Interdisciplinary Research –

Opportunities for Actuarial Profession

By A. Skučaitė, Lecturer, Vilnius university

Acknowledgment Part of this research was supported by

international projects BaltMob (Baltic Mobility) and BaltMob II *

Main goal of both projects – to bring interdisciplinary competence into academic research

* See www.enta.ee/baltmob; www.enta.ee/baltmob2 for more information

Concept of Interdisciplinary research (IDR) Strengths and weaknesses of IDR IDR and actuarial science

Outline

Concept of Interdisciplinary

Research

Concept of IDR “For some it is quite old, rooted in the

ideas of Plato, Aristotle, Rabelais, Kant, Hegel (….) who have been described as “interdisciplinary thinkers”. For others it is entirely a phenomenon of the twentieth century (….). The actual term did not emerge until the twentieth century (…..). However, the basic ideas are quite old (….)”. *

* Klein, J.T., “Interdisciplinarity – History, Theory and Practice” (1990)

Concept of IDR Exact definition of IDR is still unclear At one extreme (simplest case) we may

say that IDR is present:“when elements of any two disciplines are

used in research process”

Concept of IDRLonely researcher(s) working in single discipline

Lonely researcher using techniques from more than one discipline

Two or more researchers working as a team in same field

Two or more researchers working separately in different disciplines

Multi (Inter) disciplinary research team

Blackwell, G. W., "Multidisciplinary Team Research", Social Forces, Vol. 33 (1955)

Concept of IDR1. Different bodies of knowledge are represented in the

research group2. Group members use different problem solving approaches

(…)3. Members of the group perform different roles (…)4. Members of the group work on a common problem5. There is group responsibility for the final product6. The group shares common facilities7. The nature of the problem determines the selection of

group personnel8. Members are influenced by how others perform their tasks

Birnbaum P. H., “Contingencies for Interdisciplinary Research: Matching Research Questions with Research Organizations”, Management science, Vol. 27. No. II. (1981)

Concept of IDRInterdisciplinary research is a mode of research by

teams or individuals that integrates Perspectives / concepts / theories and/or Tools / techniques and/or Information / data

from two or more bodies of specialized knowledge or research practice.

Its purpose is (…) to solve problems whose solutions are beyond the scope of a single field of research practice.

Porter, A. L., Roessner, J. D., Cohen, A. S., Perreault, M., “Interdisciplinary Research: Meaning, Metrics and Nurture”, Research Evaluation, Vol. 15, No. 3 (2006)

Two stages of IDR Multidisciplinarity:

EconomicsEconomics

PoliticsPolitics

Actuarial science

Actuarial science

Psycho-logy

Psycho-logy

Epide-miology

Epide-miology

Public health

Public health

MedicineMedicine

AIDSAIDS

Two stages of IDR Interdisciplinarity:

Bioinformatics Econometrics Behavioral finance ……

Strengths and weaknesses of

Interdisciplinary Research

Strengths / weaknesses of IDR Main advantage: To achieve new results (scientific

knowledge) which could not have been produced if the participating researchers would all have had the same disciplinary knowledge

Strengths / weaknesses of IDR Weaknesses and threats are closely

related to main advantage: More time and effort consuming At least two researchers from different fields

are involved: Lack of “transferable” skills (communication, time

management etc.) Confluence of different “cultures” and traditions Necessity to “overstep” boundaries of own field of

research

Strengths / weaknesses of IDR Weaknesses and threats are closely

related to main advantage: Results achieved (at least at the beginning) are

quite “trivial” when seen from perspective of “traditional” sciences

IDR is a tool and not a goal

Strengths / weaknesses of IDR IDR resembles very much work in

multinational environment Each discipline represents its own

“culture”, for example “Thought pattern” (paradigms) - Specific terms (including jargon, say IBNR, UPR

etc.) Traditions how technically present results and

solutions Different notation etc.

Strengths / weaknesses of IDR IDR resembles very much work in multinational

environment Common problems arising from “cultural”

differences in IDR: What data to use Which research method is “best” Unawareness and / or misunderstanding of terms

(differences in meaning of the same word) Methodological mistakes when applying methods from

other fields Communication problems Ethical issues, …..

Strengths / weaknesses of IDR

Meeting is scheduled at 12:00

Is it acceptable to come at 12:30

In some cultures – “No”, in some – “Yes”

Strengths / weaknesses of IDR Misunderstanding of terms – examples “Risk”:

Insurance and engineering: “probability of accident x average loss per accident”

Statistics: “probability of some event which is seen as undesirable”

Finance (investments): “(unexpected) variability or volatility of returns”

Strengths / weaknesses of IDR

Accountant: “Please remove virus from my computer”

Computer specialist (after a week when nothing was done): “Well, You asked to remove virus, but there is no virus in Your computer, there is only a worm”

Strengths / weaknesses of IDR It is impossible to isolate vocabulary from

grammar, syntax or national culture in general

So it is very difficult to separate "knowledge" from methods, theories and history of practice in specific field, but…

Abundance of languages is no longer obstacle for communication

Interdisciplinary Research and

Actuarial Profession

IDR and Actuarial profession Syllabus of actuarial education (1975):

Mathematics: algebra, trigonometry, calculus; Probability and statistics; Compound interest mathematics; Life contingencies; Construction and graduation of mortality

tables; Applications: Life insurance, pensions, …

Panjer, H., “Educating the Future Actuary: from Actuarial to Risk Management Education”, Presented at Groupe Consultatif / IAA Education Seminar, Edinburgh (2006), downloadable from http://www.gcactuaries.org/events.html

IDR and Actuarial profession Syllabus of actuarial education (2005) –

new additions: Economics; Applied Statistics; Risk theory; Introduction to actuarial practice (applications),

etc.

Panjer, H., “Educating the Future Actuary: from Actuarial to Risk Management Education”, Presented at Groupe Consultatif / IAA Education Seminar, Edinburgh (2006), downloadable from http://www.gcactuaries.org/events.html

IDR and Actuarial profession Changes in syllabus reflect changing realities of

actuarial practice: It expands quickly to new areas (public health, social

benefits, banking, enterprise risk management) requiring from practitioners to acquire new skills

“Technical” (mathematical, statistical) skills even very brilliant are no longer enough

At least some knowledge about economy in general, investment principles, risk theory, etc, is almost are “must”

IDR and Actuarial profession Actuaries are supposed to be not only

experts in their field but also excellent “team players”: Be able to present ideas and results clearly To explain why one or another solution should

be adopted and what risks are associated with it

IDR and Actuarial profession

“Business managers cannot be expected to like and accept what they cannot understand”

Bhattacharya, S. N., “Actuaries in the Changing Context”, Presented at 28th International Congress of Actuaries, Paris (2006), downloadable from http://papers.ica2006.com/247.html

IDR and Actuarial profession According to survey (SOA) employers think

that besides professional knowledge other skills are important for actuaries: Effective communication Innovative thinking Appreciation of business context and general

business acumen Leadership

Daykin, Ch., Lyn, C., Palandra, M. T., “Professionalism within the Business Context”, Presented at 28th International Congress of Actuaries, Paris (2006), downloadable from http://papers.ica2006.com/348.html

IDR and Actuarial profession “Business design is incomplete if it does

not take into consideration how the human element interacts with the business model. Should psychology, sociology and behavioral economics play a bigger role in the education of actuaries?”

“Probably so, but the syllabus for qualification is already overloaded”.

Daykin, Ch., Lyn, C., Palandra, M. T., “Professionalism within the Business Context”, Presented at 28th International Congress of Actuaries, Paris (2006), downloadable from http://papers.ica2006.com/348.html

IDR and Actuarial profession It is not possible to be expert in many

fields IDR and general transferable skills may be

helpful

IDR and Actuarial profession Interdisciplinarity is great opportunity now

faced by actuarial profession In some cases it may become the only way

to “survive” under changing environment