality television shows fair?
Can one win at game shows using simple probabilities?
Which state was really responsible for George Bush's 2000 win?
Why are there still disagreements in Northern Ireland?
How can you avoid paying interest?
Is the economy expanding or contracting at any given moment?
Can we calculate the cause of reduced crime?
Why are North American sports leagues better than in Europe?
How do stock pickers win at the market?
Why is the average person not
the most likely?
Do birthdates indicate success in life?
Where did lucky numbers come from?
How does Arnold Schwarzenegger send secret messages?
Is debt destroying the world?
Who is making money from your debt?
Can #1 chart toppers inform us about increasing world poverty?
How much money do advertizers add to the cost of goods?
Why are sports so uncompetitive?
Who really broke the bank in 2009?
When I was
growing up in the Sixties and Seventies, my parents would often remind my
siblings and me of leaner times after World War II, when supplies were scarce
and food was rationed. Although we wanted for little, our lifestyle was nonetheless
one of economy as we were taught to measure our wants and not to expect too
much. We could always ask for more, even for an occasional luxury item such as
a new bike or the latest toy, but we were taught that the primary goal of
acquiring and using was need and not want, and in so doing we learned the value
of our material world.
economic troubles in the financial centers of the world, however, suggest that
something is not quite right, from the questionable ethics of trusted
institutions to a poor understanding of numbers and systems, although the
mathematics of collateralized debt obligations (CDOs), credit default swaps
(CDSs), and derivatives would baffle many a PhD mathematician. Complicated
financial instruments and creative accounting have now become the norm,
contrary to the well-taught ethics of the past, such as hard work, fairness,
and public good-as most of us understand them-while in the process, our world,
one we call egalitarian, meritocratic, and religious, has been usurped by those
in the financial know, aided by government inadequacy, while creating a culture
defined more and more by money and less and less by a common good.
One wonders if
the age in which we live, one of scientific mastery over resources, and with newer
technological gadgets by the day, has created such a world, where our wants
have become manufactured as must-have needs. We do seem to be in a hurry to
have it all as we marvel at the lifestyles of the materially well-endowed.
Growth is the buzzword, apparently at any cost, with greed its motive. But to
what end-constant economic uncertainty, a permanently stressed-out workforce,
everyday stories of government and corporate corruption and abuse? What's more,
are we falling behind in the race to get ahead as we deplete the earth's finite
and dwindling resources?
There are better ways than limping from
crisis to crisis that upset and destroy the fabric of our lives and those of
our communities as witnessed by dramatic increases in unemployment and mortgage
defaults during the now regular downturns in the economy, and a better knowledge
of basic systems is needed to understand our world and to analyze the more
complicated problems of our times.
One place to
start is with counting and mathematics, perhaps our oldest mental constructs,
upon which numerous systems have been created, from ancient calendars, weights
and measures, and games of chance to today's world of finance, banking, and
statistics. Our modern way of living would scarcely be possible without conversing
in the age-old language of counting, from household bills to the details of
modern economics. And yet many of us recoil from even the simplest math, afraid
it would seem to grasp the basics, believing the sums too hard or better left
to others, no matter that it is impossible to communicate in today's world
without a proper mathematical grounding.
first battle is to overcome our fear and to cast away the notion that some can
and some can't. Mathematics is not as difficult as we think. As with any skill,
one must practice. We train our bodies and our souls in regular sessions, why
not our minds to acquire better understanding. Problem solving need not be left
to uninformed trial and error, where old-world ideas and new-age logic trumps informed
understanding of mathematics, we simply can't make the right decisions, where fuzzy
thinking keeps us in the dark about consumer costs, enslaves us to lending
institutions, and leads to poor choices, where wisdom is confused with jargon. But,
more importantly, by shying away from the numbers, we can't make the important
decisions about essential issues such as government bailouts, oil supplies, or global
warming. Our inability to analyze numerical information keeps us from
understanding issues incumbent on our being that have exceedingly important
ethical implications for our future.
To be sure, lustful
gurus abound, telling us how to interpret our fast-changing technological
landscape, and many of us are unsure to whom to listen or which data to trust.
Life is full of "asymmetrical information" we are told, where those in the know
pass on insider info via hidden networks, leaving many to think that real
knowledge is unattainable. But real knowledge is not unattainable, and the
person in the street can communicate about today's number-filled world without
an advanced degree in business or statistics. All it takes is the right data,
the right tools, and some straightforward techniques to analyze the numbers.
Do the Math is not a
mathematics refresher, but nor does it shy away from the numbers. Instead, many
creative examples are given to explain our number-filled world, such as pyramid
scams and economic growth, (Chapter 2), the stock market and auto racing
(Chapter 3), cost-benefit analysis and reality television shows (Chapter 4),
the Electoral College and inflation (Chapter 5), Shakespeare's plays, the death
penalty, and sports competitiveness (Chapter 6), Monopoly, Blackjack, and
roulette (Chapter 7), astrology, codes, and lottery odds (Chapter 8), as well
as looking under the hood of modern financial practices (Chapter 9), consumer rip-offs
(Chapter 10), and cooperative thinking (Chapter 11). Along the way, we look to
the mathematics to explain geometric series, small-world phenomena, power laws,
continuous variables, derivatives, error, statistical methods, correlation,
computing, probability, game theory, and more. As in Lynne Truss's book Eat, Shoots & Leaves, where she
stresses the importance of grammar for better literacy, numbers and analytical
methods are stressed here for better numeracy. Indeed, it is no more acceptable
to be innumerate than illiterate.
Aesop's fable of
the Tortoise and the Hare is a
well-known story, and can be used to explain more sophisticated theories such
as inflation or derivatives. Other fables show how exponential growth left
unchecked leads to disastrous results, and from which we can better understand the
pyramid scams of Enron, Bernie Madoff, and Allen Stanford or how Bear Stearns,
Lehman Brothers, and Ameriquest played their part in a near global economic
help us to question past methods such as the woman who cut off the sides of the
family roast before putting it in the oven as her mother had done before her,
not knowing that her mother had done so only because her roasting pan was too
small. Or the story of the woman, who put all her money-a farthing-in the collection plate, thus giving less and yet more
than all the others.
Here, a simple
calculation shows how a one-size-fits-all justice is contrary to the notion of
a shared society, one in which we have been taught to believe exists, where the
relative difference can be more than
the absolute difference, and that a
flat rate is not the same for everyone. Indeed, a $500 fine is nothing to a
millionaire, and were a fine given out in like proportion to someone earning
$25,000, the fine would be $12.50, hardly a credible deterrent. For a fine to have
the same weight to the millionaire as the $500 fine to a $25,000-earner (two
percent), the fine would be $20,000, an amount perhaps not as easily scoffed at
by today's typically undeterred rich. Similarly, are thousand-dollar fines for
cutting corners any better, such as an oil spill disaster, where cleanup costs
can amount to tens of billions of dollars or a bank disaster paid for by public
money to ensure private liquidity, where costs are socialized but benefits are
privatized? What about uneven tax codes, accounting loopholes, or preferential
trading practices, which subsequently disadvantage others? Mathematics can
quantify the disparity.
haven't got everything right if half the world lives on so little (Europe, the
United States, China, and Japan account for 60 percent of the world's estimated
$73 trillion GDP), a small percentage control most of the world's wealth (in
the United States, one estimate states that one percent owns one-third, whereas
in the United Kingdom one percent owns more than two-thirds), and the debt load
of the world's poorest countries is so great they can never repay. Nor can it
be right that the divide is getting worse (relative GDP of the bottom countries
has decreased 16-fold), that average consumer debt is greater than average
income (in 2011, American personal debt was over $16 trillion or $50,000 per
person), or that failed financial institutions have destroyed people's savings
and cost jobs by the millions. Perhaps, the so-called trickle-down wealth system
said to work to everyone's benefit in fact polarizes society, contrary to the
stated goal of a better living for all. But for whom does the world exist-you
and me or the financial elite?
There is always
a moral side to numbers, hidden behind an increasingly more rip-off society.
What is a 50-percent sale when the markup is 100 percent? Why do we pay twice
the price for goods before Christmas than after Christmas? Airlines tack on so
many extras that the final price bears no resemblance to the advertized price
(one such $0 out and $0 return was more than $100). Our culture has become a
culture of hard-to-read numbers, hidden logic, and dubious claims, where in the
absence of proper regulation, one must doubt every claim and question every
transaction, vigilantly acting as one's own regulator. In such an unfair world,
it would seem that more than a cursory understanding of numbers is needed to
identify the traps, the red queens, the wicked witches, and even our own
By looking at
the numbers, we expose the myths, the half-truths, and the out-and-out lies
that are routinely trotted out by suspect sources with made-up facts and
figures. Banks affect our well-being. How does a bank calculate compound
interest? How much are you actually spending on those "no money down, no
interest" loans? Can we understand a banking system that lends out 100 times
its capital to speculate on mortgages, which dramatically impacts the lives of
millions by its failure and resultant trillion-dollar banking bailout?
How about the
lottery, seemingly simple by comparison? Should we teach a work ethic to our
children, yet devalue that same ethic by encouraging get-rich-quick, instant-freedom,
one-in-a-million chances at amounts in excess of $100 million, no matter how
altruistic the cause, especially since lotteries are regressive taxes that
disadvantage the less well-off who use them most? Or what about a now
ubiquitous gambling culture spawned by our fascination with numbers and chance,
that exists solely to make money from other people's ignorance or failure? Should
those of us in the know permit such practices, or do we keep a competitive
advantage by allowing the less-informed to be so abused?
Behind a number,
a calculation, a story lie useful methods, and not only mathematicians and economists
should understand them. Should our economies rumble on, stumbling from one
spike to the next, hell bent on unsustainable growth? What is inflation and how
is it measured? To whom do we owe such large national debts, given that
economics is a closed system? We must become better informed, working with
known facts and proven methods, such that it becomes easier to challenge bad
life is not worth living" said Socrates-wise words, which hopefully still apply
in our fast changing world of globalization and the internet. Or are we stuck
with an out-dated, superstitious, fad-ridden society that continually falls
victim to the latest swindle and unsubstantiated claim? Can we expose garbled
facts, wonky myths, and screwed-up tales that serve only to separate our money
from our wallets? One hopes so, and that we can tackle the harder questions and
put into practice better thinking and better strategies.
In Do the Math, we learn about such strategies,
some which are as stern and autocratic as the tides, some which apply in
certain conditions, and others which are as down-right whimsical as the weather.
Of course, there are many competing ideas and conflicting ways suggesting the
best ways forward, but how we progress to achieve the best ends and to whom the
world belongs are questions we must ask and for which we must have the right
information and tools to proceed. Using less by reevaluating our wants is one
solution. Better cooperation using organized strategies is another and is
essential in any working system, whether to reduce, reuse, and repair, or to
continually expand at increasing peril. Indeed, the goal of committed citizens
and their political institutions must be to apply strategies that work to
create a better living for all as set out in the great parchments of our times.
Our world has
improved enormously since the uncertain and impecunious post-war times of my
parents, but does it serve the needs of everyone or even a majority of its
citizens? If we say we live in a fair, democratic, and enlightened world, where
everyone has an equal opportunity, then we must learn the systems and count the
costs. We must do the numbers, lest we be sold a bill of goods.
Do the Math puts together various
thoughts about numbers and noise, statistics and probability, and money and
economics that have been making the rounds as we begin to understand the
limitations of our world and its many varied systems. The presentation is
purposefully eclectic, allowing the mind to synthesize ideas from different
areas. As such, I have borrowed liberally from the anecdotal and the academic, from
literature and the newspaper, and from the stock market and the casino-all in
the hopes of improving numeracy to better understand.
me? Well, I am good at numbers and have spent a career as a computational
physicist, analyzing many diverse systems, from nuclear reactors to rocket
propulsion using anything from a Commodore 64 (with its fantastically slow
input cassette drive) to the latest multi-core parallel computing
architectures. I have also delved into the world of sports scores, gaming, and
financial trading, creating numerical models and statistical analysis, all to
see how the numbers work.
importantly, I have worked in different areas, including academia, industry,
and business, where I have seen firsthand how numbers are used and abused. I am
also a generalist, constantly looking for the common in the seemingly
disparate, what overlaps and can be agreed upon-and not just the mathematics of
our daily world, but how the numbers jibe with what we are told.
I also want to
stand up and be counted, literally, as someone who is trying to assess the increasing
discrepancy between fact and fiction at play in today's seemingly more
complicated world. The intention is to look more closely at the perceived
wisdom and to see the real mechanisms at work. I hope you enjoy the journey.
About the author
John K. White received a B.Sc. in Applied Physics from the University of Waterloo, Canada, and a Ph.D. from University College Dublin, Ireland.
He has worked around the world as a physicist, lecturer, project manager, and computational analyst over a 25-year career.
He has worked as a project manager and technical writer for Sun Microsystems, The Netherlands Organization, and Berminghammer Foundation Equipment, consultant for Interactive Image Technologies, ScotiaBank, and the Ontario Government, and as a lecturer and research fellow at University College Dublin, and has analyzed game playing strategies, from professional sports teams to the stock market as well as many other thought provoking systems.
He is also active in promoting physics and numeracy in schools, and has published widely in academic journals, contributed chapters to edited volumes, and authored numerous technical publications.
Born in Dublin, Ireland, he grew up in Toronto, Canada, and now lives and works in Dublin.
Do the Math! On Growth, Greed, and Strategic Thinking
John K. White
Softcover, 350 pages, Sage Publications (2013)
Better numeracy, Do-it-yourself analysis, Social inclusiveness, Foster critical and strategic thinking, Uncomplicated mathematical discussion
Our world has become more complicated, and the notion of growth at any cost has led to constant economic uncertainty, a permanently stressed-out workforce, and everyday stories of government and corporate abuse. John K. White argues that a better knowledge of basic systems is needed to understand the world we live in, from pyramid scams to government bailouts, from sports leagues to stock markets, from the everyday to the seemingly complex.