Strata Week: Statistically speaking

Trading platforms, truth in graphs, European financial stats, and Mandelbrot's passing.

Here’s a look at the latest data news and developments that caught my eye.

Never race a penguin

The London Stock Exchange (LSE) has reportedly “doubled” their networking speed with a new Linux-based system, clocking trading times at 126 microseconds as compared to previous times of several hundred microseconds.

ComputerworldUK reports that “BATS Europe and Chi-X, two dedicated electronic rivals to the LSE, are reported to have an average latency of 250 and 175 microseconds respectively.”

The Millenium Exchange trading platform is scheduled to roll out on the LSE’s main exchange on November 1, replacing a Microsoft .Net system.

Lies, damn lies, and vertical axes

William M. Briggs took issue in his blog with a recent post of Paul Krugman’s for playing unfair tricks with the slopes of graphs by messing with the scale on the vertical axis.

Briggs asserts that starting the scale at zero is a wily way to flatten out a slope, and he’s right that it has that affect. But worse, I think, is the perception distortion that results from displaying two graphs with different scales side-by-side. Whatever scale is used, consistency is key.

Ironically, Krugman’s post was meant to call out graphical misrepresentation regarding levels of government spending. It all goes to show how much we need increased data and statistical literacy across the board.

Speaking of statistics

If you don’t believe me, ask European Central Bank (ECB) president Jean-Claude Trichet. The fifth ECB conference on statistics, originally scheduled for April but delayed by a certain Icelandic ash cloud, was rescheduled for this week. To take advantage of yesterday’s date (written in the European style, the date was twenty-ten-twenty-ten), it was declared the first World Statistics Day by the UN General Assembly. Trichet opened the conference by calling for better, more reliable statistics from all member countries.

Evidence-based decision-making in modern economies is unthinkable without statistics … The financial crisis has revealed information gaps that we have to close while also preparing ourselves for future challenges. This is best achieved through creating a wide range of economic and financial statistics that are mutually consistent, thereby eliminating contradictory signals due to measurement issues. The main aggregates must be both reliable and timely, and, in a globalised world, they should be comparable across countries and economies.

Not only did Trichet highlight the need for widespread use of accepted statistical methodologies, but he also urged the G20 to think of themselves as examples for the globalized world. Read the transcript of his speech here.

Rest in peace, Prof. Mandelbrot

I don’t wish to end on a sad note, but let’s say goodbye with much fondness and gratitude for Benoît Mandelbrot, who passed away last Thursday at the age of 85.

Mandelbrot spent most of his career at IBM, eventually becoming an IBM Fellow before moving on to teach at Yale. Mary Miller, Yale College dean, remembered Mandelbrot by saying:

He revolutionized geometry and made it possible to think about measurements and visualization of forms through an entirely new kind of geometry.

Mandelbrot is perhaps best remembered for the work he did with fractals (a term he coined). While not the first to discover them, his emphasis and research brought them into the limelight as a useful tool for understanding the world around us, including things like the movement of planets and the English shoreline.

The image below is a representation of the famous Mandelbrot Set, a mathematical set of points in the complex plane that does not simplify at any level of magnification.

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  • http://www.floatingbones.com Phil Earnhardt

    I enjoyed @ihnatko’s comment on twitter ( http://twitter.com/#!/Ihnatko/statuses/27549197550 ):

    “RIP Benoit Mandelbrot. Thank God he wasn’t murdered. It would have taken the cops forever to draw the chalk outline.”

    Like most scientific revolutions, fractals have taken a long time to seep into our cultural awareness. One of the best writings I’ve ever read is Tom Myers’s “Spatial Medicine” ( http://www.anatomytrains.com/explore/spatialmedicine/expanded ). Myers describes the three pervasive/fractal networks in the human body and how we can think about our health from that model. Myers wrote “Anatomy Trains”, a most wonderful book about our musculoskeletal anatomy and structural health.

    Fractals are closely related to chaos theory. For example, Jackson Pollock used chaotic movement to create the fractal patterns for many of his paintings. Understanding chaos theory helps to understand fractals (and vice versa). Professor Steven Strogratz’s 12-hour video course “Chaos” (from http://www.teach12.com) covers both topics very well. Copies of this course are also regularly available on EBay.

    Although he didn’t use the word “fractal”, Buckminster Fuller described tensegrity in terms of these recursive structures. From 740.21 of “Synergetics” ( see http://www.rwgrayprojects.com/synergetics/print/p700.pdf ):

    “It is obvious that each of the seemingly ‘solid’ compression struts in tensegrity island complexes could be replaced by miniature tensegrity masts. There is nothing to keep us from doing this but technological techniques for operating at microlevels. It is simply that each of the struts gets smaller: as we look at each strut in the tensegrity mast, we see that we could make another much smaller miniature tensegrity mast to replace it. Every time we can see a separate strut and can devise means for making a tensegrity strut of that overall size, we can substitute it for the previously ‘solid’ strut. “

    Fuller’s visionary text “Synergetics” is both wonderful and quite challenging to read. The book is out of print but is freely available for download in chapters from http://www.rwgrayprojects.com/synergetics/print. A far more accessible book is Amy Edmondson’s “A Fuller Explanation”. The Harvard professor’s book is available as a book or PDF from lulu.com ( http://www.lulu.com/content/664771 ). It is also available for free viewing in its entirety on Google Books ( http://books.google.com/books?id=F6n2dZJ1POwC ). Kudos to Fuller’s estate, Professor Edmondson and publisher Jim Hausman for providing such open access to these titles.