The formula that ate your 401(k)

There have been quite a few articles recently discussing the mathematical models of the valuation of mortgage backed securities, and the house of cards that fell as a result. One appeared on WIRED and another in The New York Times .

So what’s the take-away for college math education? Most of our math students are not in math intensive majors. However, majors in business and social sciences must have a very good understanding of the mathematics that they do use – typically, a subset of elementary statistics and elementary algebra. It is not clear to me that students are achieving a deeper understanding of these elementary concepts. They should at least understand that mathematical models are limited and there is much more to applying math than simply substituting variables into a range of formulas.

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Hi! I am an associate professor of mathematics at Kean University, NJ. In this blog, I share insights and resources for mathematics in secondary and higher education.

2 Responses

  1. Eve Olving
    Eve Olving at |

    Hi Reva, This post spoke to me because I am currently doing my MBA and became enlightened on how important math (esp. statistics) is to finance. I never realized how integrated the two are. I’m also finding that’s the case with economics to finance too.

  2. Reva Narasimhan
    Reva Narasimhan at |

    Thanks, Eve. I’m sort of an “evangelist” for intro level math courses since they don’t seem to get the attention they deserve. I read your post about learning preferences in your blog , and you are so right about learning gaps. If students can have their conceptual learning gaps in math pointed out by a teacher, then they can work on better understanding.

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