A three part interview with Nassim Taleb can be found here.

It is very tempting to declare that The Black Swan(subtitled The Impact of the Highly Improbable) by Nassim Nicholas Taleb is the most important book of the century so far. I might say this for the bibliography alone. But the flaw in such a statement, which the book makes clear, is that I could not possibly know this without having read all the books that have been published to date. Even more challenging is the fact that, even if I were an accomplished speed reader, I would not be able to inwardly digest all the unpublished works, which are legion. This raises the problem of the “unknown unknowns”, an expression coined by Taleb and (in)famously adopted by Donald Rumsfeld, but from which Taleb understandably prefers to distance himself.

Black swans can be positive or negative, a blockbuster book like Harry Potter or a stock market crash. They are defined as rare events with an extreme impact, which are only retrospectively predictable. That last bit is crucial. Overestimating one’s own knowledge (what Taleb describes as “epistemic arrogance”) is central to our inability to handle and anticipate black swan events. Whether it is 9/11 or Virginia Tech, we retrofit a narrative to tell ourselves that someone should have seen it coming because we ourselves could not have been that stupid. And yet, we are no better prepared for the next one.

Why call these things “black swans”? It was Karl Popper’s notion that no amount of sightings of white swans can prove that all swans are white. It is falsifiable with just one observation of a black swan. Just because you have not seen it before does not mean it can’t or won’t exist. Continue reading ‘black swans and icebergs’