Hello (New World!), 

My name is Edwin, I’m a 22 year-old French student in applied mathematics. In particular, I study probability, statistics and risk theory. We learn interesting things but there is still one question I feel stupid about: Is statistics, actually, useful? I mean not theoretically but in the real life. Many friends of mine asked me this, and I vainly struggle in answering with understandable and cogent examples. I can’t get rid of the stereotypes such as the over optimistic forecasts of GDP gross given by government neither of the very easy statistics which are about collecting data rather than proper data analyses.


Because, mathematics should never be like that... (source:http://lovestats.wordpress.com/dman/)

This question is the reason of this blog, I would like to explain by examples how statistics and probability could offer a useful perception of our environment. Indeed, according to the Oxford Dictionary, perception is the ability to see, hear, or become aware of something through the senses, or in a second meaning, the way in which something is regarded, understood, or interpreted. This is how probability and statistics are useful. They give a perception of our environment, which might be wrong, as well as our sight can suffer from an optical illusion, but the perception may help us to understand and become aware of phenomena of our environment.

To answer “the” question I will try to use examples as easy as possible so that not only the conclusions but also the process are understandable. As you will certainly see, I like sport, finance and risk issues, and I will use many examples from these areas to answer the question. I will use the software R to illustrate the different topics. Although, I’m not a great programmer, feel free to use my programs if you think they could be useful.  They are certainly not as efficient as possible and, again, feel free to comment any of my programs if you have any ideas to improve the program or the method.

Finally, before blogging for the first time in my life, I’d like to thank all the people who settle in my mind the unfathomable question of the utility of statistics. In particular Claire, Justine, Arthur, Clement and Rudy (even though the three last ones certainly know better than I do how useful is statistics) for the countless, long and unfinished delicious discussions we had about statistics and probability. Claude for his unconditional but fair question: “You like mathematics, but what kind of work can you do with mathematics?” and many other people, who, I am sure will recognize they have left their print on this blog.

Edwin.
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The financial market is not only made of stock options. Other financial products enable market actors to target specific aims. For example, an oil buyer like a flight company may want to cover the risk of increase in the price of oil.

I found a golden website. The blog of Esteban Moro. He uses R to work on networks. In particular he has done a really nice code to make some great videos of networks. This post is purely a copy of his code. I just changed a few arguments to change colors and to do my own network.

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As you have certainly seen now, I like working on artificial neural networks. I have written a few posts about models with neural networks (Models to generate networks, Want to win to Guess Who and Study of spatial segregation).

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I already talked about networks a few times in this blog. In particular, I had this approach to explain spatial segregation in a city or to solve the Guess Who? problem. However, one of the question is how to generate a good network.

The function apply() is certainly one of the most useful function. I was scared of it during a while and refused to use it. But it makes the code so much faster to write and so efficient that we can't afford not using it.

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Have you ever played the board game "Guess who?".

If you want to choose randomly your next holidays destination, you are likely to process in a way which is certainly biased. Especially if you choose randomly the latitude and the longitude.

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My previous post is about a method to simulate a Brownian motion. A friend of mine emailed me yesterday to tell me that this is useless if we do not know how to simulate a normally distributed variable.

The Brownian motion is certainly the most famous stochastic process (a random variable evolving in the time). It has been the first way to model a stock option price (Louis Bachelier's thesis in 1900).

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The merge of two insurance companies enables to curb the probability of ruin by sharing the risk and the capital of the two companies.

For example, we can consider two insurance companies, A and B.

How to estimate PI when we only have R and the formula for the surface of a circle (Surface = PI * r * r)?

The estimation of this number has been one of the greatest challenge in the history of mathematics. PI is the ratio between a circle's circumference and diameter.

I was in a party last night and a guy was totally drunk. Not just the guy who had a few drinks and speaks a bit too loud, but the one who is not very likely to remember what he has done during his night, but who is rather very likely to suffer from a huge headache today.

I am currently doing an internship in England. Therefore, I keep alternating between French and English in my different emails and other forms of communication on the Internet. I have been surprised to see that some websites are able to recognize when I use French or when I use English.

The VIX (volatility index) is a financial index which measures the expectation of the volatility of the stock market index S&P 500 (SPX). The higher is the value of the VIX the higher are the expectations of important variations in the S&P 500 during the next month.

The Olympic Games have finished a couple of days ago. Two entire weeks of complete devotion for sport. Unfortunately I hadn’t got any ticket but I didn’t fail to watch many games on TV and internet.

Hello (New World!), 

My name is Edwin, I’m a 22 year-old French student in applied mathematics. In particular, I study probability, statistics and risk theory.

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