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Unlocking the power of statistics

From confusion to career opportunities

During my time studying Maths there was always one topic that would trip me up: statistics. Being an A-level physics student, I could understand why calculus is useful in real life, using differentiation to calculate the velocities of projectiles. And I could look and see how geometry is used in buildings and structures. However, statistics often made me feel unrelatable and lost, as I was unable to see real-world applications. But today, I wish to alter my old perspective.

First and foremost, you might be pleasantly surprised to learn that statistics opens doors to some of the most lucrative careers available today. We'll delve into roles such as quantitative analysts, who boast a national average salary of £99,000 per year. But if finance is not your cup of tea, there are many other rewarding career paths to explore, from becoming a data scientist to forecasting the weather as a meteorologist.

In this article, I wish to unveil the world of statistics, revealing its importance and shedding light on its real-life applications. My hope is to not only inspire those who are already passionate about statistics but also to ignite motivation in individuals who, like me, found themselves in a similar predicament a few years ago.

The Actuary

Less well known when compared to a banker or engineer, an actuary’s sole purpose is to analyse risk for multiple different scenarios. It may sound simple on first inspection, but being an actuary is a very well-established career requiring many years of learning followed by some of the most challenging exams in the job market.

An actuary attempts to quantify the risk of an event happening so that financial decisions can be made with an objective view. A good and close-to-home example of this is being either accepted or rejected from a credit card.

As a younger person below the age of 21, the chances of you getting accepted for a credit card are extremely and quite painfully low. This is because banks, and more specifically, credit score providers, deem you to be a high-risk person to lend to. They think this because you have a very short credit history, are unaware of how responsible you are with money, and are more afraid to lend you their cash. In other words, they don’t want you to spend their money on going out and drinking booze.

The insurance industry is, however, the biggest industry when it comes to actuaries. Both life and non-life actuaries work in teams with insurance providers to establish whether a client, company, or investment is worthwhile. Actuaries apply both statistics and actuarial science (similar to applied statistics) to real-life situations, evaluate whether to offer a premium to a customer, and then establish what that premium is.

You may see in advertisements that life insurance costs as little as £10 a month for a 20-year-old compared to someone who is 65. This is because the younger you are, the less likely you are to claim against your policy.

Actuaries put together vast amounts of information about people, lifestyle choices, and other factors to help determine the probability that someone may claim, suggesting a ‘fair’ premium that an insurance company may offer. Without the help of an actuary, insurance companies would either charge too much, making people disadvantaged, or charge too little, in which case they would have to default on their policy and be unable to pay out any claims.

Although this seems very specific, the role of an actuary is becoming increasingly important as people live longer lives and insurance companies become more fearful of defaulting.To put it into perspective, actuaries on average earn £80,000 working in London, putting you well in the top 10% of earners in the UK.

The Quantitative Analyst

Similar to an actuary, quantitative analysts do exactly what is said on the tin. They use quantitative methods to analyse data.

Often, companies like investment banks, hedge funds, and pension funds will hire front-office ‘quants’. The aim of the game is to send out trades as quickly as possible before all the other trading offices do. These big companies have links directly to the trading floor, so every millisecond counts, and it’s a quant's job to devise a trading strategy that beats the rest and operates in the least amount of time.

Quants are masters of statistics and mathematics, and for this reason, high-frequency trading firms like Hudson River Trading offer salaries to top mathematical minds in excess of $500,000.

The role of quantitative researchers is to explore the latest statistical articles being published by top universities and generate strategies that can be implemented in the stock market. This job is not one to be taken lightly, as salary is often based on performance, but someone who is motivated to explore the ins and outs of statistics may find themselves loving the life of a quant.

The Meteorologist

Meteorologists are the people that we incorrectly blame for the bad weather that we have. And they are also the people we blame when we forget to take a coat and get soaked on the long walk back home. But what do meteorologists actually do? And is it any more than just an educated guess?

Meteorologists, along with climatologists, collect millions of pieces of information every hour of every day across their 195,000 weather stations spread all around the globe. These stations collect key pieces of information, including atmospheric pressure, temperature, speed, rain, humidity, and many other components of current weather conditions.

With this information, meteorologists begin to paint a picture of what the current weather climate is like and then use forecasting methods and statistical models to estimate how the weather is going to change.

The probability that it might rain is much more than an educated guess; it is the probability that if this situation happened 100 times, it would rain the estimated number of times (i.e., if there was an 80% chance of rain, it would rain 80 times out of the hundred over a large enough sample).

As a forecaster, you will collect this information and input it into very advanced systems to analyse and give an outcome, but as a researcher, you will help derive these statistical forecasting models and improve them so that our apps and news channels are even more precise.

Not only that, but you may also find yourself researching the effects of climate change from the data that you analyse, and maybe even how the weather affects the spread of pollution and disease.

Meteorologists get paid a modest salary of around £32,000 per year, which may seem small when compared to that of a quant, but the quality of life is far more generous than some careers in finance.

To conclude

In conclusion, statistics, once a perplexing subject for many, can offer an exciting and rewarding career. From the meticulous work of actuaries, assessing risks and financial decisions, to the world of quantitative analysts, where every millisecond counts, and even to the indispensable role of meteorologists, who help us navigate the weather and climate change, statistics holds the power to transform lives and industries.

As we've explored, statistics is not just about numbers and formulas; it's about making sense of the world, predicting outcomes, and creating informed decisions. So, whether you're a seasoned statistician or someone who, like me, once felt lost in its complexities, remember that statistics isn't merely a subject to conquer—it's a key that unlocks doors to some of the most intriguing and well-compensated careers out there.

Written by George Chant

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