Chelsea is to win the Premiership, the Actuarial Profession's Life conference has been told
Greg Becker, an actuary with RGA, has demonstrated to the conference that through the use of actuarial, statistical and risk management techniques it is possible to build a model which can forecast who will win the Premier League 2010/2011.
Becker delivered a presentation using computer simulations and a technique known as Monte Carlo simulation. The detailed model has been tested against recent results, and shows how it would have been able to successfully predict the winner, and those teams who would be relegated, of the Premier League, had it been used at this stage last season.
However, Becker did not claim his method was necessarily the ultimate in accuracy, and warned betting statistics are often an even better indicator of future results.
He said: "Since people are putting their money where their mouth is, and taking into account more information than a model ever could, they are the best predictors of the future.
"There are many examples of how a betting market can reflect diverse factors that affect the log, like player injuries, rumours of new signings, results in other competitions, so it is probably impossible to develop a model to take into account all these factors without introducing too much ‘model risk'."
"Unsurprisingly, my model is predicting Chelsea will win. But it's bad news for the Hammers, Wigan Athletic and Wolves. If my predictions are correct, they will be relegated."
On the accuracy of his model, Becker said: "I used a similar approach to model the World Cup and, once again argued for the use of betting statistics - which correctly predicted the winner. But I don't want to be held responsible should any punters bet big and lose."
