Нассим Талеб - The Black Swan. The Impact of the Highly Improbable

Furthermore, the sources of Black Swans today have multiplied beyond measurability. *In the primitive environment they were limited to newly encountered wild animals, new enemies, and abrupt weather changes. These events were repeatable enough for us to have built an innate fear of them. This instinct to make inferences rather quickly, and to “tunnel” (i.e., focus on a small number of sources of uncertainty, or causes of known Black Swans) remains rather ingrained in us. This instinct, in a word, is our predicament.

* Neither Peirce nor Popper was the first to come up with this asymmetry. The philosopher Victor Brochard mentioned the importance of negative empiricism in 1878, as if it were a matter held by the empiricists to be the sound way to do business—ancients understood it implicitly. Out-of-print books deliver many surprises.

* As I said in the Prologue, the likely not happening is also a Black Swan. So disconfirming the likely is equivalent to confirming the unlikely.

* This confirmation problem pervades our modern life, since most conflicts have at their root the following mental bias: when Arabs and Israelis watch news reports they see different stories in the same succession of events. Likewise, Democrats and Republicans look at different parts of the same data and never converge to the same opinions. Once your mind is inhabited with a certain view of the world, you will tend to only consider instances proving you to be right. Paradoxically, the more information you have, the more justified you will feel in your views.

* Clearly, weather-related and geodesic events (such as tornadoes and earthquakes) have not changed much over the past millennium, but what have changed are the socioeconomic consequences of such occurrences. Today, an earthquake or hurricane commands more and more severe economic consequences than it did in the past because of the interlocking relationships between economic entities and the intensification of the “network effects” that we will discuss in Part Three. Matters that used to have mild effects now command a high impact. Tokyo’s 1923 earthquake caused a drop of about a third in Japan’s GNP. Extrapolating from the tragedy of Kobe in 1994, we can easily infer that the consequences of another such earthquake in Tokyo would be far costlier than that of its predecessor.

Chapter Six

THE NARRATIVE FALLACY

The cause of the because—How to split a brain—Effective methods of pointing at the ceiling—Dopamine will help you win—I will stop riding motorcycles (but not today)—Both empirical and psychologist? Since when?

ON THE CAUSES OF MY REJECTION OF CAUSES

During the fall of 2004, I attended a conference on aesthetics and science in Rome, perhaps the best possible location for such a meeting since aesthetics permeates everything there, down to one’s personal behavior and tone of voice. At lunch, a prominent professor from a university in southern Italy greeted me with extreme enthusiasm. I had listened earlier that morning to his impassioned presentation; he was so charismatic, so convinced, and so convincing that, although I could not understand much of what he said, I found myself fully agreeing with everything. I could only make out a sentence here and there, since my knowledge of Italian worked better in cocktail parties than in intellectual and scholarly venues. At some point during his speech, he turned all red with anger—thus convincing me (and the audience) that he was definitely right.

He assailed me during lunch to congratulate me for showing the effects of those causal links that are more prevalent in the human mind than in reality. The conversation got so animated that we stood together near the buffet table, blocking the other delegates from getting close to the food. He was speaking accented French (with his hands), I was answering in primitive Italian (with my hands), and we were so vivacious that the other guests were afraid to interrupt a conversation of such importance and animation. He was emphatic about my previous book on randomness, a sort of angry trader’s reaction against blindness to luck in life and in the markets, which had been published there under the musical title Giocati dal caso . I had been lucky to have a translator who knew almost more about the topic than I did, and the book found a small following among Italian intellectuals. “I am a huge fan of your ideas, but I feel slighted. These are truly mine too, and you wrote the book that I (almost) planned to write,” he said. “You are a lucky man; you presented in such a comprehensive way the effect of chance on society and the overestimation of cause and effect. You show how stupid we are to systematically try to explain skills.”

He stopped, then added, in a calmer tone: “But, mon cher ami , let me tell you quelque chose [uttered very slowly, with his thumb hitting his index and middle fingers]: had you grown up in a Protestant society where people are told that efforts are linked to rewards and individual responsibility is emphasized, you would never have seen the world in such a manner. You were able to see luck and separate cause and effect because of your Eastern Orthodox Mediterranean heritage.” He was using the French à cause . And he was so convincing that, for a minute, I agreed with his interpretation.

We like stories, we like to summarize, and we like to simplify, i.e., to reduce the dimension of matters. The first of the problems of human nature that we examine in this section, the one just illustrated above, is what I call the narrative fallacy . (It is actually a fraud, but, to be more polite, I will call it a fallacy.) The fallacy is associated with our vulnerability to overinterpretation and our predilection for compact stories over raw truths. It severely distorts our mental representation of the world; it is particularly acute when it comes to the rare event.

Notice how my thoughtful Italian fellow traveler shared my militancy against overinterpretation and against the overestimation of cause, yet was unable to see me and my work without a reason, a cause, tagged to both, as anything other than part of a story. He had to invent a cause. Furthermore, he was not aware of his having fallen into the causation trap, nor was I immediately aware of it myself.

The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship , upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense . Where this propensity can go wrong is when it increases our impression of understanding.

This chapter will cover, just like the preceding one, a single problem, but seemingly in different disciplines. The problem of narrativity, although extensively studied in one of its versions by psychologists, is not so “psychological”: something about the way disciplines are designed masks the point that it is more generally a problem of information . While narrativity comes from an ingrained biological need to reduce dimensionality, robots would be prone to the same process of reduction. Information wants to be reduced.

To help the reader locate himself: in studying the problem of induction in the previous chapter, we examined what could be inferred about the unseen, what lies outside our information set. Here, we look at the seen, what lies within the information set, and we examine the distortions in the act of processing it. There is plenty to say on this topic, but the angle I take concerns narrativity’s simplification of the world around us and its effects on our perception of the Black Swan and wild uncertainty.