StatisticalModeling,Causal

Inference,andSocialScience

NassimTalebsTheBlackSwan
PostedbyAndrewon9April2007,12:00am

OK,Ifinishedreadingitandtranscribingmythoughts.Theyretheequivalentof
about20blogentries(oronelongunpublishablearticle)butitseemedmore
convenienttojustputtheminoneplace.

AsInotedearlier,readingthebookwithpeninhandjoggedloosevarious
thoughts....Thebookisaboutunexpectedevents(blackswans)andthe
problemswithstatisticalmodelssuchasthenormaldistributionthatdontallow
fortheserarities.Fromastatisticalpointofview,letmesaythatmultilevel
models(oftenbuiltfromGaussiancomponents)canmodelvariousblackswan
behavior.Inparticular,selfsimilarmodelscanbeconstructedbycombining
scaledpieces(suchaswaveletsorimagecomponents)andthenassigninga
probabilitydistributionoverthescalings,sortoflikewhatisdoneinclassical
spectrumanalysisof1/fnoiseintimeseries.Forsomeinterestingdiscussionin
thecontextoftexturemodelsforimages,seethechapterbyYingnianWuin
mybookwithXiaoLionappliedBayesianmodelingandcausalinference.
(Actually,Irecommendthisbookmoregenerallyithaslotsofgreatchaptersin
it.)

Thatsaid,Iadmitthatmytwobooksonstatisticalmethodsarealmostentirely
devotedtomodelingwhiteswans.MyonlydefensehereisthatBayesian
methodsallowustofullyexploretheimplicationsofamodel,thebetterto
improveitwhenwefinddiscrepancieswithdata.Justasachickenisaneggs
wayofmakinganotheregg,Bayesianinferenceisjustatheoryswayof
uncoveringproblemswithcanleadtoabettertheory.Ifirmlybelievethatwhat
makesBayesianinferencereallyworkisawillingness(ifnoteagerness)tocheck
fitwithdataandabandonandimprovemodelsoften.

Moreonblackandwhite

MyowncareeriswhiteswanlikeinthatIveputoutlotsoflittlepapers,rather
thanpausingforafewyearslikethatFermatslasttheoremguy.YearsagoI
remarkedtomyfriendSeththathesfollowedtheoppositepattern:by
abandoningtheresearchgrant,paperwritingtreadmillanddevotinghimselfto
selfexperimentation,hebasicallywasrollingthediceandgoingforthebig
scoreinTalebsterminology,goingforthatblackswan.

Ontheotherhand,youcouldsaythatinmycareerImfollowingTalebs
investmentadvicemyfacultyjobgivesmeafloorsothatIcanworkon
whateverIwant,whichsometimesseemslikesomethinglittlebutmaybecan
haveunlimitedpotential.(Onpage297,Talebtalksaboutstandingabovetherat
raceandthepeckingorderIvetriedtodosoinmyownworkbyavoidinga
treadmillofneedingassociatestodotheresearchtogetthefunding,and
needingfundingtopaypeople.)

Inanycase,Ivehadaboringsortofwhiteswanlife,growingupinthesuburbs,
beinginschoolcontinuouslysinceIwas4yearsold(andstillinschoolnow!).In
contrast,Talebseemstohavebeenexposedtolotsofblackswans,bothpositive
andnegative,inhispersonallife.

Chapter2ofTheBlackSwanhasa(fictional)descriptionofanovelistwholabors
inobscurityandthenhasanunexpectedsuccess.Thissomehowremindsmeof
howluckyIfeelthatIwenttocollegewhenandwhereIdid.Istartedcollege
duringaneconomicrecession,andingeneralallofusatMITjusthadthegoalof
gettingagoodjob.Notstrikingitrich,justgettingasolidjob.NobodyIknew
hadanythoughtthatitmightbepossibletogetrich.Itwasbeforestock
options,andnobodyknewthattherewasthisthingcalledWallStreet.Which
wasfine.IworrythatifIhadgonetocollegetenyearslater,Iwouldvefelta
certainpressuretogogetrich.Maybethatwouldvebeenfine,butImhappy
thatitwasntreallyanoption.

95%confidenceintervalscanbeirrelevant,or,livinginthepresent

Onpagexviii,Talebdiscussesproblemswithsocialscientistssummariesof
uncertainty.ThisremindsmeofsomethingIsometimestellpoliticalscientists
aboutwhyIdonttrust95%intervals:A95%intervaliswrong1timeoutof20.
IfyourestudyingU.S.presidentialelections,ittakes80yearstohave20
elections.Enoughchangesin80yearsthatIwouldntexpectanyparticular
modeltofitforsuchalongperiodanyway.(MostellerandWallacemadea
similarpointintheirFederalistPapersbookabouthowtheydonttrustpvalues
lessthan0.01sincetherecanalwaysbeunmodeledevents.Sayingp<0.01is
fine,butpleasepleasedon'tsayp<0.00001orwhatever.)Moregenerally,
people(or,atleast,politicalcommentators)oftenlivesomuchinthepresent
thattheyforgetthatthingscanchange.AninstructiveexamplehereisRichard
Rovere'sbookonGoldwater's1964campaign.Rovere,arespectedpolitical
writer,wrotethattheU.S.hadaoneandahalfpartysystem,withthe
DemocratsbeingthefullpartyandtheRepublicansthehalfparty.Yes,
Goldwaterlostbigand,yes,theDemocratsdidhavetwicethenumberof
SenatorsandtwicethenumberofRepresentativesinCongressthenbut,
actually,from1950through1990,theRepublicanswonortiedevery
Presidentialelection(except1964).Hardlytheperformanceofahalfparty.
Knowingwhatyoudontknow,andomniscienceisnotomnipotence

Thequotesonpagexixremindmeofoneofmyfavorites:Itaintwhatyou
dontknowthatgetsyouintotrouble.Itswhatyouknowforsurethatjustaint
so(MarkTwain?).Iactuallyprefertheversionthatsays,Itswhatyoudont
knowyoudontknowthatgetsyouintotrouble.AlsoEarlWeaversItswhat
youlearnafteryouknowitallthatcounts.

Onpagexx,Talebwrites,Whatyouknowcannotreallyhurtyou.Thisdoesnt
soundrighttome.Sometimesyouknowsomethingbadiscomingbutyoucant
dodgeit.Forexample,considercertaindiseases.
Creativityisnot(yet)algorithmic

Onpagexxi,Talebsayshowalmostnogreatdiscoverycamefromdesignand
planning.ThisremindsmeaboutabiographyofMarkTwainthatIreadseveral
yearsago.Apparently,Twainwasalwaystryingtocreateaprocedure
essentially,analgorithmtoproduceliterature.Hetriedvariousstrategies,
collaborators,etc.,butnothingreallyworked.Hejusthadtowaitforinspiration
andwritewhatcametomind.

Alsoonpagexxi,Talebwriteswedontlearnrules,justfacts,andonlyfacts.
Thisstatementwouldsurpriselinguists.Itsbeenwelldemonstratedthatkids
learnlanguagethroughrules(ascanbeseen,forexample,from
overgeneralizationssuchasfeetsandteached).Moregenerally,folkscience
isstronglybasedoncategoriesandnaturalkindsIthinkTalebisawareofthis
sincehecitesmysistersworkinhisreferences.(Arecentexampleofnaive
categorizationinfolkscienceisinthepapersofSatoshiKanazawa.)

Recognition,prevention,andsaltatorygrowth

Onpagexxiii,Talebwritesthatrecognitioncanabequiteapump.Yes,but
recallallthosescientistswhoseliveswereshortenedbytwoyears(onaverage)
fromfrustrationatnotreceivingtheNobelPrize!

Onpagexxiv,fewrewardactsofprevention:Imremindedofourhealthplan
ingradschool,whichpaidforcatastrophiccoveragebutnotroutinedentalwork.
Afriendofmineactuallyhadtogetrootcanal,andeventuallygottheplanto
payforit,butnotwithoutastruggle.

Onpage10,Talebwrites,historydoesnotcrawl,itjumps.Thisremindsmeof
theevidenceonsaltatorygrowthininfants(basically,babiesgrowlengthbya
jumpeveryfewdaystheydontgrowthesameamounteveryday).

Aha

Iwasalsoremindedofthefractalnatureofscientificrevolutionsbasically,atall
scales(minutes,hours,days,months,years,decades,centuries,...),science
seemstoproceedbybeingderailedbyunexpectedahamoments.(Or,topick
uponTalebsthemes,Icananticipatethatahamomentswilloccur,Ijustcant
predictexactlywhentheywillhappenorwhattheywillbe.)

Liberalsandconservatives

Onpage16,Talebaskswhythosewhofavorallowingtheeliminationofafetus
inthemotherswomnbalsoopposecapitalpunishmentandwhythosewho
acceptabortionaresupposedtobefavorabletohightaxationbutagainsta
strongmilitary,etc.Firstoff,letmechideTalebfordeterministicthinking.
FromtheGeneralSocialSurveycumulativefile,heresthecrosstabofthe
responsestoAbortionifwomanwantsforanyreasonandFavororoppose
deathpenaltyformurder:

40%supportedabortionforanyreason.Ofthese,76%supportedthedeath
penalty.
60%didnotsupportabortionunderallconditions.Ofthese,74%supportedthe
deathpenalty.

Thiswasthecumulativefile,andImsurethingshavechangedinrecentyears,
andmaybeIevenmadesomemistakeinthetabulation,but,inanycase,the
relationbetweenviewsonthesetwoissuesisfarfromdeterministic!

Butgettingbacktothemainquestion:Idontthinkitssuchamysterythat
variousleftistviews(allowingabortion,opposingcapitalpunishment,supporting
agraduatedincometax,andreducingthemilitary)aresupposedtogo
togethernorisitasurprisethattheoppositepositionsgotogetherinarightist
worldview.Abortionisrelatedtowomensrights,whichhasbeenaleftist
positionforalongtime.Similarly,conservativeshavefavoredharsher
punishmentsandliberals(tousetheU.S.term)havefavoredmilder
punishmentsforalongtimealso.Thegraduatedincometaxfavorsthehave
notsratherthanthehavemores,andthemilitaryisgenerallyaconservative
institution.Othercombinationsofviewsareoutthere,butIdontagreewith
Talebsclaimthattheleftrightdistinctionisarbitrary.

Pickingpenniesinfrontofasteamroller

Onpage19,Talebreferstotheusualinvestmentstrategy(whichIsupposeI
actuallyusemyself)aspickingpenniesinfrontofasteamroller.Thatsacute
phrasedidhecomeupwithit?ImalsoremindedofthefamousMartingale
bettingsystem.SeveralyearsagoinauniversitylibraryIcameacrossa
charmingbookbyMaxim(ofgunfame)wherehewentthroughchapterafter
chapterdemolishingtheMartingalesystem.(Forthosewhodontknow,the
Martingalesystemistobet$1,thenifyoulose,bet$2,thenifyoulose,bet$4,
etc.Yourethenguaranteedtowinexactly$1orloseyourentirefortune.Asort
oflotteryinreverse,butaneternallypopularsystem.)

Throughout,Talebtalksaboutforecasterswhoarentsogoodatforecasting,
pickingpenniesinfrontofsteamrollers,etc.Iimaginemuchofthiscanbe
explainedbyincentives.Forexample,thoseLongTermCapitalguysmadetons
ofmoney,thenwhentheirsystemfailed,Iassumetheydidntactuallygobroke.
Theyhaveanincentivetoignorethoseblackswans,sinceotherswillpickupthe
tabwhentheyfail(sortoflikeFEMApaysforthosebeachfronthousesin
Florida).ItremindsmeofthesayingthatIheardonce(referringtoDonald
Trump,Ibelieve)thatwhatmattersisnotyournetworth(assetsminus
liabilities),buttheabsolutevalueofyournetworth.Beingindebtfor$10million
andthusbeingtoobigtofailis(almost)equivalenttohaving$10millioninthe
bank.

Thediscussiononpage112ofhowRalphNadersavedlives(mostlyviaseat
beltsincars)remindsmeofhiscarbumpercampaigninthe1970s.Mydad
subscribedtoConsumerReportsthen(hestilldoes,actually,andIthinkreadsit
forpleasureitmustbeoneofthoseDepressionmentalitythings),andatone
pointtheywerepushingheavilyforthe5mphbumpers.Apparentlytherewas
somefederalregulationabouthowstrongcarbumpershadtobe,towithstanda
crashof2.5milesperhour,or5milesperhour,orwhateverthestandardhad
been2.5(Ithink),thengotraisedto5,thenloweredbackto2.5,and
ConsumersUnioncalculated(reasonablycorrectly,nodoubt)thatthe5mph
standardwould,inthenet,savedriversmoney.InaivelyassumedthatCUwas
rightonthis.But,lookingatitnow,Iwouldstronglyopposethe5mph
standard.Infact,Idsupportalawforbiddingsuchsturdybumpers.Why?
Because,asapedestrianandcyclist,Idontwantdriverstohavethatsenseof
security.Idrathertheybescaredoffenderbendersand,asaconsequence,
stayawayfromme!Anyway,thepointhereisnottodebateautosafetyitsjust
aninterestingexampleofhowmyownviewshavechanged.Anotherexampleof
incentives.

Threelevelsofconversation,or,whylunchatthefacultyclubmight
(sometimes)bemoreinterestingthanhangingoutwithchairthrowing
traders

Onpage21,Talebcomparestheexcitementofchairthrowingstocktradersto
lunchesinadrabuniversitycafeteriawithgentlemindedprofessorsdiscussing
thelatestdepartmentalintrigue.ThisremindsmeofadistinctionIcameup
withoncewhentalkingwithDaveKrantz,theideaofthreelevelsof
conversation.Level1ispersonal:spouse,kids,favoritefoods,friends,gossip,
etc.Level2isdepartmentalintrigue,whosdoingwhatjob,gettingpersonXto
dothingY,howtogetmoneyforZbasically,level2isallaboutmoney.Level3
isimpersonalthings:politics,sports,research,deepthoughts,etc.Whentalking
withDave,Iresolvedtominimizelevel2conversationandfocusonthefarmore
important(andinteresting)levels1and3.Level2topicshaveanimmediacy
whichputsthemonthetopoftheconversationalstack,whichiswhyImadethe
specialefforttoputthemaside.Anyway,itstruckmeinreadingpage21of
Talebsbookthatchairthrowingstocktradershavemuchmoreinterestinglevel
2conversations(comparedwithprofessorsorevengradstudents),andquite
possiblytheyhavebetterlevel1conversationsalsobutIdhopethatthelevel3
conversationsattheuniversityaremoreinteresting.Beingoncampus,Imused
tohavingallsortsofgoodlevel3conversations,butIfindthesehardertocome
byinothersettings.Probablyitsnothingtodowiththedepthoftheseother
people,justthatIfinditeasiertogetintoagoodconversationalgroovewith
peopleattheuniversity.Inanycase,Itry(notalwayssuccessfully)tokeep
conversationsawayfromthelatestdepartmentalintrigue.

Ridingtheescalatortothestairmaster

Thestoryonpage54aboutthepeoplewhoridetheescalatortothe
Stairmastersremindsmethat,whereIusedtowork,therewasaguywho
carriedhisbikeupthestairstothe4thfloor.Thisalwaysirritatedmebecauseit
setanunfollowableexample.Forinstance,onedayIwasontheelevator(taking
mybiketothe3rdfloor)andsomeguyaskedme,Yourideyourbikeforthe
exercise.Whydontyoutakethestairs?(IrepliedthatIdontridemybikefor
theexercise.)

Confirmationbias,or,shouldntIbereadinganastrologybook?

Aroundpages5859,Talebtalksaboutconfirmationbiasandrecommendsthat
welookforcounterexamplestoourtheories.Icertainlyagreewiththisanddoit
allthetimeinmyresearch.Butwhataboutotheraspectsoflife?Forexample,I
wasreadingTheBlackSwan,whichIknewaheadoftimewouldcontainlotsof
informationthatIalreadyagreedwith.ShouldIinsteadreadabookon
astrology?Inpractice,Imsurethiswouldjustconfirmmy(true)suspicionthat
astrologyisfalse,soImkindastuck.

Rareeventsandselectionbias

Thefootnoteon61remindedmeofatalkIsawacoupleyearsagowhereitwas
saidthatNYCisexpectedtohaveadevastatingearthquakesometimeinthe
next2000years.

Onpage77,Talebsaysthatlotteryplayerstreatoddsofoneinathousandand
oneinamillionalmostthesameway.But...whentheytrymakinglottery
oddslower(forexample,changingfrompick6outof42topick6outof48,
peopledorespondbyplayingless(unlessthepayoffsareappropriately
increased).Iattributethisnottosavvyprobabilityreasoningbuttoahuman
desirenottoberippedoff.

Onpage102andfollowing,Talebdiscussesselectionbias.Ialsorecommendthe
articlebyHowardWaineretal.(ASelectionofSelectionAnomalies)DebNolan
andIalsohaveafewinourTeachingStatisticsbook.

Then,onpage126,Talebdescribesaconferenceheattendedwherehisfirst
surprisewastodiscoverthatthemilitarypeopletherethought,behaved,and
actedlikephilosophers[inthegoodsenseoftheword]...Theythoughtoutof
thebix,liketraders,exceptmuchbetterandwithoutfearofintrospection.He
goesontodiscusswhymilitaryofficersaresuchgoodskepticalthinkers.Butthis
seemslikeaclearcaseofselectionbias!Themilitaryofficerswhocometoan
academicsymposiumareprobablyanunusualbunch.

Loserslie

Onpage118119,theresadiscussionofhowsomeonewithawinningstreakin
lifecanthinkitsskill,evenifitsjustluckandselection(thatthelosersdontget
observed).Idliketoaddanotherexplanation,whichisthatpeoplelie.Someone
whotellsyouhewontenstraighttimesprobablyactuallywontentimesoutof
fifteen.Someonewhotellsyouhebrokeevenprobablyisabigloser.Etc.

Onpage125,TalebexplainswhytheFatTonysgetmoreNobelPrizesin
medicinethantheDr.Johns.Idontknowifthisisreallytrue,butifitis,Imight
attributeittotheTonysbettersocialskills(i.e.,helpingothersbehappyand
gettingpeopletodowhattheywant)morethantheirbetterabilitytoassess
uncertainty.

Offightsandcoinflips

Onpage127128,Talebdiscussesthedistinctionbetweenuncertaintyand
randomness(inmyterminology,theboxer,thewrestler,andthecoinflip).Id
onlypointoutthatcoinsanddice,whilemaybenotrealisticrepresentationsof
manysourcesofrealworlduncertainty,doprovideusefulcalibration.Similarly,
actualobjectsrarelyresemblethemeter(thatfamousmetalbarthatsits,or
usedtosit,inParis),butitshelpfultohaveanagreeduponlengthscale.We
havesomeexamplesinChapter1ofBayesianDataAnalysisofassigning
probabilitiesempirically(forfootballscoresandrecordlinkage).
Also,asdiscussedinourTeachingStatisticsbook,whenteachingprobabilityI
prefertouseactualrandomevents(e.g.,sexofbirths)ratherthanartificial
examplessuchascraps,roulette,etc.,whicharefulloftechnicaldetails(e.g.,
whatstheprobabilityofspinninga00)thataredeadendswithnoconnection
toanyotherareasofinquiry.Incontrast,thinkingaboutsexofbirthsleadsto
lotsofinterestingprobabilistic,biological,combinatorical,andevolutionary
directions.

Overconfidenceasthesideeffectofcommunicationgoals

Onpage14,Talebdiscussesoverconfidence(asinthepathbreakingAlpertand
Raiffastudy).Asweteachindecisiontheory,theresactuallyaneasywayto
makesurethatyour95%intervalsarecalibrated.Justapplythefollowingrule:
Everytimesomeoneasksyoutomakeadecision,spinaspinnerthathasa95%
chanceofreturningtheinterval(infinity,infinity),anda5%chanceofreturning
theemptyset.Youwillbeperfectlycalibrated(onaverage).Theintervalsare
useless,however,whichpointstowardthefactthatwhenpeopleaskyouforan
interval,youreinclined(forGriceanreasonsifnoother)toprovidesome
information.AccordingtoDaveKrantz,muchofoverconfidenceofprobability
statementscanbeexplainedbythistensionbetweenthegoalsof
informativenessandcalibration.

Onpage145,Talebdiscussesthefallacyofassumingthatmoreisbetter.Alot
dependshereonthestatisticalmodelyoureusing(orimplicitlyusing).With
leastsquares,overfittingisarealconcern.LesssoinBayesianinference,but
stillitcomesupwithnoninformativepriordistributions.Animportantthe
importanttopicinBayesianstatisticsistheconstructionofstructuredprior
distributionsthatletthedataspeakbutatthesametimedontgetoverwhelmed
byafloodofdata.

Oftaxonomiesandlynx

InthediscussionofMandelbrotsworkonpage269,Idalsomentionhismodels
fortaxonomies,whichhaveasimpleselfsimilarstructurewithoutthe
complexitiesofthemorefamiliarspatialexamples.Also,thestoryaboutthe
problemsofGaussianmodelsremindsmeCavanReillyschapterinthisbook,
wherehefitsasimplepredatorpreymodelwithabout3parameterstothe
famousCanadianlynxdataandgetsmuchbetterpredictionsthanthestandard
11parameterGaussiantimeseriesmodelsthatareusuallyfittothosedata.

Buzzwords

Onpage278,Talebrantsagainststatisticalbuzzwordssuchasstandardeviation
andcorrelation,andfinancialbuzzwordssuchasrisk.Thisremindsmeofmy
rantagainstthemisunderstoodconceptofriskaversion.Ihavetowritethisup
fullysometime,butsomeofmyrantishere.

Itsalloverbutthecompartmentalizin

Onpage288,Talebdiscussespeoplewhocompartmentalizetheirintellectual
lives,forexamplethephilosopherwhowasatraderbutdidntusehistrading
experiencestoinformhisphilosophy.Inoticedasimilarthingaboutsomeofmy
collegueswhereIusedtoteachinthestatisticsdepartmentatBerkeley.Onthe
collegueswhereIusedtoteachinthestatisticsdepartmentatBerkeley.Onthe
onehand,theywereextremelytheoretical,usingadvancedmathematicsto
proveverysubtlethingsinprobabilitytheory,oftenthings(suchasthestrong
lawoflargenumbers)thathadlittleifanypracticalimport.Butwhentheydid
appliedwork,theythrewallthisoutthewindowtheyweresoafraidofusing
probabilitymodelsthattheywouldoftenresorttoverycrudestatisticalmethods.

Imonlyastatisticianfrom9to5

Itry(andmostlysucceed,Ithink)tohavesomeunityinmyprofessionallife,
developingtheorythatisrelevanttomyappliedwork.Ihavetoadmit,however,
thatafterhoursImlikeeveryothercitizen.Itrustmydoctoranddentist
completely,andIllinvestmymoneywherevertheconventionalwisdomtellsme
to(justlikethepeoplewhomTalebdisparagesonpage290ofhisbook).

Miscellaneoussociologicalthoughts

Talebscommentonpage155abouteconomicsbeingthemostinsularoffields
remindsmeofthisstoryoftheeconomistwhosaidthateconomistsaredifferent
thananthropologists,sociologists,andpublichealthofficialsbecause
economistsbelievethateveryoneisfundamentallyalike[except,ofcourse,for
anthropologists,etc.].Economistsoftendoseemprettycredulousofarguments
presentedbyothereconomists!

Thereferenceonpage158todentistsremindedmeofthedentistsnamed
Dennis.

Onpage166,Talebdisparagesplans.Butplanscanbehelpful,no?Evenifthey
dontworkout.Itusuallyseemstomethatevenapoorplan(ifrecognizedas
tentative)isbetterthannoplanatall.

Thediscussiononpage171ofpredictingpredictionsremindsmeoftheparadox,
ofsorts,thatopinionpollsshiftpredictablyduringpresidentialnominating
conventions(forevidence,seehere,forexample),eventhoughconventionsare
veryconventionalevents,andsoonesshiftinviewsshouldbe(onaverage)
anticipated.

Onpage174175,TalebcommendsPoincarefornotwastingtimefindingtypos.
Forme,though,typofindingispleasant.AlthoughIamremindedofthe
expression,theresnoendtotheamountofworkyoucanputintoaproject
afteritsdone.

Thegraphsonpages186187havethatuglyExcellook,withunecessary
horizontallinesandweirdlylabeledyaxes.Inanycase,theyremindmeofthe
gameofscatterplotcharadesthatIsometimesenjoyplayingwithastatistics
class.Thegamegoesasfollows:someonedisplaysascatterplotjustthepoints,
nothingmoreandeveryonetriestoguesswhatsbeingplotted.Thenmoreand
moreofthegraphisrevealedfirsttheaxisnumbers,thentheaxislabelsuntil
peoplefigureitout.

ImalittlepuzzledbyTalebsclaim,attheendofpage193,thattothese
peopleamusedbytheapes,theideaofabeingwhowouldlookdownonthem
thewaytheylookdownontheapescannotimmediatelycometotheirminds.
Imamusedbyapesbutcanimaginesuchasuperiorbeingwhowouldbe
amusedbyme.Whynot?

Onpage196,Talebwrites,asinglebutterflyflappingitswingsinNewDelhi
maybethecertaincauseofahurricaneinNorthCarolina...Nothereisno
thecause(letalone,thecertaincause).Presumablyanotherbutterfly
somewhereelsecouldvemovedthehurricaneaway.

Page198:thechanceofagirlbirthis48.5%,not50%.

Onpage209,Talebwrites,workhard,notingruntwork....Ihavemixed
feelingshere.Ononehand,yes,gruntworkcandistractfromthebigprojects.
Forexample,Imbloggingandwritinglotsoflittlepaperseachyearinsteadof
attackingthebigquestions.Ontheotherhand,theselittleprojectsaretheway
Igetinsightintothebigquestions.Gettingindownanddirty,playingwiththe
dataandwritingcode,isawaythatIlearn.

Thementiononpage210ofPascalswagerremindsmeofthefallacyoftheone
sidedbet.Imhopingthatnowthatthisfallacyhasbeennamed,peoplewill
noticeitandavoiditonoccasion.

Thediscussiononpage222ofcapitalism,socialism,andattributionerrors
remindsmeofthesayingthateverybodywantssocialismforthemselvesand
capitalismforeverybodyelse(andtheresnothingmorefunthanspendingother
peoplesmoney).

Thediscussiononthefollowingpageofthelongtailremindsmeofthe
conjectureaboutthefatheadofmegaconsumers.

Thefootnoteonpage224aboutbookreviewsremindsmeofageneral
phenomenonwhichisthatdifferentreviewsofthesamebooktendtohave
almosttheexactsameinformation.Thisbecomesreallyclearifyoulookupa
bunchofreviewsonNexis,forexample.Itcanbefrustrating,becauseforabook
Ilike,Idbeinterestedinseeinglotsofdifferentperspectives.Incontrast,on
thewebtheimplicitruleshaventbeendefinedyet,sotheresmorediversity(as
inthisnonreviewrighthere,orinthesecommentsonIndecision).

Thecommentsonpage231ontheGaussiandistributionremindmeofthisstory
whereevenGaltongotconfusedaboutthetailsofthedistributionasappliedto
humanheight.

Onpage240,TalebwritesthatGauss,inusingthenormaldistribution,wasa
mathematiciandealingwithatheoreticalpoint,notmakingclaimsaboutthe
structureofrealitylikestatisticalmindedscientists.IdonthavemyStigler
righthere,butIdalwaysunderstoodthatGaussdevelopedleastsquaresand
thenormaldistributioninthecontextoffittingcurvestoastronomical
observations.Surehedidlotsofpuremath,buthe(andLaplace)weredoing
empiricalsciencetoo.

IlikeGalileosquoteonpage257,ThegreatbookofNaturelieseveropen
beforeoureyesandthetruephilosophyiswritteninit....Butwecannotread
itunlesswehavefirstlearnedthelanguageandthecharactersinwhichitis
written....Itiswritteninmathematicallanguageandthecharactersare
triangles,circlesandothergeometricfigures.AsTalebwrites,WasGalileo
legallyblind?Actualnatureisnotfulloftrianglesetc.,itsfullofclouds,
mountains,trees,andotherfractalshapes.Buttheseshapesnothavingnames
orformulas,Galileocouldntthinkofthem.Hechosethenaturalkindthatwas
closesttohand.Enelpaisdelosciegos,etc.

Onpage261,Talebwritesthatinthepast44years,nothinghashappenedin
economicsandsocialsciencestatisticsexceptforsomecosmeticfiddling.Id
disagreewiththat.True,Imsureyoucouldfindantecedentsofanycurrent
methodinpapersthatwerewrittenbefore1963,butIthinkthatdeveloping
methodsthatworkoncomplexproblemsisacontributioninitself.Theres
certainlyalotwecandonowthatcouldntbedoneveryeasily44yearsago.

Readingwithpeninhand

Toconclude:itsfun(butwork)toreadabookmanuscriptwithpeninhand.
Alsoliberatingthatthebookisalreadycomingout,soinsteadofscanningfor
typosorwhatever,Icanjustwritedownwhateverideaspopup.

P.S.HerearemythoughtsonTalebspreviousbook.

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24Comments

1. dereksays:
April8,2007at12:21pm

Ihaveafatiguedisorder,andwhenIworkedinanofficewithinwalking
distancewithnotoriouslyrestrictedparking,Irodemybiketowork.People
said"thatmustbeveryhealthyexercise",Isaid"notthewayIdoit",
whichislowgearpootling,andconsiderablylessbracingthanwalkingthe
samedistancewouldbe.It'sverycomfortable,butthewholepointofthe
device,forme,isto*avoid*extraeffort.Itseemstomethatpeoplehave
forgottentheconceptofabicycleasalaborsavingmeansoftransport,for
somereason.They'renowfixatedonitasamobiletorturemachinefor
healthfreaks.

2. Anonymoussays:
April8,2007at12:48pm

"Onpagexx,Talebwrites,"Whatyouknowcannotreallyhurtyou."This
doesn'tsoundrighttome.Sometimesyouknowsomethingbadiscoming
butyoucan'tdodgeit.Forexample,considercertaindiseases."

Ithinkitwouldworkwellifyoumodelitintermsofsomethinglikesunk
costs."Whatyouknowcan'tmakeyoumessupyourexpectationhorribly."
Orsomethingsimilar.

Thatis,thingsyouknowaboutcan'tcausereallyhugecostsfromyour
currentvalue.I'mnotsureaboutthateither,considersmokingorcrappy
 diet.

3. MikeMaltzsays:
April8,2007at4:02pm

HispointoncompartmentalizationremindedmeofsomethingIreadin
Gigerenzeretal,"SimpleHeuristicsthatMakeUsSmart":

"OnephilosopherwasstrugglingtodecidewhethertostayatColumbia
Universityortoacceptajobofferfromarivaluniversity.Theotheradvised
him:'Justmaximizeyourexpectedutilityyoualwayswriteaboutdoing
this.'Exasperated,thefirstphilosopherresponded:'Comeon,thisis
serious.'"

4. OneEyedMansays:
April8,2007at6:36pm

ThequotefromGalileoandtheanalysissoundsliketheSapirWhorf
hypothesisthatwordshavetoexistforustobeabletoexperiencethem.At
leastinastrongform,itisfalse,manyconceptscanbeunderstoodand
distinguishedbypeoplewhospeaklanguagesthatlackwordsforthose
distinctions.

Also,manyanalyticaltechniquesweredevelopedtoexplainphysical
phenomena,notjustbyapplyingexistingmathtonewsituations.My
understandingisthatcalculusandoptimalcontroltheoryweredeveloped
forthispurpose,I'msuretherearemanymoreexamples.

5. Kaisersays:
April9,2007at7:05am

Thanksforthedetailedreview.I'mlookingforwardtoreadingthebook.

Yousaid:"Onpagexviii,Talebdiscussesproblemswithsocialscientists'
summariesofuncertainty.ThisremindsmeofsomethingIsometimestell
politicalscientistsaboutwhyIdon'ttrust95%intervals:A95%intervalis
wrong1timeoutof20."

Althoughconfidenceintervalsdonotsolveeveryproblem,Ifindthemtobe
valuable.Itgivesameasureoftheuncertaintyintheestimate,andwhat's
more,itisaslidingscalethatallowsthemodelertocontroltheerrorrate.
Onecouldprovide99.9%intervalsifthat'swhatisdesired.Ofcourse,those
intervalsmaybetoowidetobeofpracticaluse,especiallywithsmall
samples.Butthatstatementitselfisveryinformative.Italsodescribes
accuratelythelimitationofusingsampledatatomakegeneralizations.I
seeitmoreasalimitationofthegeneralizationproblemratherthanthe
methodofconfidenceintervals.

6. Danielsays:
April9,2007at7:06am

OkProf.Gelman,
youconvincedme.ItlooksaveryinterestingbookandIhavepreordered
it.ApparentlyIt'sgoingtobeoutinlessthan10days.It'snoteventoo
 expensiveforastudent.
thanks,

7. Andysays:
April9,2007at8:01pm

Actually,theLTCMguysdidlosealotofmoneyIdon'tthinkthatany
actuallywentbankrupt,buttheyhadlargepartsoftheirportfoliosinthe
fundandcertainlyhadmuchreducedstandardsofliving.Ithinkmost
hedgefundmanagerskeepsome"skininthegame"forpreciselythat
agentprincipalproblem.

8. Edsays:
April28,2007at1:36pm

Mythankstooforaninterestingread.Iamaretiredrocketscientestand
muchappreciatehisclosingcommentonpg298"justbeingaliveisan
extraordinarypieceofgoodluck".HisfeelingsaboutGaussiandistribution
functionsareabitoverthetop,IguessthatmakemeaMediocristan
IusedthemformeanvaluecritcaldesignmodelsandthewholeNIST
libraryofPDFsforextremeeventsespeciallymaterialfailureandWeather
relatedloads.

9. PeteSkomorochsays:
May16,2007at5:17am

Thanksforthewriteup.Ijustpickedupacopy,andafterthumbing
throughtheindexIwassuprisedtofindnomentionofExtremeValue
Theory.DoesTalebgointothis?Isn'tquantifyinguncertaintyforrare
eventsanactivefield(terrorism,hurricanes,failureofnuclearpowerplants,
etc)?

Iwouldagreethatmostpeopleseemtoignoretheprobabilityofextreme
eventsinuncertaintyestimatesintheliterature,butitseemsstrangenotto
mentionabranchofstatisticswhichtriestoaddressthis.

10. NNTsays:
May17,2007at11:48am

Hithere.AsapractitionerofEVT(barrieroptionsandderivativesthat
dependonthesup/infoftimeseries)IwroteinitearlierbutIcanassert
ofthefragilityofusingit.Iwillcommentonitlaterinthesecondeditionof
myrepiestoA.G.

11. Randalsays:
July10,2007at6:06am

"Whatyouknowcannotreallyhurtyou."

Allhe'sreallysayinghere,surely,isthatifyouknowsomethingiscoming
thenyoucanalmostalwaysmitigatetheeffectstoagreatextent.While
youcanobviouslystillbedamaged,it'snothingcomparedtothepotential
effectofareal"BlackSwan".
 I'menjoyingthisbook.ItseemstobearticulatingsomethingI'vebeenidly
mullingoverforsometime.Iwasthinkingaboutitbyusingtheanalogyof
realitybeingtheconsequenceofacollectionofknownandunknown
variablefunctions.Itdoesn'tmatterhowwellyouunderstandtheknown
functions.Ifthereisevenoneunknownfunctionoperatinginthe
background,everylawyoubelievetobecertainlyestablished,andevery
predictionyoucanmake,canbeoverturnedatanapparentlyarbitrary
instant.

Irecalla"BlackSwan"shortstorybyConanDoyle,writtenin1913,called
"ThePoisonBelt",inwhichtheearthsuddenlymovedintoa"beltof
poisonousether"thatapparentlydestroysallunprotectedlife.

12. OskarShapleysays:
November22,2007at5:42am

Theideasinthebookaregood,butthebookseemstobetoolongby50
100pages.I'dappreciatemoremath.I'msuretherearethousandsofPhDs
workingonbettermodelsfordistributionswithfattails.

Also,NNTseemstowanttoinsultasmanymathliteratepeopleaspossible
withthisbook.

13. vidsays:
March9,2008at12:21am

Thebookisverygoodforthemostpart(Iamjustoverathirdofmyway
throughitasIwrite)butit'stoooverflamboyantinmakingthecaseforthe
simplebutnotsoobviousidea.

Itbasicallyarguesthatthroughourinheritedandcommongeneticmake
up,wethehumans,haveaterrificallylargeblindspotinourassessmentof
theworld.Thisblindspotderivesfromthefactthatinordertosimplifythe
world(andretainamemoryofit)ourbrainsseekexplanationstofactsand
furthermorefillinthegaps.Asimpleexamplewillsuffice(similartotheone
inthebook):

1)Ginawashappilymarried.Shekilledherhusband.

and,

2)Ginawashappilymarried.Shekilledherhusbandbecausehecheatedon
her.

Doubtlesstosaythesecondsentenceprobablyfeelsthatlittlebitmore
comfortabletoyou.Right?

becauseitoffersanexplanationtoasetofevents(orfacts).

Inasimilarfashionourbrainsgoonourwholelifelendingexplanationsto
eventstofitfactsasweseethem.Aslongastheexplanationfitsthefacts
itdoesntseemtomatterthattheremaybeanotherinfinitenumberof
variantexplanations.thefirstonewillsufficetosatiateyourneed.
Logicallyyoumayseethatthiscanleadtoexceedinglylargeblindspots.In
aworldwhereverylittleislinear,whereasingleeventcanchange
everythingimportant,thismakesabigdifference.Examplecontinued:

GinawasthewifeoflegendaryfootballerZainMathews.Shelovedhim,and
helovedher.Lifewasperfect,theywouldgrowoldtogether.Theonly
problemisthatZainlovedallthecheerleaderstoo!

Ginathoughtshewouldbehappy,ZainthoughthewouldmakePlayerof
theSeason.Neitherhappenedbecausenooneforesawwhatwould
happen.

SoTheBlackSwangoestoexplaininafarbetteranddetailedmanner
thatourinstinctscanlullisintoastateofblissfulgullibleness.Where
everythingisgoinginlinearfashion,wheninreality,realityiscookingup
manysurprisesforyou!Whatsthesolution.Ihaventgotthereyet.ButI
thinkitssomewhereinthelineofexperimentation,testinghypothesiswith
results,andperhapstryingtofindrawdatanotnarratedstoriesetcbut
thetruthofthematterisIdontknowletshopeTalebhasasurprisefor
me!

andthatleadsmetomyfixationonchoice.

WehavechoicebutIclaimthatweoftendivorcefromit,creatingstoriesof
whymustmustdosomethingthatwedontnecessarilywantto.Thisisthe
fallacy,wenarratestoriestofitthedata.

IfIamfat,andIhavememoryofbeingfatandespeciallyhavethe
memoryofeatingtomuchanddrinkingtoomuchtogetthatway.Iwill
createstoriesinmyheadtofitthestatementsoffact.Iwilllovefood.And
whynot,whatkindofidiotwouldovereat,ifhedidntlovefood.Thenthat
lovebecomesthebasisforcompulsion.orevenIcouldcreatealternative
truth,IeatwhenIamdepressed,anotherreason.

Wedivorcechoice,oftennotbecauseofweaknessbutbecauseour
biological,mentalmachineryneedstheexplanationthatleadstothefact.
Therealtruth,ifthereissuchathingisthatyouhavethechoiceatany
momenttodowhateveryoulikeandfurthermoretothinkaboutwhatever
youlike.thereisabsolutelynocompulsionandyoumayoftenfindno
furtherconnectionbetweenyourinventedstoriesandthetruth.

Thatloveforfood,Thatdepressionarejustinventionstofitanother
truth,Thatyouarefat!

Andtherealfactisthatyoujustthinktoomuchaboutfood,youprobably
areasyoureadthisoryourbodyisefficientatfatstorageoranything
elseSimple.Therestismelodrama.

Sowehavechoice.Choiceinpracticallyeverything.Choiceinthewaywe
seethepast,choiceinthewayweletthepastaffectthefutureorthe
present.Choiceinthepresent,choiceinmakingthechoiceSquared.But
thechoicehastobemade.
 Whygointoallofthis?WhyamInowaffixiatedbythisconcept.Why
becauseitisinformationthatispracticallyablackswan,what,everything
ismadeup?Youcandowhatyouwant?

Whatifyoureallyrealisedandembracedthistruthhowwouldyourlife
changebeyondanythingyoueverimagined?Asinglethoughtasingle
actioncanchangeeverything,why?

Becauseourbrains,ourmindisaninformationprocessingmachine.asingle
thoughtcanandhas(historicallyproven)changedtheentiredataset.

Perhapsthingsarenotsodullafterall!

14. ChristianRobertsays:
April16,2008at8:59pm

JustpointingoutamuchmoreradicalvisionofthebookbyDennisLindley
inSignificance(March2008),withaveryenjoyablestyleandtheinvention
ofBleatistan[anagramofTalem]!

15. jsalvatisays:
April20,2008at1:10am

MyonlyrealproblemwiththisbookwasthatTalebisFAR,FAR,tooself
indulgentinusingsomanyinsultsinhisbook.Hisinsultsdirectedat
randompeoplegrewmoreirritatingasthebookwenton,somuchsothatI
wantedtostopreadingseveraltimes.Taleb'spersonalfeelingsaboutother
people'signorancehamperhismessage.Theyalsoaddalotofwordstoan
alreadylongbook.

16. BobbyGsays:
April23,2008at3:01pm

ChristianRobert

Ifoundhisacerbic,sarcasticwithighlyentertaining.But,thenoneofmy
favoriteessayistsisLewisLapham.Pompousgasbagsneedtobeknocked
down.Moreover,Talebstatesupfrontthathiswritingis"selfindulgent."
Betterthatthan"selfimportant."Tothecontrary,Ifindalotofself
deprecationinTaleb'sstuff,andgotalotoflaughsfromit.Lookatthe
myriadsnarkypotshotstakenbyotherswhohavecalledbullshitinsucha
domain,e.g.,MichaelLewis,AdamSmith.

And,dude,thebookwasn'tthatlong.300pagesthroughtheepilog?
C'mon.Long?Youwantlong?IthoughtI'dneverfinishSteveColl's"Ghost
Wars,"600+somepagesofsmallprint.

17. BhaskarGhoshsays:
July18,2008at8:37am

Iagreewithmanyofthecommentsmade.Themostpoignantisabout
FannieMae(sittingonabarrelofdynamite)inoneofthefootnotes.
OnestatementIwouldliketodisagreewithTalebregardingclaiming
originalityofthoughtsaboutuncertainty.Itmaybeunintentional,but
 GeorgeBernardShawagreatcynicdidsay'theonlygoldenruleisthat
therearenogoldenrules'.Thecruxofthewholebookisthatnothinginlife
is100%certain,thoughpeopleinpowerwishtodeludethemselvesand
theirsycophantsexactlyopposite!!

18. Mimsays:
November19,2008at3:19am

Thanksfortheblog.I'vebeenthinkingaboutgettingthisbookbutwanted
tofindoutmorebeforehand.Stillnotsure.Onethingthatisoffputtingis
thatwhereIlive,ourbeautifulblackswansareendemicandmuchmore
commonthantheintroducedwhiteswans:)

ThereforeIexpectthisbookisnotintendedforusinAustralia.

19. Renesays:
March6,2009at1:17am

Thereisaninterestinginterviewhere:

http://misstrade.wordpress.com/2008/12/08/nassim

Ireadthebooktoo.Itiscertainlyeyeopening.AtleastnowIknow,whyI
alswayshadabadfeelingteachingmathtoeconomystudents.Iwas
alwaysafraidwhattheprofessorstherewouldmakeoutofit.

Bytheway,IstudiedsomestockratestoseeTaleb'sarguments,athingI
normallywouldn'tdo.Seemyblogabove.

20. aaprimesays:
April4,2009at10:10am

Allowmetocommentonabortionandthedeathpenalty.Isanunborn
assumedinnocentandnotatallinfluencedbyitsenvironmentwhilea
criminalisprovenguiltybeyondareasonabledoubtifyoubelievethelegal
systemisinfallible?Thismeansthatrespectforhumanlifeisnotpartofthe
calculus.IMHO,modernviewsonthesetwoissuesaresimplisticallybased
onassigningrudimentaryvaluestohumanlifeonameasurablescalebased
onprobableoutcomesinthefuture.Thestatisticalfallacyisthatmoretime
willresultinbetteroutcomes.Truthbetold,betteroutcomesaretheresult
ofbetterideasandbetterplans,notmoretimeandgreaterresources.

21. susansays:
April22,2009at9:14am

Iwonderhowunexpectedthisfiscalemergencyisinfact.Thesefinancial
firmshaveverylargeriskdepartmentsdevotedtoanalyzing"whatif"
scenarios.Financialinstitutionshaveinthepastseveralyearbeen
sufficientlyastutetorewritebankruptylawsandhavedonatedtoenough
politicianstobeprovidedanaccesstothepoliticalprocess.Myhunchis
thatmanycompanieswereawareofthepotentialforthisoutcomeand
wereprovidedinsurancechipsforthebadeventbythepoliticians.

22. Whitesays:
 October8,2010at3:00am

IlikehowGelmanfindsallthesefaults.Ititapitythathecouldnot
seetheCLEARbigpictureTalebpaints.Nothingpersonal,butGelman
"belongsinaoldagehomewithMyronplayingsudokutogether."

ps.whoeveraskedGelmantospeakatDavos?

23. AndrewGelmansays:
October8,2010at5:10am

White:

1.Thanksforthesuggestion.

2.ItwasBillClintonwhoaskedmetospeakatDavos,butIwastoobusy
toattend.Maybenextyear!

24. MarkPalkosays:
January21,2011at11:29am

Poealsocameupwithaformalapproachtogeneratingliterature(atleast
intermsofsubjectmatterandplot)andunlikeTwainhestuckwithit.I'm
notsayingwhetherthishelpedorhurtthequalityofhiswork.