Physicists, models, and the credit crisis

I remember working in The City in the late 90’s and Wall Street in the early 00’s and remarking then that just about every quant had a physics or engineering background.  I met very few statisticians.  (Had there been more, it would have been easier to sell the merits of S — my job at the time — versus Matlab which along with Excel was endemic.)  Quantitative models have taken a hefty share of the blame for the credit crisis, but I wonder whether the blame lies more in their application, rather than the models themselves. Statisticians are trained on the limitations of models (Box: “all models are wrong, but some are useful”), and how to detect when models are breaking down, but statisticians were woefully underrepresented amongst quants. Do physicists and engineers get si…

I remember working in The City in the late 90’s and Wall Street in the early 00’s and remarking then that just about every quant had a physics or engineering background.  I met very few statisticians.  (Had there been more, it would have been easier to sell the merits of S — my job at the time — versus Matlab which along with Excel was endemic.)  Quantitative models have taken a hefty share of the blame for the credit crisis, but I wonder whether the blame lies more in their application, rather than the models themselves. Statisticians are trained on the limitations of models (Box: “all models are wrong, but some are useful”), and how to detect when models are breaking down, but statisticians were woefully underrepresented amongst quants. Do physicists and engineers get similar training?