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

Statistical regress argument (or the problem of the circularity of statistics):We need data to discover a probability distribution. How do we know if we have enough? From the probability distribution. If it is a Gaussian, then a few points of data will suffice. How do we know it is a Gaussian? From the data. So we need the data to tell us what probability distribution to assume, and we need a probability distribution to tell us how much data we need. This causes a severe regress argument, which is somewhat shamelessly circumvented by resorting to the Gaussian and its kin.

Uncertainty of the deluded:people who tunnel on sources of uncertainty by producing precise sources like the great uncertainty principle, or similar, less consequential matters, to real life; worrying about subatomic particles while forgetting that we can’t predict tomorrow’s crises.

I

LEARNING FROM MOTHER NATURE, THE OLDEST AND THE WISEST

How to make friends among walking people—On becoming a grandmother—The charms of eco-Extremistan—Never small enough—Harvard-Soviet chic

I am writing this essay three years after the completion of The Black Swan —which I have kept intact except for a few clarifying footnotes. Since then, I’ve written a dozen “scholarly” papers around some aspects of the Black Swan idea. These are very, very boring to read, since almost all academic papers are made to bore, impress, provide credibility, intimidate even, be presented at meetings, but not to be read except by suckers (or detractors) or, even worse, graduate students. Also, I am making the “what to do next” more salient here—you can take a horse to water and, in addition, you may have to make it drink. So this essay will allow me to go deeper into some points. Like the main text itself, the beginning will be what is called literary, and progressively turn technical.

I owe the idea of this book-length essay to Danny Kahneman, toward whom I (and my ideas) have more debt than toward anyone else on this planet. He convinced me that I had obligations to try to make the horse drink.

ON SLOW BUT LONG WALKS

Over the past three years, my life experienced a bit of change, mostly for the better. Like parties, a book puts you on the envelope of serendipity; it even gets you invited to more parties. During my dark days, I was called a trader in Paris (something extremely vulgaire) , a philosopher in London (meaning too theoretical), a prophet in New York (dissingly, because of my then false prophecy), and an economist in Jerusalem (something very materialistic). I now saw myself dealing with the stress of having to live up to the wholly undeserved designations of a prophet in Israel (a very, very ambitious project), a philosophe in France, an economist in London, and a trader in New York (where it is respectable).

Such exposure brought hate mail, at least one death threat (by former employees of the bankrupt firm Lehman Brothers *), which I found extremely flattering, and, worse than any threat of violence, hourly requests for interviews by Turkish and Brazilian journalists. I had to spend a lot of time writing personalized and courteous notes declining invitations to dinner with suit-wearing current hotshots, suit-wearing archeo-hotshots, suit-wearing proto-hotshots, and the nasty brand of suit-wearing namedroppers. But it also brought some benefits. I was contacted by like-minded persons, people I would have never dreamed of meeting in the past, or those I did not think existed before, in disciplines completely outside my normal circles, who helped me further my quest with the most unexpected of ideas. I was often reached by people I admired and whose work I knew well, and who became natural collaborators and critics; I will always remember the thrill of getting an unexpected e-mail from Spyros Makridakis of the M-Competition described in Chapter 10, the great debunker of misforecasting, or another one from Jon Elster, the scholar of rare erudition and insights who integrated the wisdom of the ancients into modern social science thinking. I’ve met novelists and philosophical thinkers whose works I had read and admired, like Louis de Bernières, Will Self, John Gray (the philosopher, not the pop psychologist), or Lord Martin Rees; in all four cases I had the peculiar need to pinch myself upon hearing them talking to me about my own book.

Then, through a chain of friends of friends, cappuccinos, dessert wines, and security lines at airports, I got to partake of and understand the potency of oral knowledge, as discussions are vastly more powerful than just correspondence. People say things in person they would never put in print. I met Nouriel Roubini (to my knowledge the only professional economist who really predicted the crisis of 2008, and perhaps the only independent thinker in that business). I also found a variety of people I did not know existed, good economists (i.e., with scientific standards), like Michael Spence and Barkley Rosser. Also Peter Bevelin and Yechezkel Zilber kept feeding me the papers I was looking for without knowing it, the first in biology, the second in cognitive science—thus they nudged my thinking in the appropriate direction.

So I have been dialoguing with many people. My problem is that I found only two persons who can have a conversation during a long walk (and walk slowly): Spyros Makridakis and Yechezkel Zilber. Most people, alas, walk too fast, mistaking walking for exercise, not understanding that walking is to be done slowly, at such a pace that one forgets one is walking—so I need to keep going to Athens (where Spyros lives) in order to indulge in my favorite activity, being a flâneur.

My Mistakes

And of course people will scrutinize the text. After examining messages and reports, I do not feel I need to retract anything in the initial version, or to correct any error (outside of typos and minor factual mistakes), except for two related matters. The first fault was pointed out to me by Jon Elster. I had written that the narrative fallacy pervades historical analyses, since I believed that there was no such thing as a test of a historical statement by forecasting and falsification. Elster explained to me that there are situations in which historical theory can escape the narrative fallacy and be subjected to empirical rejection—areas in which we are discovering documents or archeological sites yielding information capable of countering a certain narrative.

So, in relation to his point, I realized that the history of Arabic thought was not so definitive and that I had fallen into the trap of ignoring the continuous changes in past history, that the past too was largely a prediction. I (accidentally) discovered that I had fallen for conventional wisdom in textbook scholarship on Arabic philosophy, a wisdom that was contradicted by existing documents. I had exaggerated the import of the debate between Averroës and Algazel. Like everyone I thought that 1) it was a big deal and, 2) it killed Arabic falsafah . It turned out to be one of the mis-conceptions being recently debunked by researchers (such as Dimitri Gutas and George Saliba). Most of those who theorized about Arabic philosophy did not know Arabic, so they left many things to their imagination (like Leo Strauss, for example). I am a bit ashamed, because Arabic is one of my native languages, and here I was reporting from tenth-hand sources developed by scholars illiterate in Arabic (and sufficiently overconfident and lacking in erudition to not realize it). I fell for the confirmation bias seen by Gutas: “It seems that one always starts with a preconception of what Arabic philosophy should be saying, and then concentrating only on those passages which seem to be supporting such a bias, thereby appearing to corroborate the preconception on the basis of the texts themselves.”