The Black Swan | Reflections & Notes

Nassim Nicholas Taleb. The Black Swan: The Impact of the Highly Improbable. Random House, 2007. (366 pages)



It seems like such a simple proposition; life is improbable, and so celebrate each moment, and do not be fooled into believing we can control it. And yet, this seems like the perennial fight of our minds, to dismiss this profundity as foolishness, to believe we have control, that we can know, and understand, and that we can not only manage and navigate this world, but we can manipulate it to our wills. In truth, we actually do both, and this paradox is at the heart of the human enterprise. We actually do control things that are out of our control (weather and quantum mechanics). We actually do know things that are unknowable (science and philosophy). We actually do predict things that cannot be predicted (traffic and the stock market). We connect thigns that are completely unrelated, and we bifurcate and compartmentalized everything which is ultimately deeply connected to each other. And the delusion persists.

And so, reading a book like The Black Swan is an exercise in humility, an intellectual condescension to remind ourselves of the limits and wrongness of our cognition. But it is also, therefore, an exploration of the miraculous, that in spite of the truth of the highly improbable, the uncontrollable, the unknown, and the unforeseen, our species has managed to turn delusion into progress, development, technology, philosophy, and even theology. We have looked chaos in the face and narrated a story of its demise through our (the “god’s”?) innovations. We have hovered over the surface of the deep to speak into being order, meaning, purpose, and life. And, we continue to do so, and even more so, as we become more painfully aware of our existential insignificance.

In the end, fully embrace the human virtue of ignorance, live by unpredictability, find beauty in the randomness of this world, and recognize your existence as the most beautiful of Black Swans.




…a Black Swan (and capitalize it) is an event with the following three attributes. (xvii)

| First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, (xvii) human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable. (xviii)

| I stop and summarize the triplet: rarity, extreme impact, and retrospective (though not prospective) predictability. (xviii)

Go ask your portfolio manager for his definition of “risk,” and odds are that he will supply you with a measure that excludes the possibility of the Black Swan—hence one that has no better predictive value for assessing the total risks than astrology… (xviii)

The central idea of this book concerns our blindness with respect to randomness, particularly the large deviations: Why do we, scientists or nonscientists, hotshots or regular Joes, tend to see the pennies instead of the dollars? Why do we keep focusing on the minutiae, not the possible significant large events, in spite of the obvious evidence of their huge influence? And, if you follow my argument, why does reading the newspaper actually decrease your knowledge of the world? (xix)

What You Do Not Know

Black Swan logic makes what you don’t know far more relevant than what you do know. (xix)

Experts and “Empty Suits”

The inability to predict outliers implies the inability to predict the course of history, given the share of these events in the dynamics of events. (xx)

What is surprising is not the magnitude of our forecast errors, but our absence of awareness of it. (xx)

Our inability to predict in environments subjected to the Black Swan, coupled with a general lack of the awareness of this state of affairs, means that certain professionals, while believing they are experts, are in fact not. (xx)

Black Swans being unpredictable, we need need to adjust to their existence (xx) (rather than naïvely try to predict them). There are so many things we can do if we focus on antiknowledge, or what we do not know. … The strategy for the discoverers and entrepreneurs is to rely less on top-down planning and focus on maximum tinkering and recognizing opportunities when they present themselves.. So I disagree with the followers of Marx and those of Adam Smith: the reason free markets work is because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or “incentives” for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can. (xxi)

Learning to Learn

Another related human impediment comes from excessive focus on what we do know: we tend to learn the precise, not the general. (xxi)

We do not spontaneously learn that we don’t learn that we don’t learn. The problem lies in the structure of our minds: we don’t learn rules, just facts, and only facts. Metarules (such as the rule that we have a tendency to not learn rules) we don’t seem to be good at getting. We scorn the abstract; we scorn it with passion. (xxi)

Consider that thinking is time-consuming and generally a great waste of energy, that our predecessors spent more than a hundred million years as nonthinking mammals and that in the blip in our history during which we have used our brain we have used it on subjects too peripheral to matter. (xxii)


Who gets rewarded, the central banker who avoids a recession or the (xxiii) one who comes to “correct” his predecessors’ faults and happens to be there during some economic recovery? Who is more valuable, the politician who avoids a war or the one who starts a new one (and is lucky enough to win)? (xxiv)

| It is the same logic reversal we saw earlier with the value of what we don’t know; everybody knows that you need more prevention than treatment, but few reward acts of prevention. We glorify those who left their names in history books at the expense o those contributors about whom our books are silent. We humans are not just a superficial race (this may be curable to some extent); we are a very unfair one. (xxiv)


…the bell curve ignores large deviations, cannot handle them, yet makes us confident that we have tamed uncertainty. Its nickname in this book is GIF, Great Intellectual Fraud. (xxiv)


What I call Platonicity, after the ideas (and personality) of the philosopher Plato, is our tendency to mistake the map for the territory, to focus on pure and well-defined “forms,” whether objects, like triangles, or social notions, like utopias (societies built according to some blueprint of what “makes sense”), even nationalities. When these ideas and crisp constructs inhabit our minds, we privilege them over other less elegant objects, those with messier and less tractable structures (an idea that I will elaborate progressively throughout this book). (xxv)

The Platonic fold is the explosive boundary where the Platonic mindset enters in contact with messy reality, where the gap between what you  know and what you think you know becomes dangerously wide. It is here that the Black Swan is produced. (xxv)


You need a story to displace a story. Metaphors and stories are far more potent (alas) than ideas; they are also easier to remember and more fun to read. If I have to go after what I call the narrative disciplines, my best tool is a narrative. (xxvii)

Ideas come and go, stories stay. (xxvii)


The beast in this book…is the drive to “focus” on what makes sense to us. Living on our planet, today, requires a lot more imagination than we are made to have. We lack imagination and repress it in others. (xxvii)

…I am not rely in this book on the beastly method of collective selective “corroborating evidence.” …I call this overload of examples naïve empiricism—successions of anecdotes selected to fit a story do not constitute evidence. (xxvii)

…I stick my neck out and make a claim, against many of our habits of thought, that our world is dominated by the extreme, the unknown, and the very improbable (improbable ac-(xxvii)cording our current knowledge)—and all the while we spend our time engaged in small talk, focusing on the known, and the repeated. … I also make the bolder (and more annoying) claim that in spite of our progress and the growth in knowledge, or perhaps because of such progress and growth, the future will be increasingly less predictable, while both human nature and social “science” seem to conspire to hide the idea from us. (xxviii)



Read books are far less valuable than unread ones. The library should contain as much of what you do not know as your financial means, mortgage rates, and the currently tight real-estate market allow you to put there. You will accumulate more knowledge and more books as you grow older, and the growing number of unread books on the shelves will look at you menacingly. Indeed, the more you know, the larger the rows of unread books. Let us call this collection of unread books an antilibrary. (1)

Chapter 1: The Apprenticeship of an Empirical Skeptic


On Walking Walks

It is one thing to be cosmetically defiant of authority by wearing unconventional clothes—what social scientists and economists call “cheap signaling”—and another to prove willingness to translate belief into action. (6)

“Paradise” Evaporated

The Starred Night


History is opaque. You see what comes out, not the script that produces events, the generator of history. There is a fundamental incompleteness in your grasp of such events, since you do not see what’s inside the box, how the mechanisms work. What I call the generator of historical events is different from the events themselves, much as the minds of the gods cannot be read just by witnessing their deeds. You are very likely to b fooled about their intentions. (8)

The human mind suffers from three ailments as it comes into contact with history, what I call the triplet of opacity. They are: (8)

a. the illusion of understanding, or how everyone thinks he knows what is going on in a world that is more complicated (or random) than they realize;

b. the retrospective distortion, or how we can assess matters only after the fact, as if they were in a rearview mirror (history seems clearer and more organized in history books than in empirical reality; and

c. the overvaluation of factual information and the handicap of authoritative and learned people, particularly when they create categories—when they “Platonify.” (8)

Nobody Knows What’s Going On

The first leg of the triplet is the pathology of thinking that the world in which we live is more understandable, more explainable, and therefore more predictable than it actually is. (9)

History Does Not Crawl, It Jumps

…I developed the governing impression that our minds are wonderful explanation machines, capable of making sense out of almost anything, capable of mountain explanations for all manner of phenomena, and generally incapable of accepting the idea of unpredictability. (10)

The Levant has been something of a mass producer of consequential events nobody saw coming. …the studious examination of the past in the greatest of detail does not teach you much about the mind of History; it only gives you the illusion of understanding it. (11)

| History and societies do not crawl. They make jumps. They go from fracture to fracture, with a few vibrations in between. Yet we (and historians) like to believe in the predictable, small incremental progression. (11)

It struck me, a belief that has never left me since, that we are just a great machine for looking backward, and that humans are great at self-delusion. Every year that goes by increases my belief in this distortion. (12)

Dear Diary: On History Running Backward

One would suppose that people living through the beginning of WWII had an inkling that something momentous was taking place. Not at all.

Education in a Taxicab


Categorizing always produces reduction in true complexity. It is a manifestation of the Black Swan generator, that unshakable Platonicity that I defined in the Prologue. (16)

Where Is the Show?

My idea is that not only are some scientific results useless in real life, because they underestimate the impact of the highly improbable (or lead us to ignore it), but that many of them may be actually creating Black Swans. (18)

8 3/4 Lbs Later

The Four-Letter Word of Independence

To slowly distill my single idea, I wanted to become a flâneur, a professional meditator, sit in cafés, lounge, unglued to desks and organization structures, sleep as long as I needed, read voraciously, and not owe any explanation to anybody. I wanted to be left alone in order to build, small steps at a time, an entire system of thought based on my Black Swan idea. (21)

[via: Yes please! 🙂 I think of this too.]

Limousine Philosopher

Chapter 2: Yevgenia’s Black Swan

cf. Yevgenia Nokolayevna Krasnova

[via: Go ahead. Google the name. 😉]

Chapter 3: The Speculator and the Prostitute


I separated the “idea” person, who sells an intellectual product in the form of a transaction or a piece of work, from the “labor” person, who sells you his work. (28)

So the distinction between writer and baker, speculator and doctor, fraudster and prostitute, is a helpful way to look at the world of activities. It separates those professions in which one can add zeroes of income with no greater labor from those in which one needs to add labor and time (both of which are in limited supply)—in other words, those subjected to gravity. (28)


…I would recommend someone pick a profession that is not scalable! (28)

The Advent of Scalability’

Evolution is scalable: the DNA that wins (whether by luck or survival advantage) will reproduce itself, like a bestselling book or a successful record, and become pervasive. (30)

…death is often a good career move for an author. (30)

…sadly, much of what we ascribe to skills is an after-the-fact attribution. The movie makes the actor, he claims—and a large dose of nonlinear luck makes the movie. (31)

| The success of movies depends severely on contagions. … It is hard for us to accept that people do not fall in love with works of art only for their own sake, but also in order to feel that they belong to a community. By imitating, we get closer to others—that is, other imitators. It fights solitude. (31)

…for now let us note that the division between professions can be used to understand the division between types of random variables. (31)


The American (31) economy has leveraged itself heavily on the idea generation, which explains why losing manufacturing jobs can be coupled with a rising standard of living. 932)


When you sample is large, no single instance will significantly change the aggregate or the total. (32)

…if you are classified as human, [you consume] close to eight hundred thousand calories [per year]. (32)

The Strange Country of Extremistan

Extremistan and Knowledge

Wild and Mild

The Tyranny of the Accident





Mild or type 1 randomness

Wild (even superwild) or type 2 randomness

The most typical member is mediocre

The most “typical” is either giant or dwarf, i.e., there is no typical member

Winners get a small segment of the total pie

Winner-take-almost-all effects

Example: audience of an opera singer before the gramophone

Today’s audience for an artist

More likely to be found in our ancestral environment

More likely to be found in our modern environment

Impervious to the Black Swan

Vulnerable to the Black Swan

Subject to gravity

There are no physical constraints on what a number can be

Corresponds (generally) to physical quantities, ie.e., height

Corresponds to numbers, say, wealth

As close to utopian equality as reality can spontaneously deliver

Dominated by extreme winner-take-all inequality

Total is not determined by a single instance or observation

Total will be determined by a small number of extreme events

When you observe for a while you can get to know what’s going on

It takes a long time to know what’s going on

Tyranny of the collective

Tyranny of the accidental

Easy to predict from what you see and extend to what you do not see

Hard to predict from past information

History crawls

History makes jumps

Events are distributed* according to the “bell curve (the GIF) or its variations


*[What I call “probability distribution” here is the model used to calculate the odds of different events, how they are distributed. When I say that an event is distributed according to the “bell curve,” I mean that the Gaussian bell curve (after C. F. Gauss; more on him later) can help provide probabilities of various occurrences.

The distribution is either Mandelbrotian “gray” Swans (tractable scientifically) or totally intractable Black Swans


Chapter 4: One Thousand and One Days, or How Not to Be a Sucker


…consider induction’s most worrisome aspect: learning backward. (40)

A turkey before and after Thanksgiving. The history of a process over a thousand days tells you nothing about what is to happen next. This naïve projection of the future from the past can be applied to anything.

Consider that the feeling of safety reached its maximum when the risk was at the highest! But the problem is even more general than that; it strikes at the nature of empirical knowledge itself. Something has worked in the past, until—well, it unexpectedly no longer does, and what we have learned from the past turns out to be at best irrelevant or false, at worst viciously misleading. (41)

Mistaking a naïve observation of the past as something definitive or representative of the future is the one and only cause of our inability to understand the Black Swan. (42)

…consider this pearl of wisdom allegedly voiced by a famous ship’s captain:

But in all my experience, I have never been in any accident…of any sort worth speaking about. I have seen but one vessel in distress in all my years at sea. I never saw a wreck and never have been wrecked nor was I ever in any predicament that threatened to end in disaster of any sort. —E.J. Smith, 1907, Captain, RMS Titanic

Trained to Be Dull

A Black Swan Is Relative to Knowledge

…the Black Swan is a sucker’s problem. In other words, it occurs relative to your expectation. You realize that you can eliminate a Black Swan by science (if you’re able), or by keeping an open mind. (44)

In general, positive Black Swans take time to show their effect while negative ones happen very quickly—it is much easier and much faster to destroy than to build. (45)


Sextus the (Alas) Empirical

Do you face the possibility of an adverse event? Don’t worry. Who knows, it may turn out to be good for you. Doubting the consequences of an outcome will allow you to remain imperturbable. (46)

That awareness of a problem does not mean much—particularly when you have special interests and self-serving institutions in play. (47)


The Skeptic, Friend of Religion

While the ancient skeptics advocated learned ignorance as the first step in honest inquiries toward truth, later medieval skeptics, both Moslems and Christians, used skepticism as a tool to avoid accepting what today we call science. Belief in the importance of the Black Swan problem, worries about induction, and skepticism can make some religious arguments more appealing, though in stripped-down, anticlerical, theistic form. This idea of relying on faith, not reason, was known as fideism. So there is a tradition of Black Swan skeptics who found solace in religion,… (48)

Let me insist that erudition is important to me. It signals genuine intellectual curiosity. It accompanies an open mind and the desire to probe the ideas of others. Above all, an erudite can be dissatisfied with his own knowledge, and such dissatisfaction is a wonderful shield against Platonicity, the simplifications of the five-minute manager, or the philistinism of the overspecialized scholar. Indeed, scholarship without erudition can lead to disasters. (48)

I Don’t Want to Be a Turkey

But promoting philosophical skepticism is not quite the mission of this book. If awareness of the Black Swan problem can lead us into withdrawal and extreme skepticism, I take here the exact opposite direction. I am interested in deeds and true empiricism. So, this book was not written by a Sufi mystic, or even by a skeptic in the ancient or medieval sense, or even (we will see) in a philosophical sense, but by a practitioner whose principal aim is to not be a sucker in things that matter, period. (49)

…I am skeptical in matters that have implications for daily life. In a way, all I care about is making a decision without being the turkey. (49)

…all I will be showing you in this book is how to avoid crossing the street blindfolded. (49)

They Want to Live in Mediocristan

a. We focus on preselected segments of the seen and generalize from it to the unseen: the error of confirmation.

b. We fool ourselves with stories that cater to our Platonic thirst for distinct patterns: the narrative fallacy.

c. We behave as if the Black Swan does not exist: human nature is not programmed for Black Swans.

d. What we see is not necessarily all that is there. History hides Black Swans from us and gives us a mistaken idea about the odds of these events: this is the distortion of silent evidence.

e. We “tunnel”: that is, we focus on a few well-defined sources of uncertainty, on too specific a list of Black Swans (at the expense of the others that do not easily come to mind). (50)

Chapter 5: Confirmation Shmonfirmation!

…confirmation can be a dangerous error. (51)

I never meant to say that Conservatives are generally stupid. I meant to say that stupid people are generally Conservative. —John Stuart Mill

Our inferential machinery, that which we use in daily life, is not made for a complicated environment in which a statement changes markedly when its wording is slightly modified. (52)

Zoogles Are Not All Boogles

All zoogles are boogles. You saw a boogle. Is it a zoogle? Not necessarily, since not all boogles are zoogles… (53)

Assume that you live in a town with two hospitals—one large, the other small. On a given day 60 percent of those born in one of the two hospitals are boys. Which hospital is it likely to be? Many statisticians made the equivalent of the mistake (during a casual conversation) of choosing the larger hospital, when in fact the very basis of statistics is that large samples are more stable and should fluctuate less from the long-term average—here, 50 percent for each of the sexes—than smaller samples. (53)

People can manage to effortlessly solve a problem in a social situation but struggle when it is presented as an abstract logical problem. We tend to use different mental machinery—so-called modules—in different situations: our brain lacks a central all-purpose computer that starts with logical rules and applies them equally to all possible situations. (54)

An acronym used in the medical literature is NED, which stands for No Evidence of Disease. There is no such thing as END, Evidence of No Disease. (54)

Doctors in the midst of the scientific arrogance of the 1960s looked down at mothers’ milk as something primitive, as if it could be replicated by their laboratories—not realizing that mothers’ milk might include use-(54)full components that could have eluded their scientific understanding—a simple confusion of absence of evidence of the benefits of mothers’ milk with evidence of absence of the benefits (another case of Platonicity as “it did not make sense” to breast-feed when we could simply use bottles). (55)

Medicine has gotten better—but many kinds of knowledge have not. (55)


By a mental mechanism I call naïve empiricism, we have a natural tendency to look for instances that confirm our story and our vision of the world—these instances are always easy to find. Alas, with tools, and fools, anything can be easy to find. You take past instances that corroborate your theories and you treat them as evidence. (55)


[via: “False” is certain. “Truth” is elusive.]

I am saying that a series of corroborative facts is not necessarily evidence. Seeing white swans does not confirm the nonexistence of black swans. There is an exception, however: I know what statement is wrong, but not necessarily what statement is correct. If I see a black swan I can certify that all swans are not white! If I see someone kill, then I can be practically certain that he is a criminal. If I don’t see him kill, I cannot be certain that he is innocent. The same applies to cancer detection: the finding of a single malignant tumor proves that you have cancer, but the absence of such a finding cannot allow you to say with certainty that you are cancer-free. (56)

| We can get closer to the truth by negative instances, not by verification! It is misleading to build a general rule from observed facts. Contrary to conventional wisdom, our body of knowledge does not increase from a series of confirmatory observations,… (56)

This asymmetry is immensely practical. It tells us that we do not have to be complete skeptics, just semiskeptics. (56) … Sometimes a lot of data can be meaningless; at other times one single piece of information can be very meaningful. It is true that a thousand days cannot prove you right, but one day can prove you to be wrong. (57)

cf. “falsification”

Popper introduced the mechanism of conjectures and refutations, which works as follows: you formulate a (bold) conjecture and you start looking for the observation that would prove you wrong. This is the alternative to our search for confirmatory instances. (58)

Counting to Three

confirmation bias (58)

But don’t play chess to practice skepticism. Scientists believe that it is the search for their own weaknesses that makes them good chess players, not the practice of chess that turns them into skeptics. … This, perhaps, is true self-confidence: the ability to look at the world without the need to find signs that strokes one’s ego. (59)

Saw Another Red Mini!

Not Everything

Back to Mediocristan

Chapter 6: The Narrative Fallacy


The [narrative] fallacy is associated with our vulnerability to overinterpretation and our predilection for compact stories over raw truths. It severely distorts our mental representation of the world; it is particularly acute when it comes to the rare event. (63)

The narrative fallacy addresses our limited ability to look at sequences (63) of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship, upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it increases our impression of understanding. (64)

Information wants to be reduced.


…counter to what everyone believes, not theorizing is an act—that theorizing can correspond to the absence of willed activity, the “default” option. It takes considerable effort to see facts (and remember them) while withholding judgment and resisting explanations. (64)

Even from an anatomical perspective, it is impossible for our brain to see anything in raw form without some interpretation. (65)

Does this suggest that we are better at explaining than at understanding? (65)

Why is it hard to avoid interpretation? …brain functions often operate outside our awareness. You interpret pretty much as you perform other activities deemed automatic and outside your control, like breathing. (66)

A Little More Dopamine

Andrey Nikolayevich’s Rule

The first problem is that information is costly to obtain. (68)

| The second problem is that information is also costly to store… (68)

Finally, information is costly to manipulate and retrieve. (68)

…the great probability Andrey Nikolayevich Kolmogorov defined the degree of randomness; it is called “Kolmogorov complexity.” (69)

We, members of the human variety of primates, have a hunger for rules because we need to reduce the dimension of matters so they can get into our heads. Or, rather, sadly, so we can squeeze them into our heads. The more random information is, the greater the dimensionality, and thus the more difficult to summarize. The more you summarize, the more order you put in, the less randomness. Hence the same condition that makes us simplify pushes us to think that the world is less random than it actually is. (69)

A novel, a story, a myth, or a tale, all have the same function: they spare us from the complexity of the world and shield us from its randomness. Myths impart order to the disorder of human perception and the perceived “chaos of human experience.” (69)

A Better Way to Die


Our tendency to perceive—to impose—narrativity and causality are symptoms of the same disease—dimension reduction. (70)

Narrativity can viciously affect the remembrance of past events as follows: we will tend to more easily remember those facts from our past that fit a narrative, while we tend to neglect others that do not appear to play a causal role in that narrative. (70)

By a process called reverberation, a memory corresponds to the strengthening of connections from an increase of brain activity in a given sector of the brain—the more activity, the stronger the memory. While we believe that the memory is fixed, constant, and connected, all this is very far from truth. What makes sense according to information obtained subsequently will be remembered more vividly. (71)

The Madman’s Narrative

In a famous argument, the logician W. V. Quine showed that there exist families of logically consistent interpretations and theories that can match a given series of facts. Such insight should warn us that mere absence of nonsense may not be sufficient to make something true. (72)

Narrative and Therapy


There are fact-checkers, not intellect-checkers.

Dispassionate Science


…imagine the following scenarios and estimate their odds.

a. A massive flood somewhere in America in which more than a thousand people die.

b. An earthquake in California, causing massive flooding, in which more than a thousand people die. (76)

Which of these two statements seems more likely?

Joey seemed happily married. He killed his wife.
Joey seemed happily married. He killed his wife to get her inheritance.

Clearly the second statement seems more likely at first blush, which is a pure mistake of logic, since the first, being broader, can accommodate more causes, such as he killed his wife because he went mad, because she cheated with both the postman and the ski instructor, because he entered a state of delusion and mistook her for a financial forecaster. (76)

| All this can lead to pathologies in our decision making. How? (76)

…peo-(76)ple are more likely to pay for terrorism insurance than for plain insurance (which covers, among other things, terrorism). (77)

Black Swan Blindness

How is it that some Black Swans are overblown in our minds when the topic of this book is that we mainly neglect Black Swans? (77)

| The answer is that there are two varieties of rare events: a) the narrated Black Swans,…and b) those nobody talks about, since they escape models… (77)

…in insurance patterns, neglect of these highly improbable events in people’s insurance purchases. They call it the “preference for insuring against probable small losses”—at the expense of the less probable but larger impact ones. (977)

…stability and absence of crises encourage risk taking, complacency, and lowered awareness of the possibility of problems. Then a crisis occurs, resulting in people being shell-shocked and scared of investing their resources. (78)

The Pull of the Sensational

Now, I do not disagree with those recommending the use of a narrative to get attention. Indeed, our consciousness may be linked to our ability to concoct some form of story about ourselves. It is just that narrative can be lethal when used in the wrong places. (80)


System 1, the experiential one, is effortless, automatic, fast,  opaque (we do not know that we are using it), parellel-processed, and can lend itself to errors. It is what we call “intuition,” and performs these quick acts of prowess. … System 1 is highly emotional, precisely because it is quick. It produces shortcuts, called “heuristics,” that allow us to function rapidly and effectively. Dan Goldstein calls these heuristics “fast and frugal.” Others prefer to call them “quick and dirty.” (81)

System 2, the cogitative one, is what we normally call thinking. It is what you use in a classroom, as it is effortful (even for Frenchmen), reasoned, (81) slow, logical, serial, progressive, and self-aware (you can follow the steps in your reasoning). (82)

Most of our mistakes in reasoning come from using System 1 when we are in fact thinking that we are using System 2. How? Since we react without thinking and introspection, the main property of System 1 is our lack of awareness of using it! (82)

Beware the Brain

As a skeptical empiricist I prefer the experiments of empirical psychology to the theories-based MRI scans of neurobiologist, even if the former appear less “scientific” to the public. (83)

How to Avert the Narrative Fallacy

The way to avoid the ills of the narrative fallacy is to favor experimentation over storytelling, experience over history, and clinical knowledge over theories. (84)

[via: “empiricism” over “rationalism”]

Chapter 7: Living in the Antechamber of Hope


…it is tough to deal with the social consequences of the appearance of continuous failure. We are social animals; hell is other people. (87)

Where the Relevant Is the Sensational

attention flows effortlessly toward the sensational—not the relevant so much as the sensational. (88)


…the world is more nonlinear than we think, and than scientists would like to think. (88)

| With linearities, relationships between variables are clear, crisp, and constant, therefore Platonically easy to grasp in a single sentence,… (88)

Process over Results

We favor the sensational and the extremely visible. This affects the way we judge heroes. There is little room in our consciousness for heroes who do not deliver visible results—or those heroes who focus on process rather than results. (89)

It is my great hope someday to see science and decision makers rediscover what the ancients have always known, namely that our highest currency is respect. (90)

“a touch of madness.” …when you look at the empirical record, you not only see that venture capitalists do better than entrepreneurs, but publishers do better than writers, dealers do better than artists, and science does better than scientists… The person involved in such gambles is paid in a currency other than material success: hope. (90)

Human Nature, Happiness, and Lumpty Rewards

hedonic happiness.

| Making $1 million in one year, but nothing in the preceding nine, does not bring the same pleasure as having the total evenly distributed over the same period, that is, $100,000 every year for ten years in a row. … As a matter of fact, your happiness depends far more on the number of instances of positive feelings, what psychologists call “positive affect,” than on their intensity when they hit. … So to have a pleasant life you should spread these small “affects” across time as evenly as possible. Plenty of mildly good news is preferable to one single lump of great news. (91)

So from a narrowly defined accounting point of view, which I may call here “hedonic calculus,” it does not pay to shoot for one large win. Mother Nature destined us to derive enjoyment from a steady flow of pleasant small, but frequent, rewards. (91)

The same property in reverse applies to our unhappiness. It is better to lump all your pain into a brief period rather than have it spread out over a longer one. (91)

The Antechamber of Hope

Inebriated by Hope

The Sweet Trap of Anticipation

When You Need the Bastiani Fortress

It may be a banality that we need others for many things, but we need them far more than we realize, particularly for dignity and respect. Indeed, we have very few historical records of people who have achieved anything extraordinary without such peer validation… A school allows someone with unusual ideas with the remote possibility of a payoff to find company and create a microcosm insulated from others. The members of the group can be ostracized together—which is better than being ostracized alone. (94)

| If you engage in a Black Swan-dependent activity, it is better to be part of a group. (94)


Bleed or Blowup

Chapter 8: Giacomo Casanova’s Unfailing Luck: The Problem of Silent Evidence


More than two thousand years ago, the Roman orator, belletrist, thinker, Stoic, manipulator-politician, and (usually) virtuous gentleman, Marcus Tullius Cicero, presented the following story. One Diagoras, a nonbeliever in the gods, was shown painted tablets bearing the portraits of some worshippers who prayed, then survived a subsequent shipwreck. The implication was that praying protects you from drowning. Diagoras asked, “Where were the pictures of those who prayed, then drowned?” (100)

[This is Sky Jethani’s doodle from this story of Diagoras’ Doubt]

We call this the problem of silent evidence. (101)

Silent evidence pervades everything connected to the notion of history. (101)

By bias I mean a systematic error consistently showing a more positive, or negative, effect from the phenomenon. (102)

The term bias also indicates the condition’s potentially quantifiable nature: you may be able to calculate the distortion, and to correct for it by taking into account both the dead and the living, instead of only the living. (102)


How to Become a Millionaire in Ten Steps

The entire notion of biography is grounded in the arbitrary ascription of a causal relation between specified traits and subsequent events. Now consider the cemetery. The graveyard of failed persons will be full of people who shared the following traits: courage, risk taking, optimism, et cetera. Just like the population of millionaires. There may be some differences in skills, but (105) what truly separates the two is for the most part a single factor: luck. Plain luck. (106)

By the mechanism of retrospective determinism we will find the “cause”—actually, we need to see the cause. I call these simulations of hypothetical cohorts, often done by computer, an engine of computational epistemology. Your thought experiments can be run on a computer. You just simulate an alternative world, plain random, and verify that it looks similar to the one in which we live. [I have to once again state my amazement at the aspect of human nature that allows us to mix the most rigorous skepticism and the most acute gullibility.] (106)


Vicious Bias

There is a vicious attribute to the bias: it can hide best when its impact is largest. (108)

More Hidden Applications

The stability of species. (108)

Does crime pay? … There is no section in The New York Times recording the stories of those who committed crimes but have not been caught. (109)

[via: Nor is there a list of top ten best read books]

In addition, our representation of the standard criminal might be based on the properties of those less intelligent ones who were caught. (109)

The Evolution of the Swimmer’s Body


Money (public or private) taken away from research might be responsible for killing them—in a crime that may remain silent. (110)

| A ramification of the idea concerns our decision making under a cloud (110) of possibilities. We see the obvious and visible consequences, not the invisible and less obvious ones. Yet those unseen consequences can be—nay, generally are—more meaningful. (111)

In his essay “What We See and What We Don’t See,” Bastiat offered the following idea: we can see what governments do, and therefore sing their praises—but we do not see the alternative. But there is an alternative; it is less obvious and remains unseen. (111)

| Recall the confirmation fallacy: governments are great at telling you what they did, but not what they did not do. (111)

…according to researchers, during the remaining three months of the year, close to (111) one thousand people died as silent victims of the terrorists. How? Those who were afraid of flying and switched to driving ran an increased risk of death. There was evidence of an increase of casualties on the road during that period; the road is considerably more lethal than the skies. These families got no support—they did not even know that their l loved ones were also the victims of bin Laden. (112)

It is much easier to sell “Look what I did for you” than “Look what I avoided for you.” (112)


Assume that a drug saves many people from a potentially dangerous ailment, but runs the risk of killing a few, with a net benefit to society. (112)


…misfortune did not stick to him. (113)

“I Am a Risk Taker”

…we generally take risks not out of bravado but out of ignorance and blindness to probability! … We are mature enough to race to realize this point, enjoy our blessings, and try to preserve, by becoming more conservative, what we got by luck. We have been playing Russian roulette; now let’s stop and get a real job. (116)


the self-sampling assumption, which is a generalization of the principle of the Casanova bias to our own existence. (117)

The reference point argument is as follows: do not compute odds from the vantage point of the winning gambler…but from all those who started in the cohort. (119)

The Cosmetic Because

Whenever your survival is in play, don’t immediately look for causes and effects. The main identifiable reason for our survival of such diseases might simply be inaccessible to us: we are here since. Casanova-style, the “rosy” scenario played out, and if it seems too hard to understand it is because we are too brainwashed by notions of causality and we think that it is smarter to say because than to accept randomness. (120)

| My biggest problem with the educational system lies precisely in that it forces students to squeeze explanations out of subject matters and shames them for withholding judgment, for uttering the “I don’t know.” (120)

Note here that I am not saying causes do not exist; do not use this argument to avoid trying to learn from history. All I am saying is that it is not so simple; be suspicious of the “because” and handle it with care—particularly in situations where you suspect silent evidence. (120)

Chapter 9: The Ludic Fallacy, or The Uncertainty of the Nerd


Non-Brooklyn John


The Uncertainty of the Nerd

What is the ludic fallacyLudic comes from ludus, Latin for games. (127)

Probability is a liberal art; it is a child of skepticism, not a tool fo people with calculators on their belts to satisfy their desire to produce fancy calculations and certainties. Before Western thinking drowned in its “scientific” (128) mentality, what is arrogantly called the Enlightenment, people prompted their brain to think—not compute. (129)

One needs to exit doubt in order to produce science—but few people heed the importance of not exiting from it prematurely. … It is a fact that one usually exits doubt without realizing it. … We are dogma-prone from our mother’s wombs. —Dissertation on the Search for Truth, Simon Foucher [lost, and only known from Foucher’s own references]

Gambling with the Wrong Dice


The Cosmetic Rises to the Surface

the cosmetic and the Platonic rise naturally to the surface. This is a simple extension of the problem of knowledge. It is simply that one side of Eco’s library, the one we never see, has the property of being ignored. This is also the problem of silent evidence. It is why we do not see Black Swans: we worry about those that happened, not those that may happen but did not. It is why we Platonify, liking known schemas and well-organized knowledge—to the point of blindness to reality. It is why we fall for the problem of induction, why we confirm. It is why those who “study” and fare well in school have a tendency to be suckers for the ludic fallacy. (131)

| And it is why we have Black Swans and never learn from their occurrence, because the ones that did not happen were too abstract. (132)

We love the tangible, the confirmation, the palpable, the real, the visible, the concrete, the known, the seen, the vivid, the visual, the social, the embedded, the emotionally laden, the salient, the stereotypical, the moving, the theatrical, the romanced, the cosmetic, the official, the scholarly-sounding verbiage (b******t), the pompous Gaussian economist, the mathematicized crap, the pomp, the Académie Française, Harvard Business School, the Nobel Prize, dark business suits with white shirts and Ferragamo ties, the moving discourse, and the lucid. Most of all we favor the narrated. (132)

| Alas, we are not manufactured, in our current edition of the human race, to understand abstract matters—we need context. Randomness and uncertainty are abstractions. We respect what has happened, ignoring what could have happened. In other words, we are naturally shallow and superficial—and we do not know it. This is not a psychological problem; it comes from the main property of information. The dark side of the moon is harder to see; beaming light on it costs energy. In the same way, beaming light on the unseen is costly in both computational and mental effort. (132)

Distance from Primates

This insulation from the toxicity of the world will have an additional benefit: it will improve your well-being. Also, bear in mind how shallow we are with probability, the mother of all abstract notions. (133)

Prediction, not narration, is the real test of our understanding the world. (133)


From Yogi Berra to Henri Poincaré

It is tough to make predictions, especially about the future. —Yogi Berra

The future ain’t what it used to be. —Yogi Berra

Chapter 10: The Scandal of Prediction


True, our knowledge does grow, but it is threatened by greater increases in confidence, which make our increase in knowledge at the same time an increase in confusion, ignorance, and conceit. (138)

| Take a room full of people. Randomly pick a number. … Ask each person in the room to independently estimate a range of possible values for that number set in such a way that they believe that they have a 98 percent chance of being right, and less than 2 percent chance of being wrong. (139)

…you are not trying to gauge their knowledge but rather their evaluation of their own knowledge. (139)

Epistemic arrogance bears a double effect: we overestimate what we know, and underestimate uncertainty, by compressing the range of possible uncertain states (i.e., by reducing the space of the unknown). (140)


Guessing and Predicting


When you are employed, hence dependent on other people’s judgment, looking busy can help you claim responsibility for the results in a random environment. The appearance of busyness reinforces the perception of causality, of the link between results and one’s role in them. (143)

additional knowledge of the minutiae of daily business can be useless, even actually toxic,… (144)

The more information you give someone, the more hypotheses they will formulate along the way, and the worse off they will be. They see more random noise and mistake it for information. (144)

…the more detailed knowledge one gets of empirical reality, the more one will see the noise (i.e., the anecdote) and mistake it for actual information. (144)


What Moves and What Does Not Move

Simply, things that move, and therefore require knowledge, do not usually have experts, while things that don’t move seem to have some experts. (147)

You cannot ignore self-delusion. The problem with experts is that they do not know what they do not know. Lack of knowledge and delusion about the quality of your knowledge come together—the same process that make you know less also makes you satisfied with your knowledge. (147)

How to Have the Last Laugh

Events Are Outlandish

Herding Like Cattle

cf. Philip Tetlock

I Was “Almost” Right

We attribute our successes to our skills, and our failures to external events outside our control, namely to randomness. We feel responsible for the good stuff, but not for the bad. This causes us to think that we are better than others at whatever we do for a living. (152)

[via: a.k.a. “Fundamental Attribution Error” / “Correspondence Bias”]

Reality? What For?


The unexpected has a one-sided effect with projects. (156) … The unexpected almost always pushes in a single direction: higher costs and a longer time to completion. (157)

We cannot truly plan, because we do not understand the future—but this is not necessarily bad news. We could plan While bearing in mind such limitations. It just takes guts. (157)

The Beauty of Technology: Excell Spreadsheets

A classical mental mechanism, called anchoring, … You lower your anxiety about uncertainty by producing a number, then you “anchor” on to it, like an object to hold on to in the middle of a vacuum. (158)

The Character of Prediction Errors

In a developed country a newborn female is expected to die at around 79, according to insurance tables. When she reaches her 79th birthday, her life expectancy, assuming that she is in typical health, is another 10 years. At the age of 90, she should have another 4.7 years to go. At the age of 100, 2.5 years. At the age of 119, if she miraculously lives that long, she should have about nine months left. (159)

…the longer you wait, the longer you will be expected to wait. (159)

[via: Chinese adoption]

Let’s say you are a refugee waiting for the return to your homeland. Each day that passes you are getting farther from, not closer to, the day of (159) triumphal return. The same applies to the completion date of your next opera house. If it was expected to take two years, and three years later you are asking questions, do not expect the project to be completed any time soon. If wars last on average six months, and your conflict has been going on for two years, expect another few years of problems. (160)


Forecasting without incorporating an error rate uncovers three fallacies, all arising from the same misconception about the nature of uncertainty. (161)

| The first fallacy: variability matters. The first error lies in taking a projection too seriously, without heeding its accuracy. Yet, for planning purposes, the accuracy in your forecast matters far more than the forecast itself. (161)

The policies we need to make decisions on should depend far more on the range of possible outcomes than on the expected final number. (161)

The second fallacy lies in failing to take into account forecast degradation as the projected period lenthens. We do not realize the full extent of the difference between near and far futures. (162)

The third fallacy, and perhaps the greatest, concerns a misunderstanding of the random character of the variables being forecast. (162)

…the worst case is far more consequential than the forecast itself. (162)

It is often said that “is wise he who can see things coming.” Perhaps the wise one is the one who knows that he cannot see things far away. (163)

Get Another Job

If there is one advantage of having been in the daily practice of uncertainty, it is that one does not have to take any crap from bureaucrats. (163)

Anyone who causes harm by forecasting should be treated as either a fool or a liar. Some forecasters cause more damage to society than criminals. Please, don’t drive a school bus blindfolded. (163)


Chapter 11: How to Look for Bird Poop


Being an executive does not require very developed frontal lobes, but rather a combination of charisma, a capacity to sustain boredom, and the ability to shallowly perform on harrying schedules. (166)

Inadvertent Discoveries

The classical model of discovery is as follows: you search for what you know (say, a new way to reach India) and find something you didn’t know was there (America). (166)

| If you think that the inventions we see around us came from someone sitting in a cubicle and concocting them according to a timetable, think again: almost everything of the moment is the product of serendipity. The term serendipity was coined in a letter by the writer Hugh Walpole, who derived it from a fairy tale, “The Three Princes of Serendip.” These (166) princes “were always making discoveries by accident, or sagacity, of things which they were not in quest of.” (167)

Sir Francis Bacon commented that the most important advances are the least predictable ones, those “lying out of the path of the imagination.” (167)

We forget about unpredictability when it is our turn to predict. This is why people can read this chapter and similar accounts, agree entirely with them, yet fail to heed their arguments when thinking about the future. (167)

[via: Agreed. I was amazed how much my mind began to try predicting while reading this paragraph.]

Thomas Watson, the founder of IBM, once predicted that there would be no need for more than just a handful of computers. (168)

…after the first moon landing the now-defunct airline Pan Am took advance bookings for round-trips between earth and the moon. (169)

A Solution Waiting for a Problem

We build toys. Some of those toys change the world. (1670)

Keep Searching

cf. Viagra [originally a hypertension drug]

To predict the spread of  technology implies predicting a large element of fads and social contagion,… (170)


…the law of iterated expectations,…if I expect to expect something at some date in the future, then I already expect that something at present. (172)

| Consider the wheel again. If you are a Stone Age historical thinker called on to predict the future in a comprehensive report for your chief tribal planner, you must project the invention of the wheel or you will miss pretty much all of the action. Now, if you can prophesy the invention of the wheel, you already know what a wheel looks like, and thus you already know how to build a wheel, so you are already on your way. The Black Swan needs to be predicted! (172)

| But there is a weaker form of this law of iterated knowledge. It can be phrased as follows: to understand the future to the point of being able to predict it, you need to incorporate elements from this future itself. (172)

ignoramus et ignorabimus… (173)

Prediction requires knowing about technologies that will be discovered in the future. But that very knowledge would almost automatically allow us to start developing those technologies right away. Ergo, we do not know what we will know. (173)

| Some might say that the argument, as phrased, seems obvious, that we always think that we have reached definitive knowledge but don’t notice that those past societies we laugh at also thought the same way. My argument is trivial, so why don’t we take it into account? the answer lies in a pathology of human nature. … We see flaws in other sand not in ourselves. Once again we seem to be wonderful at self-deceit machines. (173)


There is so little room in our consciousness; it is winner-take-all up there. (174)

Third Republic-Style Decorum

The Three Body Problem

One of the readers of a draft of this book, David Cowan, gracefully drew this picture of scattering, which shows how, at the second bounce, variations in the initial conditions can lead to extremely divergent results. As the initial imprecision in the angle is multiplied, every additional bounce will be further magnified. This causes a severe multiplicative effect where the error grows out disproportionately.

One of the readers of a draft of this book, David Cowan, gracefully drew this picture of scattering, which shows how, at the second bounce, variations in the initial conditions can lead to extremely divergent results. As the initial imprecision in the angle is multiplied, every additional bounce will be further magnified. This causes a severe multiplicative effect where the error grows out disproportionately.

…the “three body problem.” IF you have only two planets in a solar-style system, with nothing else affecting their course, then you may be able to indefinitely predict the behavior of these planets, no sweat. But add a third body, say a comet, ever so small, between the planets. Initially the third body will cause no drift, no impact; later, with time, its effects on the two other bodies may become explosive. Small differences in where this tiny body is located will eventually dictate the future of the behemoth planets. (177)

Our world, unfortunately, is far more complicated than the three body problem; it contains far more than three objects. We are dealing with what is now called a dynamical system—and the world, we will see, is a little too much of a dynamical system. (177)

cf. Edward Lorenz, “the butterfly effect.”

They Still Ignore Hayek

How Not to Be a Nerd

Academic Libertarianism

Prediction and Free Will

It is another matter to project a future when humans are involved, if you consider them living beings and endowed with free will. (183)


So not only can the past be misleading, but there are also many degrees of freedom in our interpretation of past events. (188)


So, NNT, why on earth do we plan? (189)

Why? the answer has to do with human nature. Planning may come with the package of what makes us human, namely, our consciousness. (189)

In a way, projecting allows us to cheat evolution: it now takes place in our head, as a series of projections and counterfactual scenarios. (189)

Chapter 12: Epistemocracy, a Dream

[via: YES, please!]

Someone with a low degree of epistemic arrogance is not too visible, like a shy person at a cocktail party. We are not predisposed to respect humble people, those who try to suspend judgment. Now contemplate epistemic humility. Think of someone heavily introspective, tortured by the awareness of his own ignorance. He lacks the courage of the idiot, yet has the rare guts to say “I don’t know.” He does not mind looking like a fool or, worse, an ignoramus. He hesitates, he will not commit, and he agonizes over the consequences of being wrong. He introspects, introspects, and introspects until he reaches physical and nervous exhaustion

[via: This is a good existential description of my identity as “an epistemological agnostic”]

| This does not necessarily mean that he lacks confidence, only that he holds his own knowledge to be suspect. I will call such a person an epistemocrat; the province where the laws are structured with this kind of human fallibility in mind I will call an epistemocracy. (190)

Monsieur de Montaigne, Epistemocrat


It would be a society governed from the basis of the awareness of ignorance, not knowledge. (192)

| Alas, one cannot assert authority by accepting one’s own fallibility. Simply, people need to be blinded by knowledge—we are made to follow leaders who can gather people together because the advantages of being in groups trump the disadvantages of being alone. It has been more profitable for us to bind together in the wrong direction than to be alone in the right one. (192)


Prediction, Misprediction, and Happiness

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. (195)

Helenus and the Reverse Prophecies

The Melting Ice Cube

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.

[via: So, historiology is a “backward prediction?” More complicated pathways backward complicate the historian’s predictions.”]

Once Again, Incomplete Information

…while in theory randomness is an intrinsic property, in practice, randomness is incomplete information, what I call opacity… (198)

Randomness, in the end, is just unknowledge. The world is opaque and appearances fool us. (198)

What They Call Knowledge

We can get negative confirmation from history, which is invaluable, but we get plenty of illusions of knowledge along with it. (199)

Chapter 13: Appelles the Painter, or What Do You Do if You Cannot Predict?


It is not a good habit to stuff one’s text with quotations from prominent thinkers, except to make fun of them or provide a historical reference. They “make sense,” but well-sounding maxims force themselves on our gullibility and do not always stand up to empirical tests. (201)

I do not believe in the track record of advice-giving “philosophy” in helping us deal with the problem; nor do I believe that virtues can be easily taught; nor do I urge people to strain in order to avoid making a judgment. Why? Because we have to deal with humans as humans. We cannot teach people to withhold judgment; judgments are embedded in the way we view objects. I do not see a “tree”; I see a pleasant or an ugly tree. … Likewise, it is not possible to hold a situation in one’s head without some element of bias. Something in our dear human nature makes us want to believe; so what? (202)

| Philosophers since Aristotle have taught us that we are deep-thinking animals, and that we can learn by reasoning. It took a while to discover that we do effectively think, but that we more readily narrate backward in order to give ourselves the illusion of understanding, and give a cover to our past actions. (202)

Being a Fool in the Right Places

The lesson for the small is: be human! Accept that being human involves some amount of epistemic arrogance in running your affairs. Do not be ashamed of that. Do not try to always withhold judgment—opinions are the stuff of life. Do not try to avoid predicting—yes, after this diatribe about prediction I am not urging you to stop being a fool. Just be a fool in the right places. (203)

| What you should avoid is unnecessary dependence on large-scale harmful predictions—those and only those. Avoid the big subjects that may hurt your future: be fooled in small matters, not in the large. Do not listen to economic forecasters or to predictors in social science (they are mere entertainers), but do make your own forecast for the picnic. (203)

Know how to rank beliefs not according to their plausibility but by the harm they may cause. (203)

Be Prepared

…if you shed the idea of full predictability, there are plenty of things to do provided you remain conscious of their limits. Knowing that you cannot predict does not mean that you cannot benefit from unpredictability. (203)

| The bottom line: be prepared! Narrow-minded prediction has an analgesic or therapeutic effect. Be aware of the numbing effect of magic numbers. Be prepared for all relevant eventualities. (203)


Sextus Empiricus retold the story of Apelles the Painter, who, while doing a portrait of a horse, was attempting to depict the foam from the horse’s mouth. After trying very hard and making a mess, he gave up and, in irritation, took the sponge he used for cleaning his brush and threw it at the picture. Where the sponge hit, it left a perfect representation of the foam. (204)

| Trial and error means trying a lot. (204)

Volatility and Risk of Black Swan

Barbell Strategy

“Nobody Knows Anything”

a. First make a distinction between positive contingencies and negative ones. (206)

b. Don’t look for the precise and the local. Simply, do not be narrow-minded. (208)

You got to be very careful if you don’t know where you’re going, because you might not get there. —Yogi Berra

c. Seize any opportunity, or anything that looks like opportunity. They are rare, much rarer than you think. (208)

d. Beware of precise plans by governments. … Remember that the interest of these civil servants is to survive and self-perpetuate—not to get to the truth. It does not mean that governments are useless, only that you need to keep a vigilant eye on their side effects. (209)

e. Do not waste your time trying to fight forecasters, stock analysts, economists, and social scientists, except to play pranks on them. (210)

The Great Asymmetry

All these recommendations have one point in common: asymmetry. Put yourself in situations where favorable consequences are much larger than unfavorable ones. (210)

In the end we are being driven by history, all the while thinking that we are doing the driving. (211)

| I’ll sum this long section on prediction by stating that we can easily narrow down the reasons we can’t figure out what’s going on. There are: a) epistemic arrogance and our corresponding future blindness; b) the Platonic notion of categories, or how people are fooled by reductions, particularly if they have an academic degree in an expert-free discipline; and, finally c) flawed tools of inference, particularly the Black Swan—free tools from Mediocristan. (211)


Chapter 14: From Mediocristan to Extremistan, and Back

The World Is Unfair

Is the world that unfair? I have spent my entire life studying randomness, practicing randomness, hating randomness. The more that time passes, the worse things seem to me, the more scared I get, the more disgusted I am with Mother Nature. The more I think about my subject, the more I see evidence that the world we have in our  minds is different from the one playing outside. Every morning the world appears to me more random than it did the day before, and humans seem to be even more fooled by it than they were the previous day. It is becoming unbearable. I find writing these lines painful; I find the world revolting. (215)

The Matthew Effect

Note that scholars are judged mostly on how many times their work is referenced in other people’s work, and thus cliques of people who quote one another are formed (it’s an “I quote you, you quote me” type of business). (217)

Lingua Franca

The theory of preferential attachment… (218)

Ideas and Contagions

We humans are not photocopiers. So contagious mental categories must be those in which we are prepared to believe, perhaps even programmed to believe. To be contagious, a mental category must agree with our nature. (220)


A Brooklyn Frenchman

The Long Tail

Naïve Globalization

Networks have a natural tendency to organize themselves around an extremely concentrated architecture: a few nodes are extremely connected; others barely so. (226)


…the institution of tightly monogamous marriage (with no official concubine, as in the Greco-Roman days), even when practiced the “French way,” provides social stability since there is no pool of angry, sexually deprived men at the bottom fomenting a revolution just so they can have the chance to mate. (227)

People live longer in societies that have flatter social gradients. Winners kill their peers as those in a steep social gradient live shorter lives, regardless of their economic condition. (228)

| I do not know how to remedy this (except through religious beliefs). (228)

Chapter 15: The Bell Curve, That Great Intellectual Fraud


The Increase in the Decrease

If you must have only one single piece of information, this is the one: the dramatic increase in the speed of decline in the odds as you move away from the center, or the average. (231)

This precipitous decline in the odds of encountering something is what allows you to ignore outliers. (232)

The Mandelbrotian

What to Remember

Remember this: the Gaussian-bell curve variations face a headwind that makes probabilities drop at a faster and faster rate as you move away from the mean, while “scalable,” or Mandelbrotian variations, do not have such a restriction. That’s pretty much most of what you need to know.


Extremistan and the 80/20 Rule

Grass and Trees

Measures of uncertainty that are based on the bell curve simply disregard the possibility, and the impact, of sharp jumps or discontinuities and are, therefore, inapplicable in Extremistan. Using them is like focusing on the grass and missing out on the (gigantic) trees. Although predictable large deviations are rare, they cannot be dismissed as outliers because, cumulatively, their impact is so dramatic. (236)

How Coffee Drinking Can Be Safe

Particles jump around all the time. How come the coffee cup, itself composed of jumping particles, does not? The reason is, simply, that for the cup to jump would require that all of the particles (237) jump in the same direction, and do so in lockstep several times in a row (with a compensating move of the table in the opposite direction). (238)

In Mediocristan, as your sample size increases, the observed average will present itself with less and less dispersion—as you can see, the distribution will be narrower and narrower. This, in a nutshell, is how everything in statistical theory works (or is supposed to work). Uncertainty in Mediocristan vanishes under averaging. This illustrates the hackneyed “law of large numbers.”

If my cup were one large particle, or acted as one, then its jumping would be a problem. But my cup is the sum of trillions of very small particles. (238)

Love of Certainties

How to Cause Catastrophes


Golden Mediocrity

Collecting statistics, he started creating standards of “means.” Chest size, height, the weight of babies at birth, very little escaped his standards. Deviations from the norm, he found, became exponentially more rare as the magnitude of the deviation increased. (241)

[via: Is this all essentially “social comparison” psychology at work…and at scale?]

The notion of a man deemed average is different from that of a man who is average in everything he does. (242)

[via: This all reminds me of “The Median Isn’t The Message” by S. J. Gould]

God’s Error

A much more worrisome aspect of the discussion is that in Quételet’s day, the name of the Gaussian distribution was la loi des erreurs, the law of errors, since one of its earliest applications was the distribution of errors in astronomic measurements. Are you as worried as I am? Divergence from the mean (here the median as well) was treated precisely as an error! No wonder Marx fell for Quételet’s ideas. (242)

| This concept took off very quickly. The ought was confused wth the (242) is, and this with the imprimatur of science. (243)

Poincaré to the Rescue

Eliminating Unfair Influence

“The Greeks Would Have Deified It”

“Yes/No” Only Please


Drop balls that, at every pin, randomly fall right or left. Above is the most probable scenario, which greatly resembles the bell curve (a.k.a. Gaussian distribution). Courtesy of Alexander Taleb.

[via: Because there are greater numbers of pathways for the center columns.]

…just remember this dramatic speed of decrease in the odds as you move away from the average. Outliers are increasingly unlikely. You can safely ignore them. (250)

Those Comforting Assumptions

“The Ubiquity of the Gaussian”

Chapter 16: The Aesthetics of Randomness



The Geometry of Nature


Fractality  is the repetition of geometric patterns at different scales, revealing smaller and smaller versions of themselves. Small parts resemble, to some degree, the whole. (257)

…recursive means that something can be reapplied to itself infinitely. (258)

A Visual Approach to Extremistan/Mediocristan

Pearls to Swine

The Logic of Fractal Randomness (with a Warning)

The Problem of the Upper Bound

Beware the Precision

The Water Puddle Revisited

From Representation to Reality

While many study psychology, mathematics, or evolutionary theory and look for ways to take it to the bank by applying their ideas to business, I suggest the exact opposite: study the intense, uncharted, humbling uncertainty in the markets as a means to get insights about the nature of randomness that is applicable to psychology; probability, mathematics, decision theory, and even statistical physics. (268)


Once Again, a Happy Solution


I have written this entire book about the Black Swan. This is not because I am in love with the Black Swan; as a humanist, I hate it. I hate most of the unfairness and damage it causes. Thus I would like to eliminate many Black Swans, or at least go mitigate their effects and be protected from them. Fractal randomness is a way to reduce these surprises, to make some of the swans appear possible, so to speak, to make us aware of their consequences, to make them gray. But fractal randomness does not yield precise answers. (272)

Chapter 17: Locke’s Madmen, or Bell Curves in the Wrong Places

Only Fifty Years

The Clerks’ Betrayal

Anyone Can Become President

More Horror



How to “prove” things

…Locke’s definition of a madman: someone “reasoning correctly from erroneous premises.” (283)

Skeptical empiricism advocates the opposite method. I care about the premises more than the theories, and I want to minimize reliance on theories, stay light on my feet, and reduce my surprises. I want to be broadly right rather than precisely wrong. Elegance in the theories is often indicative of Platonicity and weakness—it invites you to seek elegance for elegance’s sake. (285)

[via: Like most medicines when we are sick, they don’t address the problem, but rather the symptomatic pains.]

Chapter 18: The Uncertainty of the Phony


Find the Phony

The greater uncertainty principle states that in quantum physics, one cannot measure certain pairs of values (with arbitrary precision), such as the position and momentum of particles. You will hit a lower bound of measurement: what you gain in the precision of one, you lose in the other. (287)

Can Philosophers Be Dangerous to Society?

The Problem of Practice


Where Is Popper When You Need Him?

…as a practitioner, my thinking is rooted in the belief that you cannot go from books to problems, but the reverse, from problems to books. … A scholar should not be a library’s tool for making another library,… (290)

The degeneration of philosophical schools in its turn is the consequence of the mistaken belief that one can philosophize without having been compelled to philosophize by problems outside philosophy. … Genuine philosophical problems are always rooted outside philosophy and they die if these roots decay. … [emphasis mine] These roots are easily forgotten by philosophers who “study” philosophy instead of being forced into philosophy by the pressure of nonphilosophical problems.

[via: Theology, too!]

The Bishop and the Analyst

I am most often irritated by those who attack the bishop but somehow fall for the securities analyst—those who exercise their skepticism against religion but not against economists, social scientists, and phony statisticians. Using the confirmation bias, these people will tell you that religion was horrible for mankind by counting deaths from the Inquisition and various religious wars. But they will not show you how many people were killed by nationalism, social science, and political theory under Stalinism or during the Vietnam War. Even priests don’t go to bishops when they feel ill: their first stop is the doctor’s. But we stop by the offices of many pseudoscientists and “experts” without alternative. We no longer believe in papal infallibility; we seem to believe in the infallibility of the Nobel,… (291)

Easier Than You Think: The Problem of Decision Under Skepticism

a. I can’t do anything to stop the sun from nonrising tomorrow (no matter how hard I try).

b. I can’t do anything about whether or not there is an afterlife,

c. I can’t do anything about Martians or demons taking hold of my brain.

But I have plenty of ways to avoid being a sucker. It is not much more difficult than that. (292)


Chapter 19: Half and Half, or How to Get Even with the Black Swan


Snub your destiny. … In refusing to run to catch trains, I have felt the true value of elegance and aesthetics in behavior, a sense of being in control of my time, my schedule, and my life. Missing a train is only painful if you run after it! (297)

It is more difficult to be a loser in a game you set up yourself. (297)


We are quick to forget that just being alive is an extraordinary piece of good luck, a remote event, a chance occurrence of monstrous proportions. (298)

| Imagine a speck of dust next to a planet a billion times the size of the earth. The speck of dust represents the odds in favor of your being born; the huge planet would be the odds against it. So stop sweating the small stuff. Don’t be like the ingrate who got a castle as a present and worried about the mildew in the bathroom. Stop looking the gift horse in the mouth—remember that you are a Black Swan. And thank you for reading my book. (298)

[via: You’re welcome.]

Epilogue: Yevgenia’s White Swans

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