What is its essence?
Yes, in the fact that if you have conceived a business, conceived a project, then it can be fully realized, but on one condition - that all favorable factors are available.
As soon as one factor is missing, your whole business can go downhill. The simultaneous combination of all the necessary factors - this can be called an exception.

For the first time in his book, the biologist Jared Diamond used this principle, he explained why not all animals can be domesticated and what conditions are needed for this.

• An animal must grow rapidly in order to be profitable and economical.
• Breed in captivity. Not every animal is ready to do it locked up - this is the problem of many zoos.
• Unpretentiousness in food.
• Friendliness - is it possible to tame his obstinate temper?
• Reaction to danger - animals react differently to danger, there are those that run away with all their might and are unlikely to be able to collect them later.
• Independence - Individualists and loners are inherently poor candidates for domestication.

The combination of all these factors led to the domestication of many animal species.

To explain the circle economic phenomena Krasnoyarsk professor Alexander Gorban uses this principle. He also brought it into circulation. Based on it, he investigated the adaptation various systems and organisms to external conditions. Studied why crashes happen banking systems s, ups and downs in the markets, mortality after oncology operations, etc.

The bottom line is that by observing the statistical relationship of some quantities financial systems how they behave under the influence of external factors, it is possible to calculate the crisis, even before it begins, to find hidden tension. If anything, predict the future.
Paraphrasing Tolstoy's statement, he concluded that

"All well-adapted systems are alike; all maladjusted systems experience problems with adaptation - each in its own way"

If the pressure of external factors becomes stronger, then this leads to economic suicide - the full principle of "Anna Karenina".

I bring to your attention;

• What does the expression "black swan" mean?
• What does the term shock therapy mean? What does it include?

Krasnoyarsk professor of applied mathematics Alexander Gorban, who teaches at
British University of Leicester, became the author of the "principle of Anna Karenina". The essence of the principle
in the fact that the existence in stress and the subsequent negative consequences, the scientist saw in
economic processes, in particular in the stock market. Such observations and building on them
the basis of mathematical models could help in risk management.

Patterns of stress

It all started with the fact that a team of researchers from the Siberian Federal University (Krasnoyarsk), led by Professor Gorban, turned to many previous observations of groups of people and animals, as well as trees and other plants, on the one hand, and tracking stock quotes and changes in the banking sector on the other.

All this was done for one purpose. “In many fields, from physiology to economics, animal behavior or ecological adaptation, groups of similar systems have been studied, whether they are cells, stock prices or trees that adapt to a polluted environment. By studying the dynamics of correlation and difference in many systems that are under the influence of external or environmental factors, we can usually predict the crisis and the time of its onset even before its obvious signs appear, as the correlation between the subjects increases and at the same time their difference increases ( and variability),” the mathematician comments on the essence of the problem.

To explain what is meant, the following example is given. The influence of hot steam from a thermal power plant on a nearby Scotch pine was studied. To assess its response to emissions, the products of metabolism in the needles (metabolites) were analyzed. At the same time, the control group of Scotch pines of the same age was away from the CHP and was not affected by emissions. Metabolites in the control group of pines were normal on average. The typical difference in the test group was 2.56 times higher, and the difference in correlations was huge: in the test group, the correlations were almost five times higher.

Similar things can be observed in relation to man. Physically healthy people in dirty industrial areas experience physiological stress. The body adapts to maintain a normal life. But sooner or later, this constant tension leads to failures in the form of cardiovascular and oncological diseases. And the percentage of these ailments will be higher than that of residents of ecologically safe areas.

The same effect is observed in the stock market. For example, in the dynamics of the share price of the 30 largest companies that were traded on the London stock exchange From August 14 to October 14, 2008, the correlations increased fivefold and the difference increased sevenfold.

The work of Alexander Gorban can explain what happens when the resources for the normal functioning of the economic system are almost exhausted. He points out that this could be seen as the "Anna Karenina principle" in action.

How not to lie under a train

Leo Tolstoy's novel begins with the phrase: "All happy families are alike, each unhappy family is unhappy in its own way." Gorban paraphrases: "All well adapted systems are similar to each other, all unadapted systems experience problems with adaptation, each in its own way." And he adds that “shattered” systems actually become more correlated in their misfortunes, which leads to a predictable crisis.

This approach builds on an earlier idea known as "energy of adaptation", originally put forward by endocrinologist Hans Selay in the 1930s. He wrote that "energy of adaptation" is a physiological resource, what is also called increased endurance when the body is under biological stress. Gorban and his colleagues have demonstrated that the same concept can be applied to financial institutions, using the metaphor "energy of adaptation" for statistical analysis economic systems.

However, this is not the end. If the pressure of external factors increases even more, then the “order of adaptive disorder”, according to the scientist, collapses to a completely disordered state, an economic “fatal outcome” or economic suicide, if you like. Such an outcome is the full realization of the "Anna Karenina principle."

It is important that physiological stress and human behavior in Gorban's theory is not a cause, but a model for explaining economic cataclysms. “It is not the level of stress of people that is monitored, but the “stress level” of adapting entities - firms. A method of correlation adaptometry has been constructed that allows this to be done. It is applicable to ensembles of the same type of adapting subjects and does not depend on nature,” Alexander Gorban told RBC daily.

According to him, the probability of “death under the train” can be traced not only in relation to the stock market: “Mikhail Dorrer worked with intra-company statistics with his graduate student Sergey Masaev. The first results are quite successful: it is possible to find hidden tensions and predict the crises of the company, the scientist notes. “Another area of ​​application is the analysis of the Russian financial and banking systems.”

Meanwhile, the professor's theory itself is still in development. “We do not build a comprehensive mathematical model, but we find a number of signal indicators based on indirect signs - the analysis of correlations instead of the dynamics of price values, etc. Harbingers of a crisis appear before noticeable drops in stock exchange and other indicators. Whether it is possible to use them regularly is a question for further research,” sums up Alexander Gorban.

Anna Karenina principle describes situations where the success of a project, idea or business is possible only if a number of factors are simultaneously present and, therefore, the absence of at least one of these factors dooms the entire enterprise to failure. The principle was popularized in Guns, Germs and Steel by Jared Diamond, in which he explored the geographic, cultural, environmental, and technological factors that led to the dominance of Western civilization throughout the world.

The name of the principle is based on the famous aphorism of Leo Tolstoy that opens the novel Anna Karenina:

All happy families are alike; each unhappy family is unhappy in its own way.

Application and examples[ | ]

Story [ | ]

Diamond, in Guns, Germs, and Steel, uses this principle to illustrate why there are so few instances of domestication of wild animals in human history: it only takes one necessary factor to be absent to prevent an animal from being domesticated. The simultaneous combination of all necessary factors is rather an exception.

He lists six essential ingredients without which domestication would be impossible:

• diet- A candidate for domestication must be unpretentious in food. Too picky animals are obviously unsuitable: too much fuss is required by a creature that feeds, for example, exclusively on dates.
• growth rate- The animal must grow fast enough to make it economically viable to breed. For example, a person who intended to breed elephants would have to wait 12 years for the elephant to reach maturity.
• Problems with breeding in captivity- Some animals do not want to breed in artificial conditions. So the male cheetah in his natural environment has to chase the female for several days to provoke her ovulation. In this regard, cheetahs, which are noticeably superior to dogs as hunting animals, are very difficult to breed.
• viciousness- Some species are too hostile to be a good candidate for domestication. In particular, the zebra would be an excellent candidate if not for its obstinate disposition.
• tendency to panic- Different species react differently to danger. Animals that immediately take flight at the first threat are hardly suitable for keeping on the farm.
• social structure- Independent mavericks are also bad candidates. Animals with a well-defined social hierarchy and the ability to mistake a person for a leader are best suited for breeding.

From physiology to economics[ | ]

Thus, "in the chaos of maladaptation, order arises": during periods of crisis, both the spread (systems become more “dissimilar”, the size of the data cloud grows) and correlations (the dimension of the data cloud decreases) increase simultaneously. The effect theory is based on the concept of adaptive energy, introduced by G. Selye in the 1930s. Based on this supplemented principle of Anna Karenina, a method of correlation adaptometry was created. In economics, it is used to analyze various objects: from individual enterprises to national banking systems. In physiology, Gorban's approach has been successfully used by various authors in comparative analysis adaptation in various situations, in health and disease, and from human physiology to plant adaptation.

Vladimir Arnold in his book "" describes the so-called. “Principle of the fragility of good”, which, in a sense, complements the Principle of Anna Karenina. "Good" systems must simultaneously have a number of properties, and therefore are more fragile than bad ones:

... for a system belonging to a special part of the stability boundary, with a small change in parameters, it is more likely to fall into the instability region than into the stability region. This is a manifestation of the general principle that all good things (such as sustainability) are more fragile than bad things. Apparently, all good objects satisfy several requirements at the same time, while an object that has at least one of a number of shortcomings is considered bad.

Duane Moore describes the application of the Anna Karenina principle in the field of ecology: successful environmental risk assessments are all the same, each unsuccessful environmental risk assessment fails in its own way. The Anna Karenina principle also applies to environmental risk assessment with multiple stressors.

Notes [ | ]

1. A.N. Gorban, E.V. Smirnova, T.A. Tyukina, Correlations, Risk and Crisis: From Physiology to Finance , Physica A, Vol. 389, Issue 16, 2010, pp 3193-3217.
2. "In the chaos of maladaptation, there is an order. It seems, paradoxically, that as systems become more different they actually become more correlated within limits." Anna Karenina principle explains bodily stress and stockmarket crashes, University of Leicester, 2010.
3. Group Stress Effect and Correlation Adaptometry
4. S. N. Masaev, M. G. Dorrer, Evaluation of the company management system based on the method of adaptive correlation to the external environment // Problems of Management, No. 3, 2010, 45-50.
5. E. V. Pokidysheva, Assessing the contingency of monetary and banking policies during the crisis , Finance and Credit 42(426), 2010 (November), 72-78.
6. Gorban A. N., Manchuk V. T., Petushkova E. V. Dynamics of correlations between physiological parameters during adaptation and the ecological-evolutionary principle of polyfactoriality // Problems of ecological monitoring and modeling of ecosystems. - L .: Gidrometeoizdat, 1987. - T.10. - P.187-198.
7. Svetlichnaya G. N., Smirnova E. V., Pokidysheva L. I. Correlation adaptometry as a method for assessing cardiovascular and respiratory interaction // Human Physiology. - 1997. - V.23, No. 3. - S.58-62.
8. Pokidysheva L. I., Polyntsev L. A., Lazarenko V. I. On the relationship between rheographic parameters of the eye in normal and pathological conditions during adaptation to hypothermic exposure. Journal of Ophthalmology. - Odessa, 1996. - No. 3. - P. 153-155.

Krasnoyarsk professor of applied mathematics Alexander Gorban, who teaches at the British University of Leicester, became the author of the "Anna Karenina principle", seeing the commonality in the reactions of living organisms and economic systems to stress.

“In many fields from physiology to economics, animal behavior or ecological adaptation, groups of similar systems have been studied, whether they are cells, stock prices or trees that adapt to a polluted environment. By studying the dynamics of correlation and difference in many systems that are under the influence of external or environmental factors, we can usually predict the crisis and the time of its onset even before its obvious signs appear, as the correlation between the subjects increases and at the same time their difference increases ( and variability),” a mathematician who led a team of researchers from the Siberian Federal University (Krasnoyarsk) told RBC Daily.

The following example is given as an explanation. The influence of hot steam from a thermal power plant on a nearby Scotch pine was studied. To assess its response to emissions, the products of metabolism in the needles (metabolites) were analyzed. At the same time, a control group of Scotch pines of the same age was away from the CHP plant and was not affected by emissions. Metabolites in the control group of pines were normal on average. The typical difference in the test group was 2.56 times higher, and the difference in correlations was huge: in the test group, the correlations were almost 5 times higher.

Another example: physically healthy people in dirty industrial areas experience physiological stress. The body adapts to maintain a normal life. But sooner or later, this constant tension leads to failures in the form of cardiovascular and oncological diseases. And the percentage of these ailments will be higher than that of residents of ecologically safe areas.

The same effect is observed in the stock market. For example, in the dynamics of the value of the shares of the 30 largest companies that were traded on the London Stock Exchange from August 14 to October 14, 2008, the correlations increased by 5 times, and the difference - by 7 times.

The work of Alexander Gorban can explain what happens when the resources for the normal functioning of the economic system are almost exhausted. He points out that this could be seen as the "Anna Karenina principle" in action. To paraphrase Leo Tolstoy, Gorban points out: "All well-adapted systems are similar to each other, all unadapted systems experience problems with adaptation, each in its own way." And he adds that “shattered” systems actually become more correlated in their misfortunes, which leads to a predictable crisis.

This approach builds on an earlier idea (known as "adapting energy") originally put forward by endocrinologist Hans Selay in the 1930s. He wrote that "energy of adaptation" is a physiological resource, what is also called increased endurance when the body is under biological stress. Gorban and his colleagues demonstrated that this concept can be applied to financial institutions and used the "energy of adaptation" metaphor for the statistical analysis of economic systems. If the pressure of external factors increases to a certain level, it comes to "economic suicide". Such an outcome is the full implementation of the "Anna Karenina principle."

It is important that physiological stress and human behavior in Gorban's theory is not a cause, but a model for explaining economic cataclysms. “It is not the level of stress of people that is monitored, but the “stress level” of adapting subjects - firms. A method of correlation adaptometry has been constructed that allows this to be done. It is applicable to ensembles of the same type of adapting subjects and does not depend on nature,” Gorban explained to RBC daily.

According to him, in the course of similar observations and the search for "hidden tensions" it is possible to predict crises not only in stock markets but also within firms. “Another area of ​​application is the analysis of the Russian financial and banking systems,” the scientist notes.

The professor's theory is still in development. “We do not build a comprehensive mathematical model, but we find a number of signal indicators based on indirect signs - analysis of correlations instead of price dynamics, etc. Harbingers of a crisis appear before noticeable drops in stock exchange and other indicators. Whether they can be used regularly is a question for further research,” Gorban sums up.

By the way, the so-called Anna Karenina principle often works in economics. American scientist Jared Diamond formulated it on the basis of the famous phrase from Leo Tolstoy's novel that "All happy families are alike, each unhappy family is unhappy in its own way." For economic systems, this means that all efficient markets and companies have similar features, while problematic ones fail for various reasons. At the same time, the success of an enterprise depends on the simultaneous combination of many factors, while one mistake is enough for failure. This pattern has been known since the time of Aristotle. The ancient philosopher wrote that "it is possible to do the right thing in only one and only way," since "good is certain, and evil is limitless."

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