In Box

Benoit Mandelbrot

With the financial crisis sparking renewed interest in his ideas, the godfather of chaos theory looks back on a life of turbulence.

ILLUSTRATION BY JOSEPH CIARDIELLO FOR FP
ILLUSTRATION BY JOSEPH CIARDIELLO FOR FP

I had a very eventful early life. My father’s business in Poland failed during the Great Depression. After we moved to Paris, we had to move again when World War ii started, and we settled in a very remote area of France, the equivalent of Appalachia. We were very lucky, but it’s probably not an accident that I became interested in studying turbulence and risk. They were very much a part of my life.

Near the end of the war, the time came for me to take my university exams. Because we kept moving around during the war, I hadn’t really prepared at all. Yet, after taking the exams, I came in first in my class in math. How did I do it? The truth is, I cheated. I hadn’t studied any of the formulas that were on the exam, but I had an understanding of geometry, which helped me get the answers.

I have studied a wide variety of topics in my career, and my work has been influential in a number of fields. There’s nothing really connecting the behavior of the Nile, metallurgy, and the behavior of prices except that I had the mathematical tools to explain them. I have friends who are hikers who have told me that they no longer look at mountains the same way after reading my work.

When I first began studying prices, it wasn’t a topic that mathematicians were working on. Purely by accident I saw a set of data on price changes presented in a lecture and realized they behaved similarly to the geometric models I was already studying. After I first published my work on prices, my ideas were mostly ignored for several decades. Today they are much more widely accepted. … Since the financial crisis began there’s been a lot more interest. Most economists, when modeling market behavior, tend to sweep major fluctuations under the rug and assume they are anomalies. What I have found is that major rises and falls in prices are actually inevitable. What you read in most financial theory textbooks bears almost no resemblance to what you actually see on most trading floors.

I’m an old man now. When I meet young students, they are sometimes surprised to see me alive and walking around. They’ve read about me in books where my name comes up after [Isaac] Newton, so they assume I must have lived around the same time as him.

 Twitter: @joshuakeating

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