ArticlePDF Available

Nassim Nicholas Taleb: The black swan: The impact of the highly improbable

Nassim Nicholas Taleb: The black swan: The impact
of the highly improbable
New York: Random house, 2007, 366 pages
Gene Callahan
Published online: 10 May 2008
#Springer Science + Business Media, LLC 2008
Nassim Nicholas TalebsThe Black Swan is a fascinating but deeply flawed book.
The books central thesis, that the statistical models beloved by mainstream
economists and social scientists apply to the real world at best roughly and
sometimes very poorly indeed, will find favor with Austrian and other heterodox
economists. However, what could have been a sound if more modest book is
damaged by Talebs enthusiastic embrace of the role of maverick intellectual and his
consequent weakness for hyperbole and unfounded criticisms of those he sees as
ivory tower academics. Academics are not always right, of course, and there is a
place for outsider critiques of their ideas, but neither are they always wrong, and it is
all too easy to fall into the trap, as Taleb does, of criticizing ideas one does not fully
Talebs central metaphor of the eponymous black swan arises from the fact that
scientists purportedly held that, by inductive reasoning, they could conclude that all
swans are white, since every instance of one they had seen was so colored. Then, in
Australia, black swans were discovered, upsetting their conclusion and demonstrat-
ing the flaw in inductive reasoning, the same flaw noted by Talebs philosophical
hero, Sir Karl Popper. If that history is correct, then the scientists involved were
certainly guilty of applying induction naively. But such a naïve induction by simple
enumeration of instances already had been criticized by some of the earliest
empiricists, such as Bacon and Boyle. Many philosophers of science have argued
that Poppers critique left more sophisticated versions of induction standing.
Taleb ties Poppers case against induction, and thus his swan metaphor, to
contemporary statistical practice by arguing that the widespread faith that the degree
of variation exhibited by many, perhaps most, real-world phenomena is closely
modeled by the notorious bell curve. He contends that this often is an unjustified
Rev Austrian Econ (2008) 21:361364
DOI 10.1007/s11138-008-0051-7
See Callahan, G. The Necessity of the A Priori,Critical Review, Vol. 18, No. 4, 2007 for a summary of
recent literature on this point.
G. Callahan (*)
Cardiff University, 65-68 Park Place, Cardiff, CF10 3AS, UK
induction based on previously seen cases. Rare events, by definition, will not appear
very often in the evidence, but the failure to find them in a small sample does not
mean they occur as infrequently as a Gaussian distribution implies that they will.
The bell curve may offer a good description of events in what Taleb calls
Mediocristan,the land inhabited by things like the distribution of height among
adult humans or wages among plumbers. But it is a very poor fit for depicting events
from Extremistan, where dwell phenomena like the distribution of wealth in modern
economies and book sales among published authors. We never encounter a human
being 1,000 times taller than the average, but Bill Gateswealth or J.K. Rowlings
book sales are the equivalent of a million-foot tall person compared to the norm.
This statistical blindness to the possibility and impact of the highly improbable,
Taleb contends, causes us serious trouble. The danger inherent in assuming that
future events will not differ dramatically from what we have typically observed in
the past becomes manifest when we are blindsided by the terrorist attacks of 9/11 or
an unprecedented market crash. We are like Bertrand Russells chicken, a good
(naïve) inductivist; we conclude that, because in all previous instances the farmers
appearance meant mealtime had arrived, it will always mean that, only to be rudely
disabused of the theory when the day comes for the farmers chicken dinner.
So far, so good: Taleb is on target in criticizing many social theorists for trying to
force-fit reality into familiar models simply because they are adept at working with those
models rather than accepting that the real world is far richer than their abstractions and
striving to discover novel models that better depict actual events. There is a quite sound
and useful book that the discerning reader can extract from the ambitious but
inadequately conceived embellishments with which Taleb festoons his basic thesis.
As mentioned above, Taleb tries to ground much of his critique of mainstream,
statistical thought in the philosophy of science of Sir Karl Popper. Popper famously
held that science can never confirm its hypotheses but only falsify them or fail to do
so. While Taleb places much stress on the importance of that idea for his work, he
does not seem to really grasp its implications. Of course, no Popperian could
actually make it through a single day alive without using inductive inferences. But
most Popperians at least write about Popperianism consistently. Taleb, on the other
hand, on one page claims that there is no such animal as corroborative evidence,
and then, over the next 20 pages, asserts at least half a dozen times that some theory
has been proved,”“shown,”“demonstrated,and so on, bycorroborative
evidence! Did Taleb just mouth Poppers words with no idea what they meant?
Taleb ridicules the dullwriting of academics; he has avoided that flawhis
writing is not dull in the same way that watching a multi-car pile-up is not dull. At
times his slipshod composition leaves the reader baffled as to what he meant to say.
Taleb lists fields with true expertslivestock judges, astronomers, test pilotsand
fake expertsstockbrokers, clinical psychologists, psychiatrists. What is the
difference? Simply, things that move, and therefore require knowledge, do not
usually have experts…” Its very hard to guess what Taleb is getting at here;
certainly, livestock, planets, and airplanes all move quite a bit! Does he mean self-
moved? No, livestock are self-moved as well. Taleb is not stupid, but he is arrogant,
and his arrogance creates this sort of sloppy prose.
The sloppiness rears its head not just in Talebs writing but in his thinking as well
(in that the two can be held separate). For example, he writes, in a primitive
362 G. Callahan
environment there is no consequential difference between the statements most killers
are wild animals and most wild animals are killers.That must be why primitive
man was constantly fleeing from the stray slug, chipmunk, or butterfly that he
encountered while foraging!
Taleb displays a deep scorn for academic historians, finding their work dull,
which may explain why he seems to have little idea of the essential character of
historical understanding. He criticizes historians for devising explanations that, he
contends, make entirely unexpected events predictablein retrospect: This simple
inability to remember not the true sequence of events but a reconstructed one will
make history appear in hindsight to be far more explainable than it actually wasor
is.The writing is again dreadful, but, even suitably amended, the sentence is still
falsehistory has nothing to do with rememberingsequences of events, and it is
exactly as comprehensible as historians are able to render it. The fact that the
outcome of some past situation may appear more intelligible to an historian than it
did to the participants is a virtue, not a vice, of history. Only when the historian
abandons her proper aim of discovering what actually transpired in the past and
attempts to sit in judgment of historical figures, such as declaring, Chamberlain
should have seen that appeasing Hitler would come out badly,is she guilty of the
sin for which Taleb condemns the entire discipline.
In making the above complaint about the efforts of historians, Taleb has failed to
recognize that statistical prediction is a feature of physical science and plays no part
in historical investigations. The historian offering an explanation of some specific
historical episode is not attempting to comprehend what occurred as an instance of
some idealized pattern abstracted from a family of events with which it is supposed
to share some significant characteristics. As Mises notes, The notion of a law of
historical change is self-contradictory. History is a sequence of phenomena that are
characterized by their singularity. Those features which an event has in common
with other events are not historical(1957: 212).
The historian is seeking the unique
and unrepeatable antecedents of the event under investigation in order to render its
individual appearance on historys stage more intelligible. As such, how predict-
ablethe event was at its time is irrelevant, since for the historian the oddsof its
having happened are 100%! And since the historian aims to explain that unique
episode in terms of the concrete happenings that lead up to it, concepts such as
randomness,”“chance,and improbabilityare categorically excluded from her
analysis. Taleb writes, But it is hard to look at a computer or a car and consider
them the result of aimless process. Yet they are.Certainly, if we restrict ourselves to
considering the human past in terms of matter and energy mechanically interacting
to produce unwilled motion, then we have pre-determined that all we will discover
are aimless processes. However, there is no reason we should not conduct other
explorations using other search rules, such as attempting to understand the past as
arising from purposeful human action. From that perspective, it would be ludicrous
to propose that computers and cars were the outcome of aimless process,since it is
obvious that their inventors set out intending to create useful machines and were not
Mises, L. von (1957) Theory and History, Auburn, Alabama: Ludwig von Mises Institute, p. 212.
Nassim Nicholas Taleb: The black swan 363
merely throwing together random materials only to be shocked that the result could,
for instance, be used to get around town more rapidly.
Taleb contends that we ought to downgrade softareas such as history and
social science to a level slightly above aesthetics and entertainment, like butterfly
and coin collecting.His contempt for the results of historical research is also the
product of his erroneous belief that history is just an impoverished and feeble
attempt to discover scientific truths from our past, rather correctly recognizing that
historical understanding is a categorically distinct mode of grasping reality. Unable
to evaluate the subject using its proper, internal standards, Taleb cannot conceive that
history, pursued with its own characteristic methods, can achieve results every bit as
hardand just as much based on objective evidence as do physics or chemistry.
Talebs misunderstanding of history leads to absurdities like his attempt to answer
a genuine historical question, Why didnt more people die from the bubonic
plague?by means of a fact about later conditions, namely, that if the plague had
been more deadly, we would not be here to ask the question! Real historians, the
ones whose work Taleb disdains, regularly answer such questions with authority: it
is now understood, for instance, that the chief cause of the collapse of the Roman
Empire was population decline.
In summary, Taleb is guilty of severe over-reaching. Rather than limiting himself
to rigorously exploring the implications of his genuine insights on the misuse of
statistics, he chose to use them as a platform from which to comment upon whatever
topic happened to enter his mind as he wrote, however little familiarity he had with
the specialized literature in the area. If he did not hold academic specialists in such
contempt, it might have occurred to him that, whatever their faults, people who have
devoted decades of their lives to better understanding some field, for example, the
philosophy of history or the philosophy of science, are likely to have something to
say on the subject, something that might even be worth listening to before one
decides to pontificate on how wrong-headed all of the experts are.
364 G. Callahan
... Disasters can have detrimental impacts on lives, reputations, trust, and resources [1] . These events are perceived to have a low probability of occurring, but with severe consequences [2,3] . They are the 'Black Swans' and 'Black Elephants' [4] of the organisational world; Black Swans characterised by their rarity, unexpectedness, and unpredictability -albeit, oftentimes retrospective predictability [4−6] On 22 nd July 2011, the Norwegian society was faced with the 'unimaginable'; two successive terrorist attacks were carried out by an ethnic-Norwegian lone perpetrator [6] . ...
... The above cases are disasters; forcing society out of normalcy due to the sheer magnitude of the catastrophic event [7−9] . Interestingly, had these failures been detected promptly, the chain reaction which caused them to escalate into disasters could, in theory, have been mitigated [3] . From a learning perspective, disasters tend to inspire change of practice more easily than failures due to how they are perceived [3,7] . ...
... Interestingly, had these failures been detected promptly, the chain reaction which caused them to escalate into disasters could, in theory, have been mitigated [3] . From a learning perspective, disasters tend to inspire change of practice more easily than failures due to how they are perceived [3,7] . Thus, this paper will examine whether there is potential for organisations to learn from the two cases presented in the form of i) feedback from the users to design, ii) the incorporation of advanced tools in innovative applications, and iii) the fostering of interdisciplinary approaches to generic lessons [10] . ...
Full-text available
Disasters can have detrimental impacts on lives, reputations, trust, and resources. The aim of this paper is to illustrate how root cause analysis methods can be used to learn from failures in both security and safety domains. Utilising two case studies within the security and safety domains, respectively the 22-7 terrorism and Norway and the COVID-19 pandemic within the UK, we investigate how using a hybrid model approach consisting of Fault Tree Analysis (FTA), Reliability Block Diagram (RBD) and Minimum Cut Set Analysis (MCSA), helps identify the causality between failures and the catastrophic events. Results illustrate the benefits of using a hybrid of root cause analysis techniques to extract learning lessons, in order to mitigate against future similar incidents. We applied techniques that can assist organisations to apply the concept of learning from failures in practice. More specifically, the Fault Tree Analysis - for analysing causality, Reliability Block Diagram - for analysing relationships between causal factors, and Minimum Cut Set Analysis - for analysing vulnerable scenarios, were applied to the two cases, demonstrating how these models can aid in their 'de-blackening'.
... My book Keynes: The Return of the Master (Skidelsky, 2009) was published in the autumn of 2009. It was published the year after the global banking collapse of 2008 and the massive rescue operations undertaken by governments all round the world -not just the bailout of a bankrupt banking system, but also large monetary and fi scal stimulus. ...
... This assertion shocked the economists of Keynes's day, whose models taught them that persisting unemployment was impossible if wages were fl exible. Keynes's Cambridge colleague Arthur Pigou expressed the typical belief of 1933: "With perfectly free competition...there will always be a strong tendency for wage-rates to be so related to demand that everyone is employed" (Pigou, 1933). Based on this argument, unemployed workers must be choosing not to work. ...
Full-text available
With the world on the brink of yet another steep recession, and with ecological disaster looming, we can no longer afford the luxury of an economic policy which concentrates on the fight against inflation, leaves unemployment to emergency measures, distribution of wealth and income to the market, and ignores ecological challenges.
... The challenge of complexity can be accepted, or it can be rejected, or it can be avoided. [11]. ...
Full-text available
The article reveals the concept of “uncertainty” in the context of culture, science and practice. The notions of uncertainty in different schools and concepts in the field of philosophy and psychology are compared. The hypotheses of the uncertainty phenomenon are explained in detail. The article describes a clinical analysis of five types of subjective attitude to uncertainty, based on the research of scientists: M. K. Mamardashvili, T. E. Sokolova and other experts in the field of subjective attitude to uncertainty. At the end of the article, the data of the scientific interview is given. The article also presents research by modern scientists: Byrne, Peters, Willis, Phan, Worthy (2020), who demonstrated in their research the psychological States of respondents with high uncertainty. The article goes on to describe in more detail the types of research that demonstrate the concepts of acute and moderate stress, tolerance, and other important factors that influence attitudes to uncertainty. The following describes a study aimed at disaster risk reduction, researchers: Schueller, Booth, Fleming, Abad (2020), who developed a disaster risk reduction (DRR) recommendation for stakeholders, which is designed to assess how uncertainty affects the processing of early warning information and subsequent decision-making (for example, an evacuation order), embedded in fictitious geo-graphical, policy and practical conditions. This topic: "Uncertainty as an important determinant in psychological science and practice" is relevant in modern society. The conclusions reveal the content of the data obtained, the analysis of the attitude to uncertainty as a phenomenon of science and practice.
... The purpose of the survey is to research the sustainability of the transport service system of the large Russian city, Tyumen, in the conditions of the sharp unexpected impact of a negative environmental factor ("black swan" in the interpretation of N. Taleb [24,25]). The negative impact is expressed as the high decline in citizens' transport mobility because of the "self-isolation" regime applied by regional and municipal authorities. ...
Full-text available
In spring 2020 the whole world went through the “black swan”—COVID-19 pandemic. The healthcare systems of all countries and the world economy, in general, became very stressed. The extraordinary decline of activity in all spheres, except healthcare, led to a drop in the demand for transport services, including city public transport. It was important for city management to support the sustainability of the local transport system. The article presents fundamental approaches to assessing the sustainability of a transport service, particularly city passenger public transport (CPPT), for the example of the large Russian city Tyumen (size of population—nearly 807 thousand people). Methods of analysis of the sustainability of the transport process in conditions of negative environmental impact (COVID-19 pandemic) are considered. During the period from 30.03.2020 to 31.05.2020 (nine weeks—the acute phase of COVID-19 pandemic) structural sustainability of the CPPT system in Tyumen kept a high level. By changing the parameters of the planned characteristics of the CPPT system state, an attempt to adapt the transport service supply to a sharp decrease in transport demand was made. In the period of “self-isolation”, the demand for the CPPT transport service reduced more than the transport service supply. Sustainability of CPPT functioning was evaluated by calculating the elasticity of the transport supply (number of trips) in relation to the actual demand (actual volume of transportations). Calculation of the elasticity index of the CPPT system of Tyumen during nine weeks of April–May 2020 (duration of “self-isolation“) is provided. A conclusion was made from the results of the research. In particular, it was found that the foreground target function of city management was the maintenance of a high level of transportation processes to the detriment of the transportations’ effectiveness. Such a policy led to contradictory results—the additional financial expenses at the rate of 135–150 million rubles and quite a high level of contentment of the Tyumen population with the quality of the CPPT work (sociological research established that 80–85% of respondents were satisfied with the quality of the transport service in April–May 2020).
... For instance, Taleb (2007) in his book "The Black Swan" criticizes the banking sector for its extensive reliance on complex statistical models. These models provide the decision makers a false confidence about the risks which cause the society chaos such as the current crisis (Taleb, 2007;Callahan, 2008). ...
Full-text available
Force ratios are an important variable in warfare and in nature. On the Serengeti, large zebra herds are constantly hunted by small prides of lions. But with their overwhelming majority, why don't the zebras unite and attack the lions? Hooves can be as deadly as claws when used correctly. And conversely, if the lions are such effective predators, why are there so many zebras? Ecological interactions between predators and their prey are complex. Sometimes the few prey on the many; picture a whale devouring thousands of docile microorganisms. And sometimes the many prey on the few, as with killer bees attacking an unsuspecting person. During the past century, the mathematics underlying different types of survival strategies for attacker and evader have been worked out by ecologists, and we now have a fairly good understanding of such relationships. While not a perfect metaphor, it is striking that these quantitative ecology models greatly resemble behavioral interactions during counterinsurgency operations. While a predator-prey model alone may be too simplistic to fully describe counterinsurgency, there are more detailed ecological models of competition that better capture the essence of the problem. The purpose of this paper is not to provide definitive solutions, but to suggest a framework for other researchers to adapt and expand upon. Indeed, many of the models discussed are common to both ecologists and economists. The goals of both types of modeling are similar: maximizing profits in terms of food or money at the least risk death or bankruptcy. From our preliminary work on the possible applications of ecology to counterinsurgency, we hope that others more adept at the use of these quantitative models will make significant contributions to the area of predictive ability in combating terrorism and understanding unconventional warfare.
ResearchGate has not been able to resolve any references for this publication.