Black Swan — Chapter I
Series of Summaries on Taleb’s work
Hi,
Nicholas Nassem Taleb is an influential thinker. His writing is verbose. However, once we learn the core of his philosophy, it will serve us well.
Over the next few issues, I intend to summarise his book, ‘The Black Swan — The Impact of the Highly Improbable’. Today, we look at the first chapter. This chapter is titled “The Apprenticeship of an Empirical Sceptic”.
The Human mind suffers from 3 ailments. First, the illusion of understanding. We tend to assume that we understand the world. The world is far more complicated than we realise. Second, the retrospective distortion. We analyse things with the benefit of hindsight and this severely warps our vision. Retrospective plausibility makes us discount the rarity of an event. Today, with the rapid of decrease of Covid cases, we might swear that there will be no third wave. However, if a third wave occurs, we would claim that it was inevitable, as people had become careless or because the government did not plan enough (or invent yet another plausible reason). However, it would be interesting to look at Charlie Munger’s ‘invert’ philosophy in this context. Munger believes that if you want to figure out what will ruin X in five years, assume that you are in the future and X has been ruined. What caused the ruin of X? If you solve the cause in the present, X will be peril free in the future. Third, we tend to overvalue factual information and want to Platonify — or categorise things into eat little boxes.
Next, he discusses how history does not crawl, but jumps. He looks at the spread of Islam and Christianity and how there are very little contemporary records of their growths. While we tend to think that history progresses incrementally, it jumps leaps and bounds.
However, the biggest take away is this — that humans are rationalising, not rational beings. When one looks at the works of behavioural economists like Tversky and Kahnemann, we realise that humans are not ‘econs’, we do not always act rationally. We fall prey to other instincts, even while making choices we claim are rational, logical, and proper. Contrarily, humans are rationalising, and we tend to impute causation to events after they happen. This is perhaps due to our need to give narratives and make remembering easier on our memories, as Taleb discusses in Chapter VI.
I hope you liked this edition and I look forward to discuss Chapter II soon.
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