On the Shoulders of Giants

by Emily Kessler, SOA Senior Staff Fellow, Intellectual Capital

Emily photo As a relatively young science, actuarial science doesn’t yet have a lot of intellectual role models. I know each of us can name our own personal role models, probably some of whom are actuaries. But an individual’s relationship with a role model is personal; what inspires you may not inspire me. My personal role model may not be an appropriate role model for the profession.

So where does a profession get its role models? Who do we look up to as we push the science forward? In 2003 the UK actuarial profession voted and named Frank Redington (1906-84), who helped develop immunization theory, the greatest British actuary ever. The list was short enough that the #2 vote getter is still very much alive.

Why are role models important? Role models help us see what we can become, particularly at moments in our lives where we might not be so sure ourselves. They also help us recognize that we don’t need to be bound by the constraints set on us by others. They are the giants upon whose shoulders we can stand to become more than we thought we could be.

Dr. James C. Hickman, FSA, MAAA, ACAS (deceased), past Dean of the University of Wisconsin-Madison School of Business was such a role model. Actuaries are worse than MBAs at strategic vision and communication? Here’s an actuary who became the dean of a business school. Actuarial academics don’t understand the needs of the profession? Jim Hickman helped develop the stochastic view of life contingencies. His work led directly to the multi-decrement probabilistic models that many actuaries use every day. And, the stochastic basis of insurance is one of the drivers of risk theory. Actuaries don’t have vision? Not only did Jim Hickman became an expert on Social Security who helped reaffirm the need, in the 1970s, for structural reform, but he also, in writing on insurance pricing and product design, noted that immunization may not be sufficient to deal with volatile investment environments.

“If I have seen farther than others, it is because I was standing on the shoulders of giants.” (attributed to Sir Isaac Newton)

The Society of Actuaries Board of Directors recently renamed its doctoral stipend program to honor Jim Hickman. The Society of Actuaries James C. Hickman Scholars program provides stipends of $20,000 per year to students pursuing a doctoral degree in actuarial science or a related field who also hold or are studying to obtain an actuarial credential. There are now nine SOA Hickman Scholars (four scholars continuing from 2009-10 and five new scholars named for 2010-11). Our hope is that each SOA Hickman scholar becomes worthy of the Hickman name and proud bearer of his legacy. May they see farther, standing on the shoulders of Jim Hickman.

In researching the etymology of the term “role models” for this blog, I discovered it was coined by Robert K. Merton, an American sociologist (and author of On the Shoulders of Giants). That name sound familiar? You’re probably thinking of his son, Robert C. Merton, who won the 1997 Nobel prize in economics for his work behind Black-Scholes and CAPM. Robert C. Merton’s work has helped redefine actuarial practice and inspired a number of actuaries to rethink financial risk and risk management, particularly for pension plans—just as Jim Hickman’s work on the stochastic view of life contingencies reshaped actuarial practice.

Robert K. Merton, sociologist, Robert C. Merton, economist, and James C. Hickman, actuary. The company of giants.

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