Last week James Governor kindly bought me lunch and gave me a book. The curry was very good, but the book has had a profound impact on me. It is not often that I finish a book, and then immediately read it again. Nassim Nicholas Taleb’s book, Fooled by Randomness is such a book.
Throughout my business studies at university, I heard a lot about the rational man. Rationality became something assumed. At the centre of most economic, efficient market and business theory is the rational, self interested behaviour. This book knocks that on the head.
Nassim has performed format c: on a goodly portion of my naive assumptions about financial markets and life in general. He has validated lots of what Francis Antonie and Douglas Irvine taught me as a political philosophy student years ago and I’d forgotten. It is time to dust off Karl Popper, and start thinking again.
Photo from Flickr by launceston_lad
Black swans are symbolically important, because until Australia was discovered, it was believed that all swans are white. This is a good example of a logical fallacy. There is a difference between there is no evidence of black swans, and there is evidence of no black swans.
We humans tend to fall into the induction trap. I do it a lot.
In the airport on the way home I spotted his new book. It has the title, you guessed it, Black Swan. I was glad my flight was delayed. I could read more of it. He Americanises Betrand Russell’s chicken, turning it into a turkey.
Nassim’s motto is
“My major hobby is teasing people who take themselves & the quality of their knowledge too seriously & those who don’t have the guts to sometimes say: I don’t know.…” (You may not be able to change the world but can at least get some entertainment & make a living out of the epistemic arrogance of the human race).
Nassim writes very well, the prose is tight and buzzword free. He doesn’t dumb things down and he explains without being condescending. He merges a fantastic knowledge of the classics with a profound grasp of probability. He is witty but serious.
So many new things to learn, and so much that I learned decades ago but need to rediscover: Hindsight bias, Platonic folds, logical fallacy, epiphenomena, exquisite cadavers, induction, Mandelbrot, Hume, Wittgenstein’s ruler, negative skewness, Extremestan and Mediocristan.The list goes on.
My readers will have noticed I’ve been working on trying to understand risk recently, and Nassim’s work has made me realise that risk isn’t as simple as I thought it was. After spending most of my adult life avoiding statistics, I’m realising the folly of my ways.
I’d better build my antilibrary.
By coincidence I stumbled on this post from the O’Reilly Radar this morning on the beauty of statistics. Watch Professor Rosling video. Swivel also looks rather interesting. Just remember those black swans….