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Thursday, June 05, 2008
Black Swans
Nassim Nicholas Taleb is an economist, philosopher, and one-time trader who’s made his “f**K you” pile and can pursue whatever intellectual projects he wishes, hence he co-directs a laboratory devoted to “The Psychology of Ecological and Nonludic Uncertainty." His home-grown website has links to lots of stuff, including his bestselling books, reviews thereof, articles, etc.
Talib has a very readible article on “The Roots of Unfairness: the Black Swan in Arts and Literature” (PDF) that was published in Literary Research/Recherche Litteraire (Journal of the International Comparative Literature Association) 21.41-42 (2005): 241-254. Great works and great ideas are all black swans, as he calls them, statistical outliers that have tremendous impact. Prospectively improbable and unpredictable, in retrospect these black swans seem inevitable.
To understand successes, the study of traits in failure need to be present. For instance some traits that seem to explain millionaires, like appetite for risk, only appear because one does not study bankruptcies. If one includes bankrupt people in the sample, then risk-taking would not appear to be a valid factor explaining success.
Any form of analysis of art that does not take into account the silent initial population becomes close to pure verbiage.
The line of argument in the remaining segment of the paper is to further weaken the causative explanations by showing the prevalence of extrinsic attributes, as opposed to intrinsic ones, those not embedded in the piece to be analyzed. The role of these extrinsic attributes (say social contagion or informational cascades) implies that the piece was successful for reasons that lie outside its own qualities, and that, accordingly, explanations by the critics are proportionally weaker than face value.
It’s an interesting notion, and suggests that, unless we are very careful, our retrospective appreciations of canonical texts may not tell us very much about why those texts have become canonical. In the case of literary texts, the extrinsic attributes would include the characteristics of the minds of the reading population.
Ann Dalke, in English at Bryn Mawr, has reviewed his The Black Swan: The Impact of the Highly Improbable, in part for its storytelling:
Taleb constructs his argument by drawing heavily on a range of experience far outside my own: his years of work as a speculative trader, a “quant” who applied mathematical models of uncertainty to financial data. Out of the wealth of that data, he devised a theory about the danger of “the black swan,” a highly improbable event with three characteristics: it is unpredictable; it carries a massive impact, and (after the fact) we concoct explanations that make it appear more predictable than it was. It is our belief in our concoctions, Taleb argues, that repeatedly gets us in trouble. Given the high impact of the highly improbable, we are way too quick to arrive @ conclusions. We need to cultivate a much more skeptical empiricism.
Part of what makes reading Taleb so enjoyable is his own storytelling gifts, including a quirky sense of humor and word play.I’ve picked up from him a range of nice terms I plan to put in play whenever possible. My favorite is “Platonicity.” Others include “extremistan” (a province where a single event can have a huge impact), vs. “mediocristan” (where a single observation does not affect the aggregate); the “lucid fallacy,” or “uncertainty of the nerd” (basing studies of chance on games and dice); and GIF (the “Great Intellectual Fraud” that is the bell curve). Admittedly, it’s hard to sustain such whimsy for 350 pages, and Taleb isn’t able to; his book would have been punchier, more readable, and less repetitious, had he had an editor with a heavier hand than the one he wielded himself.
This profile in The Sunday Times concludes with 10 of his maxims:
1 Scepticism is effortful and costly. It is better to be sceptical about matters of large consequences, and be imperfect, foolish and human in the small and the aesthetic.
2 Go to parties. You can’t even start to know what you may find on the envelope of serendipity. If you suffer from agoraphobia, send colleagues.
3 It’s not a good idea to take a forecast from someone wearing a tie. If possible, tease people who take themselves and their knowledge too seriously.
4 Wear your best for your execution and stand dignified. Your last recourse against randomness is how you act — if you can’t control outcomes, you can control the elegance of your behaviour. You will always have the last word.
5 Don’t disturb complicated systems that have been around for a very long time. We don’t understand their logic. Don’t pollute the planet. Leave it the way we found it, regardless of scientific ‘evidence’.
6 Learn to fail with pride — and do so fast and cleanly. Maximise trial and error — by mastering the error part.
7 Avoid losers. If you hear someone use the words ‘impossible’, ‘never’, ‘too difficult’ too often, drop him or her from your social network. Never take ‘no’ for an answer (conversely, take most ‘yeses’ as ‘most probably’).
8 Don’t read newspapers for the news (just for the gossip and, of course, profiles of authors). The best filter to know if the news matters is if you hear it in cafes, restaurants… or (again) parties.
9 Hard work will get you a professorship or a BMW. You need both work and luck for a Booker, a Nobel or a private jet.
10 Answer e-mails from junior people before more senior ones. Junior people have further to go and tend to remember who slighted them.
Comments
Also, Juniors know what’s really going on while their bosses are clueless. It’s the SNAFU principle: real communication happens between equals. Once their is a power imbalance, the powerless will lie to the powerful and they will then have an imperfect picture of the world. This picture gets distorted the further up the chain of command yo go.
Hey Bill,
Taleb did a lecture a few weeks ago for the Long Now Foundation. Each week they have another great speaker. You can subscribe through iTunes or just take the MP3 off the site. I love listening to those lectures each week. I think you would like it too.
http://www.longnow.org/projects/seminars/
Here is the section where you can see the lectures.
Thanks, Chris.
From your link.
“Skepticism and domain dependence. Are religious people more skeptical and less pattern seeking than nonreligious people? [IN PROGRESS] We test if people who are skeptical in empirical domains (economic matters) are gullible in the religious domain, and vice-versa.”
The weakest portions of Taleb’s arguments stem from his religiosity. His defense of religion, to me, seems that there are things beyond human understanding and we should not take them apart. This too came up a bit in the Q and A part of the lecture I linked to and I was not really satisfied with this sort of reasoning. He kept on stressing that there are many things that there are many things he does not know, socratic ignorance. He knows plenty! The blind spot comes up only with religion. It just seemed like a cop out to me.