Originally (in the summer of 2015, that is) I was planning to make a single long list of flaws in the book. But this obviously didn’t happen, so I will just continue to list flaws when I think of them, as I already did a few weeks ago.
Item: The author’s literature search left huge gaps. For example, Ian Stewart published an unusually clear and concise explanation of the Black-Scholes equation and its role in the 2008 financial crisis in the February 11, 2012 issue of the Guardian. Two months later, when I began writing Chapter 4, Tim Harford posted an article quoting Stewart on the BBC website. This article was cited in note 36 to Chapter 4, and you can check that Stewart’s name appears, without explanation. Did the author go to the trouble of consulting the original source? No, he didn’t; if he had he would certainly have included the excellent concluding paragraph of Stewart’s article:
Despite its supposed expertise, the financial sector performs no better than random guesswork. The stock market has spent 20 years going nowhere. The system is too complex to be run on error-strewn hunches and gut feelings, but current mathematical models don’t represent reality adequately. The entire system is poorly understood and dangerously unstable. The world economy desperately needs a radical overhaul and that requires more mathematics, not less. It may be rocket science, but magic it’s not.