The black swan : the impact of the highly improbable

by Nassim Taleb

Paper Book, 2010

Status

Available

Call number

003.54

Tags

Publication

New York : Random House Trade Paperbacks, 2010

Description

Business. Sociology. Nonfiction. HTML:The most influential book of the past seventy-five years: a groundbreaking exploration of everything we know about what we don�t know, now with a new section called �On Robustness and Fragility.� A black swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was. The astonishing success of Google was a black swan; so was 9/11. For Nassim Nicholas Taleb, black swans underlie almost everything about our world, from the rise of religions to events in our own personal lives.   Why do we not acknowledge the phenomenon of black swans until after they occur? Part of the answer, according to Taleb, is that humans are hardwired to learn specifics when they should be focused on generalities. We concentrate on things we already know and time and time again fail to take into consideration what we don�t know. We are, therefore, unable to truly estimate opportunities, too vulnerable to the impulse to simplify, narrate, and categorize, and not open enough to rewarding those who can imagine the �impossible.�   For years, Taleb has studied how we fool ourselves into thinking we know more than we actually do. We restrict our thinking to the irrelevant and inconsequential, while large events continue to surprise us and shape our world. In this revelatory book, Taleb will change the way you look at the world, and this second edition features a new philosophical and empirical essay, �On Robustness and Fragility,� which offers tools to navigate and exploit a Black Swan world. Taleb is a vastly entertaining writer, with wit, irreverence, and unusual stories to tell. He has a polymathic command of subjects ranging from cognitive science to business to probability theory. Elegant, startling, and universal in its applications, The Black Swan is a landmark book�itself a black swan.… (more)

Media reviews

Since the book was written prior to the current situation, many of the insights will seem prophetic. For instance, “regulators in the banking business are prone to a severe expert problem and they tend to condone reckless but (hidden) risk taking.” Some might think that the book specifically
Show More
predicted the current market and economic crisis—wrong. The book is about the expectation that it could occur.
Show Less
3 more
Some of his presentation is incendiary in criticizing economics, finance, and many of its most honored practitioners. Because the book is viewed as being partly about Taleb himself and because of the style of the presentation, some react to the author's persona. If you are forewarned and forearmed,
Show More
it is easier to focus on the ideas in the book. Because the arguments are controversial, it is understandable that he has chosen to have sharp elbows in getting to the front of the stage.
Show Less
Taleb and his publishers clearly believe the success of Fooled by Randomness is going to come again. But that book had a persuasive sobriety. The same cannot be said for The Black Swan, which despite the great utility of its insights is badly structured and hurriedly written.
"The Black Swan" has appealing cheek and admirable ambition, and contains such wise observations as: “We attribute our successes to our skills, and our failures to external events outside our control.” But the book exhibits shortcomings, the first being lack of structure.

User reviews

LibraryThing member dtw42
Economics is often a con,
Says Taleb in his book The Black Swan;
The Gaussian bell
Curve’s misleading as hell,
And you seldom can tell what’s going on.
LibraryThing member mbmackay
This book has a simple and important premise - unexpected and significant events happen, and such events are not foreseen or considered in most forecasting, making such forecasting useless or worse. In the context of most of economic life, Taleb points out that this simple premise is ignored.
The
Show More
book should have been an enjoyable read, but is fatally tainted by the expressed personality of Taleb. I can't imagine a more obnoxious and unlikable person. Hell would be stuck in a corner with Taleb at an eternal cocktail party. Apart from his fresh thinking, his other great talent seems to be in annoying people. He relates the negative reception given by professionals to his ideas, and complains of the ad hominem attacks, while it is clear to me at least, that it would take an angel not to want to strangle this man.
Aside from that problem, my other complaint is that this is not a book length idea - it should have been condensed to an essay length. The idea is good and its consequences are worth considering, but not at book length. An essay length discussion would have limited how much the reader could get to know Taleb, and that could only be a good thing for all involved.
Read July 2012
Show Less
LibraryThing member teddyballgame
In The Black Swan, Nassim Nicholas Taleb makes a strong case against the Bell Curve, Modern Portfolio Theory, and the field of economics. He argues that Black Swans (large events that are no one's radar and are inherently unpredictable) have a greater impact on the history of our world then the
Show More
predictable events that fall within the Bell Curve. Therefore, trying to predict future economic and political events is a useless exercise that has inherent weaknesses.

Taleb also rails against historians and what he calls the "narrative fallacy." He argues that trying to understand and derive correlations between historical events is a useless waste of time that cannot possibly explain certain events as drawing causation is mere speculation. One thing may seem to have led to another, but one cannot be sure based on a small amount of known facts. By making these claims with very little basis, historians do damage by giving modern day prognosticators false information. This leads to dangerous forecasts by people in the prediction business - bankers, politicians, fund managers, and economists.

Taleb makes a strong case, but his book is overly verbose and his prose is excessively arrogant. He wonders why people in the economic community take such offense to his positions. While they may disagree, I think they probably take offense more to his delivery. He comes across in the book as someone who is right 100% of the time. He's not trying to add to study of economics or philosophy - he's trying to tear down the entire system and rebuild it with his fundamental beliefs. When many have spent their entire lives developing these economic and philosophical theories, I can understand their responses.

Overall, Taleb's book is very good. It's too long and contains too many examples and diatribes. His message is relatively simple - modern day prognosticators are usually wrong. They ignore what they do not know and they expect that it won't happen. However, it often does and this leads to the inherent weakness of what they do.

If Taleb only saw the Black Swan of his book being too verbose and arrogant, maybe it would have been better received.
Show Less
LibraryThing member Richard7920
The only real point made by the author could have been made in a much more compact presentation. He tends to ramble and at many points the book appears to be simply a platform to showcase the author's arrogance. This one will not assume a permanent place on my library shelves but instead is
Show More
destined for the resale shop.
Show Less
LibraryThing member tgraettinger
Tough book to review... There are some nuggets of interesting, useful content. I did find the writing style to be rambling without much of a clear sense of direction. In a few words, I might summarize the key points for me as:
- go to parties, you never know who you might meet
- don't be fooled by
Show More
confirmations of an idea or theory. Look for counter-examples and withhold judgment
- you don't know as much as you think you do
- look for some positive black swans in your life and work
- don't ignore outliers if they can dominate
Show Less
LibraryThing member ennui2342
Taleb certainly has good points to make with good advice on how to approach the risks from surprise events and the failure of standard statistical approaches to risk.However, the book suffers in places from a descent into diatribe. Taleb could certainly have cut this back considerably and made the
Show More
book about half as long. It also takes a while to get going, so stick with it. Overall worth reading, but not an enjoyable read.
Show Less
LibraryThing member paradoxosalpha
This book was recommended to me as an examination of "how to think," but it would have been more accurate to characterize it as admonitions on "how not to think." It is a lucid and highly vernacular study of randomness and unknowability, debunking much of what passes for "social science,"
Show More
especially economics. The author is a statistically-trained trader of derivatives, a friend/disciple of Benoit Mandelbrot, and a foe of the Nobel-Prize-bearing intellectual establishment.

If nothing else, Taleb is a brilliant self-promoter who presents himself as a fascinating character. I can't imagine a mainstream talk-show producer reading this book without coveting him as a guest. (The fact that other reviewers have castigated him as "arrogant" only enhances this effect.) In an especially clever turn, he introduces the thinly-fictionalized alter-ego of "Nero Tulip," and describes Nero's spectacular facing down of his boss in an episode that could have been part of Palahniuk's Fight Club (98-99). Did Taleb really do that? Maybe.

One little fault I would charge against Taleb is his demonization of Plato. (xxv) He insists that he has read "more material from those I disagree with than from those whose opinion I share," (304) which is of course the intellectually upright approach for those engaged in argumentation. But there's no Plato in his bibliography, and his anecdote to demonstrate what he takes as "Platonicity" only cites a recent book on "handedness". (319) I suspect him of having ingested his distaste for Plato secondhand through Karl Popper. (Taleb lionizes Popper at length.) He insists that to "Platonify" is to see the world through predetermined categories and models. (257) But I think Taleb has a lot in common with Plato in his devotion to intellectual outsiders; and Plato shared Taleb's distrust of narrative knowledge, to the point of proposing that Homeric epics be outlawed.

A key message, and something of the spirit, of The Black Swan can be found in chapter 22 of Aleister Crowley's Book of Lies (1912): The Despot. Taleb writes: "Luck is the grand equalizer, because almost everyone can benefit from it." (222)
Show Less
LibraryThing member timtom
While NNT's postulate is certainly valid and should be wider known (although to a rational mind it sounds rather obvious), diluting it in such a convoluted and rapidly boring book is certainly not giving it credit. Examples are redundant and often contradictory. The author's vast contempt towards
Show More
economist is satisfying and even amusing at first, but its constant repetition quickly bores the reader. So does the affirmation of Taleb's large ego around every second sentence. A ten-page pamphlet getting to the point would have been much more efficient, but probably less satisfying to the author's reputation and bank account...
Show Less
LibraryThing member gsatell
It's a good book and he makes a great point about the problem of only looking within 3 standard deviations. However, he overplays his hand and his arrogant style gets old pretty fast.
LibraryThing member tronella
I didn't really enjoy this one. He said a lot of things I thought were incorrect, and a lot which had no evidence to back them up. Basically, this book is about everyone except him is stupid, especially academics and anyone who works in finance, because noone interprets the probabilities of
Show More
unlikely events properly or consistantly. A lot of his "mathematical" explanations were unnecessarily complicated and came across as deliberately misleading because of it, and the book as a whole was extremely repetitive and ranty.
Show Less
LibraryThing member Noisy
Second edition: contains Postscript essay.

This deserves a fuller review, but I'll keep it brief because it's taken me a long time to actually reach the end of the book and some of the detail is lost. And there lies part of the problem, because this book started out as a five-star work because of
Show More
the quality of the writing and the impact of the message but drifted down in my estimation the further I progressed. I think it was just the repetition of the message that wore me down, because at the end of each of the four parts I was considering knocking half-a-star off my final evaluation. In the end, the Postscript essay NNT (yep, that's how he refers to himself) added in the revised edition pulls it back to make a solid four-star evaluation.

So, here's a self-confident and erudite chap pulling down the walls of the economic establishment. Or at least trying to, because the overly self-confident and nowhere near as erudite members of that establishment just carry on blithely ignorant of the message about the Black Swan event ('all swans are white' until you actually travel to the southern hemisphere and expose that fallacy) that lurks around the corner if you put your trust in economic models. And the message is that stark - all economic models, not just some. I recently saw NNT on television (Newsnight, BBC2) where he moderated that somewhat by saying models can be effective at the micro level, but break down at the macro level.

He convinced me; but that was pushing at an open door. I've designed a computer system to support money market traders, and the rules I was given convinced me it's just the same as a casino. Except the '0' (and '00' for those in some locations) mean that you don't just lose your stake but your whole wad.

Read it, then, but I'll quite understand if you abandon the attempt part way through because of the arrogance on display. The second edition with the additional essay saved it for me, so please use that by preference. Note that it will be your loss if you don't stay the course.
Show Less
LibraryThing member Brown
I cannot recall another book where the author praises himself more while continually dismissing the work of others. This running comparison of the author's brilliance with the incompetence of others would be easier to swallow if he had provided references to his and others' work. (Names of the
Show More
author's friends and his life experiences are not adequate references.)
The primary example upon which he based the book (the turkey story) is a beautiful example of statistics with a sample size of one! With no more data than one turkey's growth and death records a year for each of the past few years (or a few turkeys from last year), elementary statistics would be adequate to predict the turkey's Black Swan event to the day.
Show Less
LibraryThing member debnance
I don’t know enough about statistics or science to understand most of this book, but it didn’t really matter; I loved how Taleb turns statistics on its head and watches how it tries to keep standing. From this book away these big thoughts: You think they won’t, but black swans will happen. No
Show More
one will expect them. Their impact will be astonishing. Go for the good black swans, however unlikely; stay away from the bad black swans, no matter what.
Show Less
LibraryThing member ebnelson
Fascinating stuff, but crippled by faulty premises. Whereas I can understand a person without a faith positing that there isn't a higher rationale guiding the universe, but I have a harder time with his assertion that his unique life with little responsibility gives him a clearer view of humanity.
Show More
Essentially, he’s a classical erudite Epicurean who vilifies Platonists--who ironically boosts his huge ego through supposedly attempting to be pragmatic to the common man. Never mind that his scorn for common life cripples his ability to actually see things as the typical man (who he attempts to champion) does.
Show Less
LibraryThing member jamet123
NNT (as he calls himself) has some fascinating points and some interesting turns of phrase, though he does rather go on and on and on.... Leaving aside the long-winded somewhat self-absorbed writing style, NNT makes some interesting points that he illustrates well. He discusses the problems with
Show More
the fact that humans seek validation for what they think (rather than challenging themselves) and why we cannot predict well in many circumstances. He spends a lot of time discussing the problems inherent with the use of a bell curve to predict things where the impact of extreme events really matter. Finally he spends (too little) time on what to do about all this. I took a few key points away from the book:
- It is better, perhaps, to try and be generally right rather than precisely wrong
- Beware of looking for more rules than really exist
- Watch out for a tendency to prepare for "last war"
- Rare and consequential events can be much more important than the "normal" stuff in the bell curve
- Some things (that he calls "mediocristan") are such that the most typical is average and single instances don't impact the total much
- Others (he calls these "extremistan") are more winner-takes-all kinds of environments where extreme events matter most
- He makes the point that a thousand days cannot prove you right but one can prove you wrong

There's more but it's a very long book and I am not going to attempt to summarize the nuggets spread throughout it here. Be prepared for a slog if you want to get everything you can out of the book - it goes on and on. 3 stars to average out 1 star for length and incoherence in places and 5 stars for some great content.
Show Less
LibraryThing member madcurrin
Taleb has an infectious, somewhat cheeky attitude that gets lost in his dense explanatory passages. He swings between rollicking prose and indulgent intellectualist rambling. As a result it's an uneven read, not as enjoyable as it could be and never really makes its point clearly. With some editing
Show More
this would translate to a much more accessible book.
Show Less
LibraryThing member jahn
Whether you will love or hate this book depends much on whether you belong to the establishment or not. If you have diligently done much as you have been told by authorities, and on that base now occupy a place of authority, from which you are making authoritarian predictions for authorities to
Show More
make policy on, you might want Nassim Taleb banned, jailed, or worse. If you are bent quite the other way, you are in for a few laughs.
It is an easy read, and missing a few pages is not likely to mean missing important content - some of it is self-biography, some is self-biographical sounding fiction, and some is introduction to authors and events not at all clearly explained as relevant. Generally it is a well written rambling collection of attacks on probability’s presumed calculability outside a hermetically closed domain, quite egocentrically, and at times quite sardonically, put forward.
Show Less
LibraryThing member dvf1976
Pretty mind-bending approach to reality.

I'm not sure I don't believe that Gaussian methods have no application to real life. Supply-chains and baseball immediately spring to mind as places where Gaussian methods can apply (without worrying particularly about a Black Swan.

The author came off as a
Show More
bit too self-important, which makes me a bit skeptical of his methods.

I like irreverant, but too much irreverance made the book's message jumbled.
Show Less
LibraryThing member EzekielLamb
This is my favorite nonfiction book. Taleb is witty & insightful. Please beware of some of the negative reviews. Either they didn't read the whole book, or didn't understand parts of it. For instance, one review on this site said that the Bell Curve does apply to some things, & claims that the book
Show More
says it doesn't apply to anything. This book points out that it applies to some things many many times, & the reader somehow didn't pick up on this. Seriously, I recommend this book to people whose intellect I respect. Don't miss out, or you may be fooled into believing a ton of nonsense printed in other books, newspapers, or heard on radio or TV.
Show Less
LibraryThing member Mercef
I found this book sitting unloved on my library shelves. I'd never heard of it but it sounded intriguing.
If only I could give it a half star rating. Possibly the most boring book I have ever attempted to read.
Anyway, read the lengthy reviews of others who know what they're talking about who also
Show More
gave it a poor rating. They are at least entertaining.
Show Less
LibraryThing member FKarr
interesting, but verbose; difficult at times to separate the wheat from the chaff
LibraryThing member koliver
I became bored with this book after the first hundred pages or so. I got the gist of what he was saying and then it seemed to become very repetitive. I think I was also put off to some degree by his style of writing, which tends to ramble a bit. It was thought-provoking and I can see myself
Show More
referring to it from time to time for its many good examples of the shortcomings of forecasting and long range planning.
Show Less
LibraryThing member gbsallery
This book contains one interesting idea, namely that humans are really bad at anticipating events which cannot be inferred from previous data. Specifically, Taleb rails against the assumption that events have a Gaussian distribution, and does so at some length and with a moderate level of erudition
Show More
- though his manner is self-important and unnecessarily didactic, this is a useful message and deserves to be better understood.

The book could, however, effectively be condensed into a pamphlet - if the repetition, appeals to authority and dribblings of autobiography were removed. Stripped of this excess verbiage, it would become apparent that Taleb is espousing nothing newer than the fundamental problem of inductive reasoning, and would provide less of a platform from which to promote himself. This would be less good for the author, but as a reader, I would prefer the shortened version.
Show Less
LibraryThing member colinhyde
Taleb studied the markets and came up with his theory of randomness that uses mathematical models that relate to the real world to debunk the all-powerful hold on the public imagination exercised by the bell-shaped curve. The main point is that Gauss hides the rare events (black swans) at the
Show More
extremes of a distribution and therefore underestimates the potential for destabilisation (of any system but particularly our social systems) that the occurrence of one of these events can actually exert on our lives. Good, strong and well-argued case; it attacks mainstream economic theorists for delivering ideas beased on detailed algorithms that give spuriously accurate results. The impact of the black swan events is unrecognised and therefore any theories so based will fail to work properly when they are most needed. Added to which, he finds time to suggest that we live our lives incorrectly when we think that it is necessary to run for a train. 'Don't run for trains' is his motto (derived from Mandelbrot) - it is beneath your dignity and life should not be lived at that level but in a more elevated and aesthetically defensible manner. Great inspirational read - to read again.
Show Less
LibraryThing member RandyStafford
If you're casually interested in economics or a reader of the Skeptical Inquirer, there is probably a fair amount of this rumination on randomness, specifically of the noncalculateable and very consequential kind - for good or bad - that will not be new.

For such a reader, confirmation biases,
Show More
"silent evidence" or selection bias, narrative fallacies, retrofitting prophecies to events, and good old self-delusion are familiar concepts. What is fun and satisfying (speaking of confirmation bias!) is to see the target of the discussion not be psychic powers and reputed psychics but practitioners of the dismal science including some Nobel Prize winning economists. And, while Taleb is admiring of Frederich Hayek, his concept of "silent evidence" similar to economist Henry Hazlitt's observation that we never see what would have happened if government spending hadn't taken place, and deeply critical of central planning, he doesn't neatly fit into a conservative mold on economic matters. He takes Milton Friedman to task as one of many economists who thought any econometric model was better than none, regards globalization as a dangerous example of - to use the old engineering maxim - efficiency being the enemy of reliability, and thinks Wall Street bonus structures often are dangerous and reward bad behavior.

Taleb is not - as he makes especially clear in the essay "On Robustness & Fragility" added for the second edition - a statistical nihilist, someone who believes that statistics are of no use. While he calls the Gaussian bell curve, the "Great Intellectual Fraud" (while noting it was not really Frederich Gauss but Adolphe Quetelet who sought it everywhere), he also carefully notes that in the land of "Mediocristan" it does work. The problem is you don't always know when you've left Mediocristan and entered "Extremistan" where probabilities are unknown. Those who purport to chart courses for economies and stock portfolios usually don't know one territory from the other. Indeed, the recent track record of many prominent Wall Street financers and economists shows that not only are their predictions wrong - so is their math. Indeed, Taleb says, in his experience, the only profession that takes risk analysis and management seriously is the military, the origin of the "known unknowns" and "unknown unknowns" alluded to in the title of Donald Rumsfield's recent autobiography Known and Unknown: A Memoir.

Tabeb nicely demonstrates common real world examples of areas where Gaussian distributions and the precisely plotted probabilities of the casino don't apply, regions where it is often scalable probabilities that are at work. This explains the "winner take all" distribution of earnings for some professions like writers. He also briefly touches, in his footnotes, on some more sophisticated mathematical analysis of the problems often ignored by statisticians and economists.

The style of the book is an eccentric mixture of autobiography including his youth in Lebanon, anecdote, mathematics, psychology, accounts of Taleb's phone pranks and cocktail conversations, and clearly listed suggestions as to how individuals and institutions can benefit from tunavoidable black swans - which are not always bad. In fact, his advice to embrace randomness in life echoes one of the findings in The Luck Factor: The Four Essential Principles. And he doesn't talk about black swans just in relation to finances but things like health and diet, an idea he developed more in his recently co-authored The New Evolution Diet: What Our Paleolithic Ancestors Can Teach Us about Weight Loss, Fitness, and Aging.

The intimidatingly extensive and varied bibliography offers plenty of reading material for follow up. (Though I don't remember Marxist historian E. H. Carr's What Is History? being a pursuit of causation - quite the opposite, an argument for the futility of doing so - but it's been many years since I read it.) This bracing review and synthesis of a lot of ideas is usually an entertaining guide to seeing the world - and our ability to plan - in a more realistic way.
Show Less

Language

Original publication date

2007

Physical description

xxxiii, 444 p.; 21 cm

ISBN

9780812973815
Page: 0.3715 seconds