Stitch and Bear

A long-running Irish blog with reviews of the best restaurants in Dublin and throughout Ireland. Some wine and cocktails thrown in for good measure!

Tuesday, February 24, 2009

The Black Swan - Nassim Nicholas Taleb

The Black Swan: The Impact of the Highly Improbable has been a recent bestseller recently. Given the current economic turmoil, the lessons that Taleb imparts in this book are even more relevant. However, much of what is interesting and relevant is undermined by the author's attitude and dare I say, arrogance.

Let's start with the definition of a black swan. It is a rare (or outlying) event, which has a maximum impact and that with hindsight could have been predictable. What Taleb reiterates throughout the book is that we should not confine ourselves to the realm of the usual and predictable. Fair enough.

Taleb then goes on to disparage Gaussian statistics and the reliance that is placed on such statistics, particularly in financial or economic matters. Given that Taleb is an ex-trader himself, I found it highly interesting that he doesn't detail any of the modelling methods that he employed. He refers to himself as a skeptical empirist, someone who is not easily convinced.

However, as a physicist (though not working as such anymore) I found his bashing of the bell-curve to be tedious. Most good scientists are well familiar with the limitations of such statistics and do not place any real credence in them. However, judging from the author, you would gain the impression that all of the world is founded upon these methods, and it's just waiting to come crashing down.

In short, I did enjoy his concept. Black swan events should happen and we should not ignore them when they do. Life is a blend of random and predictable and to ignore the former in favour of the latter is hardly a clever thing to do.

I did not enjoy the book because of the Taleb's attitude. His sense of superiority is astounding, especially when you consider that he rails so often against the arrogance of those who think they know it all.

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