Mathematically speaking, Brazil has an 18.8% chance of winning the 2010 FIFA World Cup, followed by Germany with 18.6% and Italy with 17.5%. This is according to an actuarial model prepared by an actuary and a pricing analyst from RGA Reinsurance.
The same model predicts that England’s chances are 6.4%, followed by the Netherlands with 5.4% and Spain with 5.3%.
Afflicted with soccer fever, the team of number crunchers, Greg Becker, a product development actuary in charge of managing RGA’s worldwide Innovation Centre, and Arminder Kainth, an annuities pricing analyst at RGA, put aside their risk calculations and applied their actuarial skills to find some mathematical answers to who is likely to win the 2010 FIFA World Cup using previous World Cup performance statistics.
Rowan Burger, chairperson of the Actuarial Society of South Africa’s Communications and Marketing Board, says with their World Cup predictions, Becker and Kainth have shown the fun side of being an actuary and playing with numbers.
“Actuaries use numbers to predict the odds – normally to help people understand risks such as death and how to protect themselves from these. In this case, they have applied numbers to predict the odds of a positive outcome.”
Burger points out, however, that it is impossible for numbers to factor in the human element of soccer, which can significantly alter the outcome predicted by an actuarial model.
“While the actuarial model prepared by Becker and Kainth calculates a slim chance of South Africa winning the 2010 World Cup, a good run of form, intensive preparation and 50-million vuvuzelas behind them may very well help Bafana Bafana outperform statistical expectations.”
Becker and Kainth explain that they took the historical results of teams that will be participating in the 2010 Soccer World Cup and developed a win/draw/lose likelihood probability for each team. According to them it is no surprise then to see that past winners such as Brazil and Germany are most likely to win matches.
Both concede, however, that it was impossible to factor in things such as teams no longer consisting of the same players as in previous world cup games.
“We developed a model and simulated the entire tournament thousands of times. It is interesting to note that, using our system, all teams have a chance of surviving the group phase, but that the chance of surviving is heavily dependent on both the team’s historical performance and the quality of the opposition in their group.”
With South African actuaries firmly behind Bafana Bafana, Burger concludes that the investment industry has taught the lesson that past performance is not necessarily a good predictor of future performance.
Get the latest issue of FAnews