[excepts from the book “The Black Swan authored by Nassim Nicholas Taleb]
This is something I find interesting and want to share with others, which, I hope , some will also take an interest in.
A Black Swan is an event, positive or negative, that is deemed improbable yet causes massive consequences.
What is called a Black Swan follows these three attributes, 1) it is an outlier. as it commands the realm of regular expectations, because nothing in the past can convincingly point its possibility; 2) it carries an extreme impact; 3) inspite of its outlier status, human nature makes us concoct explanations for its occurrence, after the fact, making it explainable and predictable, in short rarity, extreme impact, and retrospective (though not prospective) predictability, [the highly expected not happening is also a Black Swan. Note that by symmetry , the occurrence of a highly improbable event is the equivalent of the nonoccurrence of a highly probable event]. A small number of Black Swans explain almost everything in our world, from the success of ideas and religions, to the dynamics of historical events, to elements of our own personal lives. Ever since we left Pleistocene, some ten millennia ago, the effect of these Black Swans has been increasing, it started accelerating during the industrial revolution, as the world started getting more complicated, while ordinary events, the ones we study and discuss, and try to predict from reading the newspapers, have become increasingly unconsequential.
Just imagine how little your understanding of the world on the eve of the events of 1914 would have helped you what was to happen next. (Don’t cheat by using the explanation drilled into your cranium by your dull high school teacher.) How about the rise of Hitler and the subsequent war? How about the precipitous demise out the Soviet bloc? How about the consequences of the rise of Islamic Fundamentalism? How about the effect of the spread of the Internet ? How about the market crash of 1987 (and the more unexpected recovery)? Fads, epidemics, fashion, ideas,the emergence of art genres, and schools. All follow these Black Swan dynamics. Literally, just about everything of significance around you might qualify.
The combination of low predictability and large impact makes the Black Swan a big puzzle. Add to this phenomenon the fact that we tend to act as though it does no exist! I don’t mean just you, your cousin Joey, and me, but almost all “social scientists” who, for over a century, have operated under the false belief that their tools could measure uncertainty. For the applications of the sciences of uncertainty to real-world problems has had ridiculous effects; I have been privileged to see it in finance and economics. Go ask your portfolio manager for the definition of “risk” and odds are that he will supply you with a measure that excludes the possibility of a Black Swan–hence one that has no better predictive value for assessing the total risks than astrology (we will see how they dress up the intellectual fraud with mathematics). This problem is endemic in social matters.
The central idea of this book concerns our blindness with respect to randomness, particularly the large devistions: why do we scientists or nonscientists , hotshots or regular Joes, tend to see pennies instead of the dollars? Why do we keep focusing on the minutiae, not the possible significant large events, inspite of the obvious evidence of their huge influence?
It is easy to see that life is the cululative effect of a handful of significant shocks. It is not so hard to identity the role of the Black Swan, from your armchair (or barstool). Go through the following exercise. Look into your own existence. Count the significant events, the technological changes,and the inventions that have taken place in our environment since you were born and compare them to what was expected before their advent. How many of them came on a schedule? Look into your own personal life, to your choice of profession, or meeting your mate, your exile from your country of origin , the betrayals you faced, your sudden enrichment or improvishment. How often did these things occur according to plan?
WHAT YOU DO NOT KNOW
Black Swan logic makes what you do not know far more relevant than what you do know.* Consider that many Black Swans can be caused and exacerbated ‘by their being unexpected.’
Think of the terrorest attack of Sept. 11, 2001: had the risk been reasonably conceivable on Sept. 10, it would not have happened. If such a possibility were deemed worthy of attention, fighter planes would have circled above the Twin Towers, airplanes would have had locked bulletproof doors, and the attack would not have taken place, period. Something else might have taken place. What? I don’t know.
*The Black Swan is the result of collective and individual epistemic limitations(or distortions), mostly confidence in knowledge; it is not an objective phenomenon. The most severe mistake made in the interpretation of my Black Swan is to try to define an “objective Black Swan” that would be invariant in the eyes of all observers. The events of September 11th, 2001,were a Black Swan for the victims, but certainly not to the perpetrators .The postscript provides an addionan discussion of the point.
Here is part one I will send more.
One question to think about, would you consider COVID-19 a Black Swan?
Dean Giacomo #1207157
Nottoway Correctional Center
Categories: Dean Giacomo