Hollywood verdict: Quants not guilty

 

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And so, by implication, are the mathematics professors who taught them how to model financial derivatives.  The parties responsible for the collapse of 2008 are clearly designated in The Big Short and they are bankers and investment brokers, with a strong supporting cast in the ratings agencies and the financial media; government regulators are guilty primarily of crimes of omission.   I only remember seeing one quant:  Ted Jiang, in a brief appearance by Stanley Wong, presented by the Ryan Gosling character as Yang, who doesn’t speak English (though in fact he does) and whose role in the film is to project the nightmare stereotype of the “math guy” whom one could not imagine possessed of human agency, much less of being able to be guilty of anything.

The distribution of responsibilities on view in The Big Short is consistent with what I’ve seen in other films on the (continuing) financial crisis; the “math guy” is never the culprit.  Thus the quant played by Zachary Quinto has a substantial part in advancing the plot of Margin Call, released in 2011, but his role is purely technical; the unethical means to which his firm resorts to escape being brought down in the unfolding disaster are entirely the responsibility of the bankers.  Quants are hardly visible at all in the other films I’ve seen, but I confess I haven’t seen them all and my impression is open to correction.

Insofar as Hollywood shapes mass consciousness, the bottom line seems to be that we’re not guilty.  Good.  Does that mean we’re off the hook?  The next time the system collapses, will it be enough to follow Daniel Stroock’s lead and protest that “others were supposed to man the brakes?”  I think we can do better, and it would be wise to get started sooner rather than later.

Added January 14:  I neglected to mention that Stroock’s “batfish” article in Technology Review was taken up by the international press.  On December 9, 2007 it was cited by the Financial Times in an article entitled

Does not compute: How misfiring quant funds are distorting the markets

that concluded

Whether quants have a future, however, depends on how far investors burnt by the losses of August and the subsequent flight to less risky-looking assets can share Mr Stroock’s confidence.

In May 2008 El País cited Stroock’s “batfish” piece in an article entitled “This robot will make me a millionaire”;  the Madrid daily identified Stroock as a defender of automated trading.  (That’s the quotation that eventually led me to the Technology Review exchange.)  A few months later the Lehman Brothers collapse settled the debate for most purposes.

 

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3 thoughts on “Hollywood verdict: Quants not guilty

  1. DrNo

    The woman from moody can also be considered as quant, she is valuating complex products and then enter parameters in models so…And she’s guilty but have a boss!

    Like

    Reply

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