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Black Swan: Second Edition

I believe this is an important book. I was directed to it from the references to it in Professor Kahneman’s Thinking fast and slow.

I found this book difficult.  The central ideas are presented in  narratives that are combinations of instructive life experiences,  fictional tales as well as explicit thought experiments and expositions of technical issues that undermine the prevalent use of the Gaussian distribution assumption in matters of uncertainty and the insights to support a new approach.

My difficulties did not arise in relation to the importance of the messages.  A number of powerful ‘punches’  were delivered to me to provoke me out of ignorance of my ignorance and prompt me to acknowledge my arrogant faith in flawed models. These were constructive blows. I hope they will yield the sustained open and critical attitude in my mind that  I believe the author intends for his readership. I found the author’s recounting of the story of the ‘drowned worshippers’ from Cicero, particularly potent. It reminded of the fabled tale of the  air force engineer who was exhorted by his commanding officer to reinforce the bullet ridden bodies of his returned aircrews planes, ‘…because the lives of our crew are of utmost importance…’  The engineer had to politely remind his commander that these were the holes that the surviving crews came back with (i.e. they were not critical) and that what would be of more relevance to ‘saving lives’ would be knowing what the weakness were in the crews that did not survive.

My tension with the book arose in relation to the (sometimes amusing and entertaining) one line characterisations of various professions: statisticians, bankers, economist, forecasters, academics. The case for the flaws in all these areas are well made by the author. It is further  laudable that the author defends the worker in the field who, by experience, has learned the lessons of uncertainty and unpredictability (positive and negative) and the limitations and failures of models (however elegant and well crafted).  I was distracted,however, from what I believe are very important and deep issues by the frequency of these sidebars.

I am not a professional mathematician, statistician, banker, forecaster, economist or academic, so these were not personal insults.  I was in deep admiration for a real trader expressing in public the meaningless nature of cause attributions by journalists, forecasters, politicians of the arbitrarily chosen intervals of stock prices, currency valuations. Every time I hear, ‘the market responded today to the news that…’, I cringe…I felt a vindication,

I do admit to being pigeon holed into the ‘nerd’ and autism spectrum and perhaps this characterisation as innately Black Swan blind by the author did grate.  I could only agree with the comfort of order and the beauty of Mathematics. However, engagement in the world, particularly confronting the issues of understanding and communication of risk have revealed limitations  beyond  Heisenberg’s uncertainty principle, Godel undecidability, Turing’s halting theorem and Arrow’s impossibility theorem.  I accept that the author’s confident and strong personality and track record of success that he uses as a foundation of confidence to deliver some of these sharp and intense messages. However, as a simple and somewhat ‘nerdy’ reader, I do not find the beauty and elegance of Mathematics any less a pleasure and joy of the world than the contemplation of works of art or literature. The issue of utility is a different matter.

I do not wish to give the impression that these preceding comments affect the merit of the book.  I reiterate I believe this is an important book.  I was very pleased that the author added the long essay in the second edition. The long discussion of the reception of the book put many things in context for me. The author’s listing of the common misconceptions of the Black Swan concept and the common responses were extremely instructive. Many of my own misconceptions or misunderstandings were covered and I believe this was an important addition to improve the clarity of the message.

Finally, I believe the conceptualization of the four quadrants both ‘crystallised’ the concepts and provided a way forward.

The book took me on an important journey.  I was provoked to rethink, to reframe, to remember the incompleteness of the picture, the bias in the incomplete picture, the limitations of my human nature, my need for narrative, my need to find causes for things when I have no basis and the importance of empiricism and fundamentally the importance of engaging in the world, looking at payoffs and taking the opportunities that the randomness of the world offers.

Categories: books
  1. July 30, 2012 at 10:09 pm

    A video lecture:

    you can search this site (“Nassim Taleb”) for other talks

  1. October 21, 2012 at 1:36 pm
  2. October 28, 2012 at 12:48 pm
  3. August 29, 2013 at 6:45 pm

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