Numbers of 2012
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What is the concept behind 'Numbers of 2012' and how is the episode structured?
Thank you for downloading this edition of More or Less from BBC Radio 4. Here's Tim Harford. Hello and welcome to More or Less. This week, our special review of the year through the excellent, extraordinary, eccentric numbers of 2012. And who better to start the programme than one of the BBC's most excellent, extraordinary, and some might say eccentric, presenters. I'm Robert Paston, the BBC's Business Editor. My statistic of the year was given to me by Jean-Claude Trichet. He's the former president of the European Central Bank. And he told me about the 80-20 ratio for Europe and the 20-80 ratio for the United States. In Europe, roughly speaking, banks provide 80% of the finance needed by businesses and households, whereas in the States, banks provide only 20%.
20% of the finance required by businesses and households. Why does this matter? Well, it tells us a huge amount about the crisis in the Eurozone, and it also tells us a huge amount about why the economy of Britain and many of the economies of Europe in general have singularly failed to recover since the great crash of 2008, which Whereas although the American economy isn't off to the races, it has grown rather more strongly than the European economies. So let's explain the significance of being so dependent on banks. When banks are weak, when they have a shortage of capital, which is palpably true of many Eurozone banks and arguably, according to the government of the Bank of England, true of British banks,
they are reluctant to lend. What they try and do is they actually try and shrink. They try, to use a ghastly phrase, deleverage. And when banks deleverage, when money is not going to households and businesses, frankly, our households and businesses can't spend, they can't invest, and the economy can't grow. And also... When you have banks playing such an important role, it also turns out banks are enormous. They're so big that when they get into trouble, even governments like the Spanish government find it very difficult to afford to bail them out. So the 80-20 ratio tells you two fantastically important things. It tells you why the European economy has been so sluggish, and it also tells you why governments like Spain and Ireland have been on the brink of bankruptcy because their banks are so big they can't afford to rescue them.
My name is Pippa Wells, and I'm a physicist working at CERN in Geneva.
How does Jean-Claude Trichet's 80-20 banking ratio explain Europe's slow recovery?
At the end of last year, we had a tantalising hint that there might be a new signal emerging in the data we'd been recording at the Large Hadron Collider. And we're trying to answer various questions about how matter works. Why do elementary particles have mass? In the 1960s, several theorists proposed a mechanism to give mass to fundamental particles, and Peter Higgs realised that this new field that they needed would actually produce itself a new particle, the Higgs boson. Over the last decades, people have been searching for the Higgs boson, and we were really hoping that this year we'd confirm it and be able to announce the discovery of the Higgs boson. So my number for this year was five. That's the significance we had to reach in order to be able to say that we'd really found something.
If you make a measurement, the data tends to spread around the central value, and the width of that spread is characterised by the standard deviation, which we call sigma, the Greek letter sigma. About two-thirds of the data will be within one sigma of the central value, but we need to get five sigma away from the central value to be able to say we've actually made a significant discovery. This means that the events we're seeing from well-known processes could not have fluctuated up to give a fake signal with a probability of more than one in 3.5 million. To everyone's astonishment, both experiments had reached the five-sigma level, and both with the same mass for the Higgs boson of around 125 GV, so that's about 125 times heavier than a hydrogen atom.
So the fact both experiments had seen it, and what's more, with consistent mass in the two experiments, we were absolutely confident that we'd found something new.
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Chapters
4 chapters
1
What is the concept behind 'Numbers of 2012' and how is the episode structured?
0:00–2:42
2
How does Jean-Claude Trichet's 80-20 banking ratio explain Europe's slow recovery?
2:42–14:37
3
What did CERN scientists mean by 'five sigma' when announcing the Higgs boson?
14:37–24:43
4
How unlikely is it that there have been no openly gay top‑level footballers in 20 years?
24:43–27:23