Editorial: The Importance of Keeping an Open Mind

by C.K. "Stan" Khury

Once in a while some interesting stuff blows in from Cyberspace. Recently I opened my E-mail and found one such item: a collection of statements made by respected members of society. Here is a small sampler:

"I think there is a world market for maybe five computers."—Thomas Watson, Chairman of IBM, 1943

"Who the hell wants to hear actors talk?"—H. M. Warner, Warner Brothers, 1927

"Heavier than air flying machines are impossible."—Lord Kelvin, Royal Society, 1895

"Stocks have reached what looks like a permanently high plateau."—Irving Fisher, Professor of Economics, Yale University, 1929

"There is no reason anyone would want a computer in their home."—Ken Olson, president, chairman, and founder of Digital Equipment, 1977

"640K ought to be enough for anybody."—Bill Gates, Microsoft, 1981

"Everything that can be invented has been invented."—Charles H. Duell, Commissioner, U.S. Office of Patents, 1899

And, as you might imagine, there were many more of these.

Of course, with the benefit of hindsight, we can chuckle about the foolishness of these statements. But consider that these experts were quite serious at the time they made their statements—and in no way were they intending to be funny.

Actuaries, by one generally accepted definition, estimate the current implications of future contingent events. Thus, in a very real sense, actuaries are in the business of predicting slices of the future (however narrow those slices may be) and stating those predictions in today’s terms. In the name of intellectual integrity and self-examination, I believe it would be fair to ask, given the human condition of actuaries as professional forecasters of the future, what lessons can one draw from the examples above?

We can think of at least two such lessons: One is to be especially sensitive to the need to open the mind when making statements about the future and the other is to learn, once the mind has been opened, to keep it open as we consider and re-consider statements we have made in the past about the future. In other words, no matter what truth our work may profess, it is essential to recognize that the test of time is a very harsh test and much of what we hold to be obviously true may well fail. We need to be constantly aware of that potential.

We still remember some of the examination readings that contained absolute statements about five percent being the proper provision for underwriting profit. We also remember a variant of that reading, that investment income should be excluded from the ratemaking process. And when it comes to loss reserves, we still hear an occasional debate on the question of the appropriateness of discounting loss reserves.

With respect to each of these and other items, those who believed the "older" points of view to be self-evident truths have had to revise their beliefs, however grudgingly.

One more point. The challenge of keeping an open mind applies to institutions as well as to individuals. By institutions we mean those who occupy the leadership positions—such as boards of directors, committees, officers, councils, and task forces. It has been our good fortune that the actuarial profession has been most scrupulous about testing the waters first before adopting anything that might look like a self-evident truth. There have been many of these opportunities in the past and we hope there will be many more, whether they have to do with the attempt to articulate a set of actuarial principles that underlie all of actuarial science or the attempt to revise the rules that govern the discipline procedures of the ABCD.

Keeping an open mind is a priceless virtue no matter how sure we may be about what we believe to be truth and no matter how sincere and noble our efforts may be about articulating that truth. However, keeping an open mind is an active process that requires each of us to take a personal responsibility to make our voices heard whenever our views are asked for. Let us endeavor to keep our minds and the minds of our actuarial institutions open. The leadership surely appreciates it whenever members speak up when their opinions are asked for