Blog 34: Apophenia by Xavier Lo, FIA, FRM, MBA

Apophenia [關連感應]. Not a word that you use every day. However, it is definitely something that you will understand and recognise in your life. Have you ever looked at cars and thought they were smiling or frowning at you [對著你笑嘅車]? Or have you sometimes looked at the remaining tea leaves in your cup of tea and thought it was spelling out random letters [冇關係嘅英文字母]? If so, then you’ve experienced apophenia!

This word actually just means seeing connections [關係] or meaning [意思] in unrelated things. This obviously can be in the form of images (like the famous example of seeing a man’s face on the surface of the moon), or even in gambling [賭博], when you play roulette [輪盤] and start to think that there is a pattern in the number of reds and blacks (as a side note, there most likely isn’t a pattern). Why do we do this? There are many theories, but the one I like is that we love to make logical sense [邏輯性] of the world. It gives us the feeling that we are in control and are able to explain seemingly random things. It also helps us simplify the world [簡化世界] around us because if we can see patterns in things, it allows us to expect things – which could sometimes mean the difference between life and death!

How does this impact us actuaries? Well, when we are dealing with data analysis, if our brains are actively looking to find patterns [模式] or meaning, we will definitely find something. However, this doesn’t mean that the data is really telling us a story. It just means that we imposed our thoughts onto the data. That’s why it is so important to ask someone else to independently review your work!

I know its always exciting when we manage to see meaning in ordinary things. There’s no better feeling than that moment where you think you’ve managed to find something that no one else in the world has ever looked into. Although this feeling does bring you out of this world, just always be mindful to not let apophenia bring us crashing down!

About the Author

Xavier Lo, FIA, FRM, MBA

Qualified fellow actuary (in UK and Hong Kong), Financial Risk Manager, and MBA graduate (listed on the Dean's List) with a passion for insurance, data science, and analytics. Experienced in a broad range of insurance roles (pricing, capital modelling, reserving, ERM), along with a touch of knowledge in banking. Member of the General Insurance Committee (2021), Actuarial Innovation Committee (2019 - 2021) in ASHK.