One of the reactions I received several times while advertising The Black Swan by Nassim Taleb during the past month was the question, “The movie?” It was not the movie at all. According to Taleb, (in the prologue), “a Black Swan is –
- an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility.
- it carries an extreme impact
- In spite of its outlier status, human nature makes us concoct explanations for its occurrences after the fact, making it explainable and predictable.”
If that sounds like a big and long explanation, it is. Taleb is a philosopher and statistician, and, as pointed out by Craig during the discussion in the back of the Michigan News Agency, the thesis is regurgitated throughout the book. The three of us agreed that the author’s thought process was apparent, and we could see why it was easy for him to write it. One of the other points is that we liked that the author’s ideas were from a different point of view than what is common.
The bottom line? People want explanations for events, even when they are truly unexplainable, and random. We tend to find some way to make connections and explain why something did happen or that it should happen. Taleb basically states that the random and unexpected occurrences are outliers – they happen outside of what is expected. It is how casinos can make money because people expect big winnings based on the few who do, for example.
Matt brought up the point of the antilibrary. Imagine a bookshelf full of books with all the knowledge you have. The books that are missing, or what you do NOT know, would be the antilibrary.
We also discussed:
- What Taleb might have thought about the market crash in 2008 related to the book “The Big Short” by Michael Lewis.
- The variety of financial information.
- That economists basically don’t have a clue and can prove anything.
- How incentives determine behaviors.
- How everyone tries to get to the middle, yet the rich keep getting richer and there’s a definite divide.
- That for the most part we already practice not watching the news, which was one of Taleb’s points since there usually isn’t anything important.
- Hedonic Happiness (my favorite point from p91): “…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. In other words, good news is good news first; how good matters rather little. 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.”
I am always happy when there are book discussions 🙂 What made you happy today?
One final note: If you live in or visit Michigan, you can see a black swan at the Kellogg Bird Sanctuary. As the definition of Black Swan suggests, the black swan is a rare bird and it is found in Australia. Thanks to John, who recommended the book and took the photograph.
Stacy (a.k.a. “The Book Lady”)