The Man With the

Sprained Brain

Presented By: Rajan Thakur

FIN 700
Lambert Adolphe Jacques Quételet
(22 February 1796 – 17 February 1874)

 Born in a Belgian.
 Astronomer, mathematician,

statistician and sociologist.

 He founded and directed the

Brussels Observatory and was

influential in introducing statistical
methods to the social sciences. Along with the
discovery of Bell Curve.
Bell Curve
 Quetelet - The average man
“Effect are proportional to causes.”
- by Lambert Adolphe Jacques Quetelet

“The greater the number of individuals observed, the

more do peculiarities, whether physical or moral,
become effaced, and allow the general facts to
dominate, by which society exists and is preserved.”
- by Lambert Adolphe Jacques Quetelet

“If you torture the data long enough, the numbers will
prove anything you want.”
 Francis Galton
(16 February 1822 – 17 January 1911)

 Born in Birmingham, England.

 English Victorian polymath,
anthropologist, eugenicist,
geographer, meteorologist,
proto-geneticist, and statistician.
 Produced over 340 papers and books in many subjects
throughout his lifetime.
 He created the statistical concept of correlation and
widely promoted regression toward the mean.

 Eugenic
 A word whose Greek root means good or
well.
 A notorious word, adopted by the Nazis
associated with the extermination of
millions of human beings.
 Labeled by Galton, a study of how talent
persist through generation after
generation in certain family.
 The study of eugenic (Cont’d)
 Measurement was Galton’s hobby.
some interesting experiment: Beauty map of
England.
 Built a Anthropometric Laboratory in 1884.

Tracking all kinds of possible character of human

body.
 Spent several years in Africa for explorer and
study. (sprained brain)
 The study of eugenic (Cont’d)
 The study of heredity has to do with the transmission of
key characteristic from generation to generation.
 Under big influence of Quetelet. Use statistic methods in
his research.
 By developing his study, he start to classify people by
natural ability.
 The normal distribution was ubiquitous, especially in the
measurement as body height and chest measurement.
 In 1869,Galton Published most important work-“Heredity
Genius”. This book give a lot of evidence to prove that
talent and eminence are hereditary attributes.
 The study of eugenic (Cont’d)
 Along with the study, Galton’s find that the law of the
deviation from the mean stood stubbornly in his way.
 Then he had to explain differences within the normal
distribution. Which is why the data arrange themselves
into a bell curve.
 An extraordinary discovery: Moderate influences occur
much more often than extreme influences, both good
and bad. Which is regression to the mean.
 Some famous experiment to demonstrate his concept.
Use Quincunx I and Quincunx II; Sweet Peas.
 Regression to the mean
 Regression to the mean is dynamic.
 Motivates almost every variety of risk-
taking and forecasting.
 Fear or greed has encouraged the crowd
to drive the stock’s price away from its
intrinsic value to which it is certain to
return.
--by the author
 The concept of correlation
 Galton’s another great contribution was the
discovery of corelation.

 Definition
A measurement of how closely any two series
vary relative to one another. It indicates the
strength and direction of a linear relationship
between two random variables.
 The concept of correlation
 Formula
The correlation coefficient ρX, Y between two
random variables X and Y with expected values
μX and μY and standard deviations σX and σY
is defined as:
 The concept of correlation
 where E is the expected value operator and cov
means covariance. A widely used alternative
notation is
Calculating a weighted correlation

 Weighted Mean:

 Weighted Covariance
Calculating a weighted correlation

 Weighted Correlation
 The significant meaning
 Galton’s work reflects that the study of
probability is essential tool for the analysis of
everything.
 What Galton and these other innovators learned
along the way led ultimately to the emergence of
today’s complex instruments for the control and
management of risk in both business and
finance.