WELCOME TO THE ALGOWORLD; Suddenly Maths Is Hot -- Algorithms Run Our Net-Driven World and Are Even the Subject of Robert Harris's New Thriller. Sam Leith Reports WELCOME TO THE ALGO OWORLD

Article excerpt

Byline: Sam Leith

ROBERT Harris's new book, The Fear Index, may on the face of it have the nerdiest premise of any thriller for quite some time. Its hero is not a detective or a secret agent or a maverick investigative journalist. He's a pointy-headed maths spod. Alex Hoffmann designs computer programs that predict the movements of financial markets for his hedge fund.

What puts his life and those of others at jeopardy in this book is VIXAL-4. VIXAL-4 is not a giant diamond, or a dark secret, or a political plot, or a bank vault full of millions: it is, basically, a bunch of mathematical equations.

Harris has once again proved himself to be a man with a sure touch for the zeitgeist. The Sunday Times reported yesterday that a British hedge fund is using a cunning algorithm to trawl tweets in an attempt to predict the stock market.

And in a speech at the technology conference TEDGlobal this summer, computer scientist Kevin Slavin argued that a profound shift is taking place: maths is undergoing a "transition from being something that we extract and derive from the world to something that actually starts to shape it".

The maths Slavin is talking about, and Harris is writing about, is algorithms.

We are, he says, living in an "algo-world". If Slavin is right, algorithms are shaping everything from the goods we buy to the value of the money with which we buy them.

An algorithm, simply put, is a set of instructions. No more nor less than that. It takes an input -- let's say x -- and enacts a certain number of procedures at the end of which it spits out an output which we can call y. Computer programs are made of algorithms.

In little more than a decade, Google has become one of the most valuable companies in the world for no reason other than it had better algorithms than the next company along. The key to Google's success is its uncanny ability to put the most useful search result at or near the top of its results list. It does this with algorithms that work out how many pages link to a given site -- and then values each of those links according to how many pages link, in turn, to those ones.

But it's not just Google. Algorithms are filling every area of life -- bringing previously unimaginable efficiencies and conveniences. They help make some people (fund managers and the founders of Google, to take the most obvious instances) filthy rich, and they help make things cheaper and easier for the rest of us.

Marketing companies use algorithms to target their campaigns. Airlines use algorithms to adjust the costs of flights. More than half of online film purchases are determined by recommendation algorithms. iTunes's Genius software uses algorithms to build playlists of songs that go well together. Facebook uses algorithms to work out who your friends are likely to be. The security services use algorithms to identify possible terror suspects.

Algorithms, then, are clever little chaps. They can do things that leave you and your pocket calculator standing. They can recalculate odds faster than the quickest tic-tac man on the circuit; they can price global commodities markets; they can manage the distribution of electricity across the grid with the maximum efficiency minute-by-minute; they can run peer-to-peer distribution systems across the internet. …


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