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

Just as autism is called “mind blindness,” this inability to think dynamically, to position oneself with respect to a future observer, we should call “future blindness.”

Prediction, Misprediction, and Happiness

I searched the literature of cognitive science for any research on “future blindness” and found nothing. But in the literature on happiness I did find an examination of our chronic errors in prediction that will make us happy.

This prediction error works as follows. You are about to buy a new car. It is going to change your life, elevate your status, and make your commute a vacation. It is so quiet that you can hardly tell if the engine is on, so you can listen to Rachmaninoff’s nocturnes on the highway. This new car will bring you to a permanently elevated plateau of contentment. People will think, Hey, he has a great car, every time they see you. Yet you forget that the last time you bought a car, you also had the same expectations. You do not anticipate that the effect of the new car will eventually wane and that you will revert to the initial condition, as you did last time. A few weeks after you drive your new car out of the showroom, it will become dull. If you had expected this, you probably would not have bought it.

You are about to commit a prediction error that you have already made. Yet it would cost so little to introspect!

Psychologists have studied this kind of misprediction with respect to both pleasant and unpleasant events. We overestimate the effects of both kinds of future events on our lives. We seem to be in a psychological predicament that makes us do so. This predicament is called “anticipated utility” by Danny Kahneman and “affective forecasting” by Dan Gilbert. The point is not so much that we tend to mispredict our future happiness, but rather that we do not learn recursively from past experiences. We have evidence of a mental block and distortions in the way we fail to learn from our past errors in projecting the future of our affective states.

We grossly overestimate the length of the effect of misfortune on our lives. You think that the loss of your fortune or current position will be devastating, but you are probably wrong. More likely, you will adapt to anything, as you probably did after past misfortunes. You may feel a sting, but it will not be as bad as you expect. This kind of misprediction may have a purpose: to motivate us to perform important acts (like buying new cars or getting rich) and to prevent us from taking certain unnecessary risks. And it is part of a more general problem: we humans are supposed to fool ourselves a little bit here and there. According to Trivers’s theory of self-deception, this is supposed to orient us favorably toward the future. But self-deception is not a desirable feature outside of its natural domain. It prevents us from taking some unnecessary risks—but we saw in Chapter 6 how it does not as readily cover a spate of modern risks that we do not fear because they are not vivid, such as investment risks, environmental dangers, or long-term security.

Helenus and the Reverse Prophecies

If you are in the business of being a seer, describing the future to other less-privileged mortals, you are judged on the merits of your predictions.

Helenus, in The Iliad , was a different kind of seer. The son of Priam and Hecuba, he was the cleverest man in the Trojan army. It was he who, under torture, told the Achaeans how they would capture Troy (apparently he didn’t predict that he himself would be captured). But this is not what distinguished him. Helenus, unlike other seers, was able to predict the past with great precision—without having been given any details of it. He predicted backward.

Our problem is not just that we do not know the future, we do not know much of the past either. We badly need someone like Helenus if we are to know history. Let us see how.

The Melting Ice Cube

Consider the following thought experiment borrowed from my friends Aaron Brown and Paul Wilmott:

Operation 1 (the melting ice cube): Imagine an ice cube and consider how it may melt over the next two hours while you play a few rounds of poker with your friends. Try to envision the shape of the resulting puddle.

Operation 2 (where did the water come from?): Consider a puddle of water on the floor. Now try to reconstruct in your mind’s eye the shape of the ice cube it may once have been. Note that the puddle may not have necessarily originated from an ice cube.

The second operation is harder. Helenus indeed had to have skills.

The difference between these two processes resides in the following. If you have the right models (and some time on your hands, and nothing better to do) you can predict with great precision how the ice cube will melt—this is a specific engineering problem devoid of complexity, easier than the one involving billiard balls. However, from the pool of water you can build infinite possible ice cubes, if there was in fact an ice cube there at all. The first direction, from the ice cube to the puddle, is called the forward process . The second direction, the backward process , is much, much more complicated. The forward process is generally used in physics and engineering; the backward process in nonrepeatable, nonexperimental historical approaches.

In a way, the limitations that prevent us from unfrying an egg also prevent us from reverse engineering history.

Now, let me increase the complexity of the forward-backward problem just a bit by assuming nonlinearity. Take what is generally called the “butterfly in India” paradigm from the discussion of Lorenz’s discovery in the previous chapter. As we have seen, a small input in a complex system can lead to nonrandom large results, depending on very special conditions. A single butterfly flapping its wings in New Delhi may be the certain cause of a hurricane in North Carolina, though the hurricane may take place a couple of years later. However, given the observation of a hurricane in North Carolina , it is dubious that you could figure out the causes with any precision: there are billions of billions of such small things as wing-flapping butterflies in Timbuktu or sneezing wild dogs in Australia that could have caused it. The process from the butterfly to the hurricane is greatly simpler than the reverse process from the hurricane to the potential butterfly.

Confusion between the two is disastrously widespread in common culture. This “butterfly in India” metaphor has fooled at least one filmmaker. For instance, Happenstance (a.k.a. The Beating of a Butterfly’s Wings) , a French-language film by one Laurent Firode, meant to encourage people to focus on small things that can change the course of their lives. Hey, since a small event (a petal falling on the ground and getting your attention) can lead to your choosing one person over another as a mate for life, you should focus on these very small details. Neither the filmmaker nor the critics realized that they were dealing with the backward process; there are trillions of such small things in the course of a simple day, and examining all of them lies outside of our reach.

Once Again, Incomplete Information

Take a personal computer. You can use a spreadsheet program to generate a random sequence, a succession of points we can call a history. How? The computer program responds to a very complicated equation of a nonlinear nature that produces numbers that seem random. The equation is very simple: if you know it, you can predict the sequence. It is almost impossible, however, for a human being to reverse engineer the equation and predict further sequences. I am talking about a simple one-line computer program (called the “tent map”) generating a handful of data points, not about the billions of simultaneous events that constitute the real history of the world. In other words, even if history were a nonrandom series generated by some “equation of the world,” as long as reverse engineering such an equation does not seem within human possibility, it should be deemed random and not bear the name “deterministic chaos.” Historians should stay away from chaos theory and the difficulties of reverse engineering except to discuss general properties of the world and learn the limits of what they can’t know.