For the past several days I've been absorbed in the non-fiction book The Black Swan, by Nassim Nicholas Taleb. This book, which had been recommended to me by at least half a dozen people, was a New York Times bestseller when it debuted two years ago. Taleb is a Wharton-school graduate who made a lot of money in the stock market and who is a devotee of world history.
The book, which is subtitled "The Impact of the Highly Improbable," has this as its premise: The bullet that hits you is never the one you see coming. All right, that's a simplification. What Taleb does is categorize all the reasons that we misjudge probabilities, plus the huge cost of those misjudgments when an unexpected event (a "black swan") suddenly appears. Taleb believes that it's the unexpected that shapes history, the financial markets, and much of our everyday disasters. What you don't see gets left out of the your predictions, and what you don't see matters hugely.
Two examples, the first borrowed from Bertram Russell: a turkey gets fed every day by humans for a thousand days. The turkey is "justified by the data" in concluding that humans reliably feed turkeys. The thousand-and-first day is the day before Thanksgiving and the turkey gets the axe. This, Taleb argues, is what happens to financial markets, and thus why all the "trend data" in the world results in professionals doing no better than amateurs at picking stocks (a phenomenon confirmed by experiments).
A second example: Humans invest too heavily in post-event explanations of causality (which may or may not be true; Taleb isn't a big believer in rational causality on the grounds that most humans aren't very rational). We then apply this post-event analysis to the future, and so again don't see coming the totally unexpected random event. As a result, Taleb distrusts nearly all "experts" -- they know too much past data, and so are blinded by their own expectations of order rather than seeing the true randomness of life.
I am only half way through the book, so I haven't yet come to Taleb's suggestions about all this (warning: MATH AHEAD). But I am very intrigued so far, partly because my own life often looks so affected by randomness (for instance, I never planned on becoming a writer). Has anybody else read The Black Swan? Thoughts?