Market crashes! Fads! 9/11! Fashion changes!
The quick demise of the Soviet Empire!
Epidemics! Viagra, a Success! Harry Potter, a Phenomenon!
Why are things so surprising?
Every so often, a book comes along that:
- Forces you to question your basic assumptions about how human knowledge is created;
- Reaffirms your skepticism about experts and their opinions and prognostications; and/or,
- Is highly entertaining in its varied use of stories, examples, and anecdotes.
Nassim Taleb's new book, The Black Swan: The Impact of the Highly Improbable, happily and systematically delivers on all three counts.
I had read Taleb's Fooled By Randomness, and enjoyed it. But "The Black Swan" is a much deeper and well thought-out exploration of the "unexpected" in our lives.
While Taleb's style is fun (and sometimes rude), personal, and engaging, the book itself (because of its subject matter) is not easy to plow through. My strategy was to read 10-15 pages a night for three weeks. My reward: a fresh perspective of some basic epistemological concepts.
The two main points are the book are: 1) the future is unpredictable; and, 2) we humans try to concoct stories to convince ourselves that the world is more predictable than it actually is.
Taleb defines a "black swan" as having these three characteristics: 1) it's an outlier: something outside the realm of regular expectations; 2) it carries an extreme impact; and, 3) it can be explained after its occurrence but can't be predicted beforehand. There you have it: rarity, extreme impact, and retrospective (though not prospective) predictability.
Much of the book consists of an exploration of 1) our blindness to randomness — particularly the big deviations— and 2) what Taleb calls "Black Swan Logic." Taleb is especially hard on Plato (and his intellectual descendants), categorical thinking, and the "Bell Curve" of expectations.
The more you summarize, the more order you put in, the less randomness. Hence the same condition that makes us simplify pushes us to think that the world is less random than it actually is . . . .
. . . Black Swan Logic makes what you don't know far more relevant than what you do know. Consider that many Black Swans can be caused and exacerbated by their being unexpected.
Taleb has a different background from most philosophers: he grew up in Lebanon and came of age during their civil war; he studied at Wharton and was a successful Wall Street trader who made a killing during the market crash of 1987; and he seems at home throughout the world with friends and business associates from many different industries. All of this feeds the many diverse examples he shares throughout the book.
There area lot of juicy morsels in this book. After discussing several civil wars and the fall of the Soviet Empire, he muses:
The studious examination of the past in the greatest of detail does not teach you much about the mind of History; it only gives you the illusion of understanding it. History and societies do not crawl. They make jumps. They go from fracture to fracture.
Here's his take on elite thinkers vs. cabdrivers (in their ability to predict events):
I noticed that very intelligent and informed people were at no advantage over cabdrivers in their predictions, but there was a crucial difference. Cabdrivers did not believe that they understood as much as learned people — really, they were not the experts and they knew it. Nobody knew anything, but elite thinkers thought they knew more than the rest because they were elite thinkers, and if you're a member of the elite, you automatically know more than the non-elite.
Another gem (based on his observations about Aristotle Onasis, and a psychology study investigating information and problem-solving):
The more information you give someone, the more hypotheses they will formulate along the way, and the worse they will be [in their ability to solve the problem]. They see more random noise and mistake it for information.
Taleb believes that as the world becomes increasingly more complex, the sources of Black Swans have multiplied beyond measure. Thus, we need to clean up our thinking about just what is possible in the real world. Taleb's book, The Black Swan, is an excellent first step. I recommend it.
Here is a video of Taleb on the Colbert Report.