We’re inclined to think of actuaries as the ultimate numerical, objective, unemotional people. But wait …
I’m an actuary.
(If you don’t know: that’s someone who has a professional qualification in measuring and managing risk.)
Well, I’m a retired actuary, not a practising one. But as a friend once said consolingly (when I had my Fellowship in the Institute of Actuaries taken away): “Once an actuary, always an actuary.” For me, that’s true. I think that way, always. I hadn’t realized how much it’s a part of me. And I’m delighted that my Fellowship has been restored, now that I’m no longer being paid for anything.
It’s a part of my personality to love statistics and analysis of numbers and to hear misuse of numbers all around me.
For example, when I hear some expert say that a certain kind of behavior (like exercise or a diet) reduces your chance of dying by 20%, my mind automatically thinks: “What nonsense! Your chance of dying is 100%, no matter how you behave. It can never be even 1% below that.” What the expert probably means is that your chance of dying in the next year goes down by 20%; but then, why not say so?
When I go to a baseball game, I usually take with me my small table of the expected number of future runs that develop in an inning from a certain situation (this “expected” number being, of course, the average over all the games in a number of seasons). For example: With a runner on 2nd base and nobody out, the “expected” number of further runs in that inning is 1.1. If the next batter is out to a fly ball and the runner advances to 3rd base, the expected number comes down to 0.9; so that play has cost the batting side 0.2 runs. This is just like what I used to think of as a mortality table (and these days, as I age, I prefer to think of it positively and call it a longevity table!), with which one can compare actual outcomes for a population with expected (or average) outcomes.
Similarly, with a football (soccer) game, I like the “expected goals” statistic, measuring, for each team, what is the average number of goals scored in a game that has the events that actually occurred. For example: The team I support, Manchester United, got 60 points for the season, and finished 8th in the English Premier League in 2023/24, but their actual performance (based on goals expected from the situations they got into) deserved to earn them 40 points and a 16th place finish, illustrating the huge effect of luck in a low-scoring sport.
Going back to my Fellowship being taken away, the Institute informed me that it was because I was earning money as a director of a company and refusing to take Continuing Professional Development lessons. I pointed out that my role as a director had nothing to do with actuarial work, so I wasn’t a practising actuary (and hadn’t been one, for decades) and didn’t need CPD lessons. I agree that earning money is a necessary condition for being a practising actuary (meaning: you can’t be a practising actuary if you don’t earn money), but it is not a sufficient condition (meaning: earning money does not, by itself, classify you as a practising actuary). In the same way, breathing is a necessary condition for being a practising actuary (you can’t be a practising actuary if you aren’t breathing), but scarcely a sufficient condition (breathing is not enough to classify you as a practising actuary) – or every living person would be categorized as a practising actuary. They ignored the logic of this. But you see how my mind works.
I don’t think I’m an extreme example of how actuaries think. There are jokes about the actuarial mind. For example, you know how the contrast between having an optimistic perspective and having a pessimistic perspective is often expressed: an optimist sees the glass as half full, while the pessimist sees the glass as half empty. What you may not know is the actuarial perspective: the actuary sees a glass that’s twice as big as it needs to be. (While I’m at it: When actuaries go duck hunting, it’s OK if one misses by 10 feet to the left and the other by 10 feet to the right, because on average they both shot it. And so on.)
Where am I going with all of this?
It’s that we actuaries are notorious for being so numerical and logical that we’re low on emotion. We tend to be introverts rather than social creatures (yes, I know that’s a gross generalization). Nobel Prize winner Danny Kahneman calls the human near-instantaneous emotional reactions and our much slower rational thought processes System 1 and System 2, respectively: well, it’s as if actuaries constantly strive for our mental System 2 to override our mental System 1.
So, imagine my surprise recently …
Wait, let me back up a bit. There’s a professional magazine called The Actuary, and in addition to a ton of technical stuff, one recent issue had an article called “Expand your mind.” And although it was focused on a growth mindset (by which it meant that tweaking your view of small everyday things can lead to big rewards: achievements depend more on effort than on innate intelligence), it contained a series of five things that dealt with interaction with others, things you could tell others that would identify efforts that those others had made, and praise them for it. Imagine: actuaries using the logic of their observation of people they work with, to provide encouragement – and emotional purpose, for sure.
These are the five things one might consider telling others:
- “Your determination and perseverance in completing your tasks are great qualities to have.”
- “You kept trying different approaches until you found the one that worked. That’s the mark of a problem-solver.”
- “You didn’t give up, even when things seemed challenging. That’s what makes you a resilient learner.”
- “Your willingness to ask questions, and seek help when you needed it, is admirable. It shows how committed you are to learning.”
- “Keep exploring and learning – your positive attitude and willingness to try new things are what will bring success.”
Well, I don’t know about you, but if someone had said things like that to me in my younger days, I would have been over the moon!
Congratulations, and thank you, Dr Helen Wright, leader of the Institute and Faculty of Actuaries’ recent growth mindset online course, for those wise and profound – and joyful – suggestions.
And then, take it a step further. Dr Wright not only says: “Notice what happens when you use these phrases with others.” She adds (and this, to me, is mind-blowing): “And with yourself.”
In other words (this is my interpretation), even if you’re inward-looking, truthfully telling yourself any or all of those five things can be personally encouraging and inspiring.
This could be the first step to a professional break-through.
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Let me now add a personal note. My wife and sister-in-law both know actuaries, partly through me and partly from working in the fields of personal finance and life insurance. I showed them this draft, and asked: What do you think? They both liked it. My wife added: “You may not be an extreme example of an actuary, but you are extreme, and I wonder how the partners of the really extreme ones manage” – followed by multiple exclamation marks. My sister-in-law said: You are an extreme actuary – statistically, the most extreme actuary I’ve ever met. And then she added: “The mental picture of two actuaries (one of them being you) sitting in a soggy, foggy duck blind, decked out in camouflage suits, arguing about statistics as they wait for some wayward mallard to fly by so they can fire and miss by a good 10 feet each way – it is quite priceless! And in my head, I can hear my husband saying: Who the hell gave Don a shotgun?!!!”
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Takeaway
Joking aside, the rigorous, objective thinking that actuaries are trained to do may be on the verge of being added to via a growth mindset.
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I have written about retirement planning before and some of that material also relates to topics or issues that are being discussed here. Where relevant I draw on material from three sources: The Retirement Plan Solution (co-authored with Bob Collie and Matt Smith, published by John Wiley & Sons, Inc., 2009), my foreword to Someday Rich (by Timothy Noonan and Matt Smith, also published by Wiley, 2012), and my occasional column The Art of Investment in the FT Money supplement of The Financial Times, published in the UK. I am grateful to the other authors and to The Financial Times for permission to use the material here.