Why don’t we anticipate large scale events better? Giant hurricanes (again, the 3rd in ten years)…500 year floods (again, the 3rd in Houston in three years by at least one account)… the crash of the economy… the election of crazy people… the list is getting pretty darned long. People’s inability to see the coming tsunami wave is analyzed quite well in a book I recently read: The Black Swan by Nassim Nicholas Taleb.
The human mind suffers from three ailments as it comes into contact with history, what I call the triplet of opacity. They are:
a. The illusion of understanding…
b. The retrospective distortion…
c. The overvaluation of factual information and the handicape of authoritative and learned people
—The Black Swan
Taleb’s book is only ten years old but already a classic. I read it on the mini-bus driving around the quiet hills of Ireland, and I can’t imagine a better way to absorb such an indictment of our human myopia. It’s very readable; there are some numbers in it, but mostly in the footnotes or the appendix. Most of it is anecdotes and stories, which is kind of ironic, since one of Taleb’s main points is that we rely on anecdotes to understand things because we can’t cope with the math. As it turns out, that’s probably okay, because we aren’t using the math properly anyway.
The Illusion of Understanding–Don’t Be the Turkey
One way Taleb says we fail to predict properly is in our inability to understand the world in front of us. The world is complicated and large; it’s hard to take it all in. As a result, we either (a) conclude that we can’t predict anything because it’s too complicated or (b) we rely on simply models and create quasi-statistical understandings entirely based on the present. These models fall apart if what our scope is limited. The best example of this is Taleb’s Turkey analogy.
The turkey, born on January 1st, for example, learns to look forward to the chef. The chef feeds him every day, lovingly popping the tastiest grains and morsels into his little mouth. For 330 days, he sees that chef come over and knows, from experience, that something good’s gonna happen.
Until it doesn’t. Continue reading “I Didn’t See That Coming”