Can The Actuarial Profession Innovate?.....Should It?
“Neither the Society of Actuaries nor the American Academy of Actuaries will be publishing the paper or endorsing it……we do not think it would be appropriate …… to take the existing paper and publish it somewhere else…..”.
TOM WILDSMITH, PRESIDENT, AAACRAIG REYNOLDS, PRESIDENT, SOA
There is no better way to create interest in a paper than to ban its publication. This is effectively what the American Academy of Actuaries (AAA) and the Society of Actuaries (SOA) did with a paper innocuously titled “Financial Economics Principles Applied to Public Pension Plans”. The ban has already been the subject of articles in Pensions & Investments titled “Actuary groups disband taskforce on finance”, in The Economist “No love, actuary: a report on American pension funds is controversially shelved”, in MarketWatch “The $6 trillion public pension hole that we’re all going to have to pay for”, and in the Wall Street Journal “Covering up the Pension Crisis”. i
Given that the AAA and the SOA identify themselves as organizations interested in respectively promoting good public policy and good education/research in pensions, banning a research paper by a taskforce they themselves created is surely a highly unusual step. Presumably, the organizations felt strongly that the paper did not meet requisite education/research quality standards, nor would it foster good public policy in pension design, disclosure, and regulation. This Letter summarizes the key messages of “the paper”, offers opinions on why it was banned, what the ban says about innovation in the actuarial community, and on what good research, education, and public policy advocacy in pensions could and should produce.
SOA President Craig Reynolds announces the SOA has changed its mind, and will soon publish a version of “the paper” that is “acceptable to all parties”. However, now it appears that a copyright battle has broken out between the warring parties.