# The practical side of 'pure mathematics':

# How differential geometry can save the U.S. government
40 billion dollars a year.

### Eric Weinstein

### Mathematics Department, MIT

### 4:00 PM, September 25, 1997

### Room 102, Bradley Hall

The overstatement of the Consumer Price Index (CPI) may be the world's
most costly accounting error:

"*...remarkably, the upward bias by itself would constitute the
fourth largest federal outlay program, behind only social security, health
care and defense. By 2008, the increased deficit would be $180 billion
and national debt $1 trillion.*"

-Final Report of the Boskin Commission on CPI

Economic theorists have developed numerous formulae to define, quantify,
and index growth and inflation. Unfortunately, they are known to be

B). Ill defined for consumers whose tastes are not absolutely constant.

C). Incomputable from (price and quantity) data without detailed knowledge
of consumer psychology

and these difficulties have come to be known as "The Index Number
Problem(s)". In joint work with economist Pia Malaney, we show that
all the above problems can be simultaneously eliminated in a novel way
by recasting the problem in the differential geometric framework of connection
theory on fiber bundles. This introductory talk will focus on an application
of gauge theoretic differential geometry to the first of these outstanding
problems in mathematical economics. Conversely, the talk could be viewed
as an unorthodox introduction to gauge theory bypassing the abstraction
of differential geometry by way of the CPI.

*This talk should be accessible to grad students and advanced
undergraduates.*