The Black Swan: The Impact of the Highly Improbable

{{Short description|2007 book by Nassim Nicholas Taleb}} {{Use mdy dates|date = April 2019}} {{Use American English|date = January 2019}} {{Infobox book| <!-- See Wikipedia:WikiProject Novels or Wikipedia:WikiProject Books --> | name = The Black Swan | title_orig = | translator = | image = The black swan taleb cover.jpg | caption = Hardcover first edition | border = yes | size = | author = Nassim Nicholas Taleb | illustrator = | cover_artist = | country = United States | language = English | series = Incerto | genre = Non-fiction | subject = Epistemology, philosophy of science, randomness | publisher = Random House (U.S.) Allen Lane (U.K.) | release_date = April 17, 2007 | english_release_date = | media_type = Print, e-book | pages = 400 pp (hardcover) | isbn = 978-1400063512 | isbn_note = (U.S.), {{ISBN|978-0713999952}} (U.K.) | dewey = 003/.54 22 | congress = Q375 .T35 2007 | oclc = 71833470 | preceded_by = Fooled by Randomness | followed_by = The Bed of Procrustes }}

'''''The Black Swan: The Impact of the Highly Improbable''''' is a 2007 book by Nassim Nicholas Taleb, who is a former options trader. The book focuses on the extreme impact of rare and unpredictable outlier events—and the human tendency to find simplistic explanations for these events, retrospectively. Taleb calls this the Black Swan theory.

The book covers subjects relating to knowledge, aesthetics, as well as ways of life, and uses elements of fiction and anecdotes from the author's life to elaborate his theories. It spent 36 weeks on the ''New York Times'' best-seller list.<ref>{{cite news|url=https://www.bloomberg.com/news/articles/2008-03-27/taleb-outsells-greenspan-as-black-swan-gives-worst-turbulence|title=Taleb Outsells Greenspan as Black Swan Gives Worst Turbulence|last=Baker-Said|first=Stephanie|publisher=Bloomberg News|date=March 27, 2008|access-date=December 20, 2020}}</ref>

The book is part of Taleb's five-volume series, titled the ''Incerto'', including ''Fooled by Randomness'' (2001), ''The Black Swan'' (2007–2010), ''The Bed of Procrustes'' (2010–2016), ''Antifragile'' (2012), and ''Skin in the Game'' (2018).<ref>{{cite web|url=https://www.theaustralian.com.au/weekend-australian-magazine/nassim-nicholas-taleb-author-trader-thinker-for-our-times/news-story/291b81b1139445ea8aab9f8aa65e1338|title=The chaos man|last=Clancy|first=Josh|publisher=The Australian|date=April 7, 2018|access-date=December 20, 2020}}</ref>

==Coping with Black Swan events== A central idea in Taleb's book is not to attempt to predict Black Swan events, but to build robustness to negative events and an ability to exploit positive events. "Robustness" reflects an attitude where nothing is permitted to fail under conditions of change.<ref>{{cite book|url=https://books.google.com/books?id=fpCGCgAAQBAJ&pg=PT163|title=FUSE: Foresight-driven Understanding, Strategy and Execution: Move The Future|page=163|last=Krishnadas|first=Devadas|publisher=Marshall Cavendish|year=2015|isbn=9789814721455}}</ref> Taleb contends that banks and trading firms are vulnerable to hazardous Black Swan events and are exposed to losses beyond those predicted by their defective financial models.

The book asserts that a "Black Swan" event depends on the observer: for example, what may be a Black Swan surprise for a turkey is not a Black Swan surprise for its butcher. Hence the objective should be to "avoid being the turkey", by identifying areas of vulnerability in order to "turn the Black Swans white".

==Summary== Taleb has referred to the book as an essay or a narrative with one single idea: "our blindness with respect to randomness, particularly large deviations."<ref>{{harvnb|Taleb|2007}} p.xix.</ref> The book moves from literary subjects in the beginning to scientific and mathematical subjects in the later portions. Part One and the beginning of Part Two delve into psychology. Taleb addresses science and business in the latter half of Part Two and Part Three.<ref>{{cite web|url=https://alexmonaco.net/9-books-about-your-life-that-will-make-your-life-better/|title=9 Books About Your Life That Will Make Your Life better|last=Monaco|first=Alex|website=alexmonaco.net|date=September 2, 2020|access-date=December 20, 2020}}</ref> Part Four contains advice on how to approach the world in the face of uncertainty and still enjoy life.

Taleb acknowledges a contradiction in the book. He uses an exact metaphor, the Black Swan idea to argue against the "unknown, the abstract, and imprecise uncertain—white ravens, pink elephants, or evaporating denizens of a remote planet orbiting Tau Ceti."

{{blockquote|There is a contradiction; this book is a story, and I prefer to use stories and vignettes to illustrate our gullibility about stories and our preference for the dangerous compression of narratives.... You need a story to displace a story. Metaphors and stories are far more potent (alas) than ideas; they are also easier to remember and more fun to read.<ref>{{harvnb|Taleb|2007}} PROLOGUE p.xxvii, Taleb call this human tendency ''the narrative fallacy'': we seem to enjoy stories, and we seem to want to remember stories for their own sake.</ref>}}

===Part one: Umberto Eco's antilibrary, or how we seek validation=== In the first chapter, the Black Swan theory is first discussed in relation to Taleb's coming of age in the Levant. The author then elucidates his approach to historical analysis. He describes history as opaque, essentially a black box of cause and effect. One sees events go in and events go out, but one has no way of determining which produced what effect. Taleb argues this is due to ''The Triplet of Opacity'' (an illusion of understanding in which we think we understand a complicated world).<ref>{{harvnb|Taleb|2007}} PROLOGUE p8.</ref><ref>{{cite book|url=https://books.google.com/books?id=NSScAQAAQBAJ&pg=PA39|title=National Security Through a Cockeyed Lens: How Cognitive Bias Impacts U.S. Foreign Policy|last=Yetiv|first=Steve A.|publisher=Johns Hopkins University Press|year=2013|page=39|isbn=9781421411255}}</ref>

The second chapter discusses a neuroscientist named Yevgenia Nikolayevna Krasnova, who rejects the distinction between fiction and nonfiction, and her book ''A Story of Recursion''. She published her book on the web and was discovered by a small publishing company; they published her unedited work and the book became an international bestseller. The small publishing firm became a big corporation, and Krasnova became famous. But her next book fails. So, she experienced two black swans.<ref>{{cite book|url=https://books.google.com/books?id=km8A81WgIN4C&pg=PA49|title=Fundamentals of Enterprise Risk Management: How Top Companies Assess Risk, Manage Exposure, and Seize Opportunity|last=Hampton|first=John|page=49|publisher=AMACOM|year=2009|isbn=9780814414934}}</ref> The book goes on to reveal that the so-called author is a work of fiction, based in part on Taleb.<ref>{{cite web|url=https://www.linkedin.com/pulse/yevgenia-krasnova-prophetical-gem-black-swan-arthur-li-imba-c-msc|title=Yevgenia Krasnova – the Gem of a Black Swan|last=Li|first=Arthur|publisher=LinkedIn Pulse|date=December 21, 2016|access-date=December 20, 2020}}</ref>

The third chapter introduces the concepts of ''Extremistan'' and ''Mediocristan''.<ref>{{cite journal|url=https://philosophynow.org/issues/69/Nassim_Nicholas_Taleb|title=Interview: Nassim Nicholas Taleb|last=Sandis|first=Constantine|journal=Philosophy Now|issue=69|date=August 25, 2014|access-date=December 20, 2020}}</ref> He uses them as guides to define the predictability of the environment one is studying. ''Mediocristan'' environments can safely use Gaussian distribution. In ''Extremistan'' environments, a Gaussian distribution should be used at one's own peril.<ref>{{cite web|url=http://blogs.reuters.com/felix-salmon/2009/08/23/the-flaw-of-averages/|archive-url=https://web.archive.org/web/20090827003811/http://blogs.reuters.com/felix-salmon/2009/08/23/the-flaw-of-averages/|url-status=dead|archive-date=August 27, 2009|title=The Flaw of Averages|last=Salmon|first=Felix|publisher=Reuters blogs|date=August 23, 2009|access-date=December 20, 2020}}</ref> In this part he quotes Benoit Mandelbrot and his critique of the Gaussian distribution.<ref>{{cite journal|last=Davies|first=Will|url=http://www.oxonianreview.org/wp/all-in-a-flap-beware-unknown-unknowns/|archive-url=https://web.archive.org/web/20110528053009/http://www.oxonianreview.org/wp/all-in-a-flap-beware-unknown-unknowns/|url-status=usurped|archive-date=May 28, 2011|title=All in a Flap: Beware of Unknown Unknowns|journal=Oxonian Review|issue=3|date=June 15, 2007|volume=6 |access-date=December 20, 2020}}</ref> {{Unreliable source?|date=September 2022}}

Chapter four brings together the topics discussed earlier into a narrative about a turkey before Thanksgiving who is fed and treated well for many consecutive days, only to be slaughtered and served as a meal. Taleb uses it to illustrate the philosophical problem of induction and how past performance is no indicator of future performance.<ref>{{cite book|url=https://books.google.com/books?id=0DhRDAAAQBAJ&pg=PA88|title=Strategic Thinking in Complex Problem Solving|page=88|last=Chevallier|first=Arnaud|publisher=Oxford University Press|year=2016|isbn=9780190463908}}</ref> He then takes the reader into the history of skepticism.

In chapter nine, Taleb outlines the multiple topics he previously has described and connects them as a single basic idea. In chapter thirteen, the book discusses what can be done regarding "epistemic arrogance", which occurs whenever people begin to think they know more than they actually do.<ref>{{cite book|url=https://books.google.com/books?id=nQOrCQAAQBAJ&pg=PA34|title=Prudent Decision Making in an Imprudent World: Better Decisions at Home and Work: Better Decisions at Home and Work|page=34|last=Gould|first=Patrick|publisher=ABC-Clio|year=2009|isbn=9780313372322}}</ref> He recommends avoiding unnecessary dependence on large-scale harmful predictions, while being less cautious with smaller matters, such as going to a picnic. He makes a distinction between the American cultural perception of failure versus European and Asian stigma and embarrassment regarding failure: the latter is more tolerable for people taking small risks. He also describes the "barbell strategy" for investment that he used as a trader, which consists in avoiding medium risk investments and putting 85–90% of money in the safest instruments available and the remaining 10–15% on extremely speculative bets.<ref>{{cite web|url=https://www.forbes.com/forbes/2011/0627/money-guide-11-spitznagel-black-swan-cnbc-protect-tail.html|title=Protect Your Tail|work=Forbes|last=Farrell|first=Maureen|date=June 8, 2011|access-date=December 20, 2020}}</ref><ref>{{cite web|url=https://www.forbes.com/sites/bryancollinseurope/2018/08/23/why-you-should-prepare-for-disaster-and-how-to-do-it/|title=Why You Should Prepare For Disaster (And How To Do It)|last=Collins|first=Bryan|work=Forbes|date=August 23, 2018|access-date=December 20, 2020}}</ref>

==Argument== The term ''black swan'' was a Latin expression: its oldest reference is in the poet Juvenal's expression that "a good person is as rare as a black swan" ("''{{lang|la|rara avis in terris nigroque simillima cygno}}''", 6.165).<ref>{{Cite journal|url=https://www.jstor.org/stable/294875|doi=10.2307/294875|jstor=294875|title=The Origin of Etruscan tusna ("Swan")|journal=American Journal of Philology|volume=105|issue=2|year=1984|last=Puhvel|first=J.|pages=209–212 |url-access=subscription}}</ref> It was a common expression in 16th century London, as a statement that describes impossibility, deriving from the old world presumption that 'all swans must be white', because all historical records of swans reported that they had white feathers.<ref>{{cite web|last=Taleb|first=Nassim Nicholas|url=http://fooledbyrandomness.com/notebook.htm |title=Opacity: What We Do Not See |publisher=Fooledbyrandomness.com |access-date=2010-10-01}}</ref> Thus, the black swan is an oft cited reference in philosophical discussions of the improbable. Aristotle's "Prior Analytics" is the most likely original reference that makes use of example syllogisms involving the predicates "white", "black", and "swan." More specifically, Aristotle uses the white swan as an example of necessary relations and the black swan as improbable. This example may be used to demonstrate either deductive or inductive reasoning; however, neither form of reasoning is infallible, since in inductive reasoning, the premises of an argument may support a conclusion, but do not ensure it, and similarly, in deductive reasoning, an argument is dependent on the truth of its premises. That is, a false premise may lead to a false result and inconclusive premises also will yield an inconclusive conclusion. The limits of the argument behind "all swans are white" is exposed—it merely is based on the limits of experience (e.g., that every swan one has seen, heard, or read about is white). The point of this metaphor is that all known swans were white until the discovery of black swans in Australia.<ref>{{cite book|url=https://books.google.com/books?id=UCjEjj80RQUC&pg=PA151|title=An Aristotelian Account of Induction: Creating Something from Nothing|page=151|last=Groarke|first=Louis|publisher=McGill–Queen's University Press|year=2009|isbn=9780773535954|issn=0711-0995}}</ref> Hume's attack against induction and causation is based primarily on the limits of everyday experience and so too, the limitations of scientific knowledge.

==Reception== The book has been described by ''The Sunday Times'' as one of the twelve most influential books since World War II.<ref name="STimes">{{cite news|author-link=Bryan Appleyard|last=Appleyard |first=Bryan|url-access=subscription|url=https://www.thetimes.com/comment/register/article/books-that-helped-to-change-the-world-qbhxgvg2kwh |title=Books that helped to change the world|work=The Sunday Times|date=2009-07-19}}</ref> As of December 2020, it has been cited approximately 10,633 times, 9,000 of which are for the English-language edition.<ref>{{cite web|url=https://scholar.google.com/citations?user=64BtMdsAAAAJ&hl=en|title=Nassim Nicholas Taleb|publisher=Google Scholar|access-date=December 20, 2020}}</ref> The book spent 36 weeks on the ''New York Times'' Best Seller List;<ref>{{cite web|url=https://www.bloomberg.com/news/articles/2011-02-24/charlie-rose-talks-to-nassim-taleb|title=Charlie Rose Talks to Nassim Taleb|last=Rose|first=Charlie|publisher=Bloomberg News|date=February 24, 2011|access-date=December 20, 2020}}</ref> 17 as hardcover and 19 weeks as paperback.<ref>{{cite news|url=https://www.nytimes.com/best-sellers-books/2011-01-16/paperback-nonfiction/list.html |newspaper=The New York Times |first=Jennifer |last=Schuessler |title=Paperback Nonfiction|date=January 16, 2011|access-date=December 20, 2020}}</ref> It was published in 32 languages.<ref>{{cite book|title=The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility"|first=Nassim Nicholas|last=Taleb|date=11 May 2010|publisher=Random House Trade Paperbacks|isbn=978-0812973815 }}</ref>

Mathematics professor David Aldous argued that "Taleb is sensible (going on prescient) in his discussion of financial markets and in some of his general philosophical thought, but tends toward irrelevance or ridiculous exaggeration otherwise."<ref>{{cite journal|url=http://www.stat.berkeley.edu/~aldous/157/Books/taleb.html|author=David Aldous|author-link=David Aldous|journal=Notices of the American Mathematical Society|issue=March|year=2011|pages=427–413|title=A critical review of Taleb, Nassim Nicholas. ''The Black Swan: The Impact of the Highly Improbable''}}</ref> Gregg Easterbrook wrote a critical review of ''The Black Swan'' in the ''New York Times''<ref>{{cite news|url=https://www.nytimes.com/2007/04/22/books/review/Easterbrook.t.html|newspaper=The New York Times |first=Gregg |last=Easterbrook |title=Possibly Maybe |date=April 22, 2007|access-date=December 20, 2020}}</ref> to which Taleb replied with a list of logical errors, blaming Easterbrook for not having read the book.<ref>{{cite web|url=http://www.fooledbyrandomness.com/easterbrook.pdf|title=Abbreviated List of Factual and Logical Mistakes in Gregg Easterbrook's Review of The Black Swan in ''The New York Times''|author=Nassim Nicholas Taleb|website=Fooledbyrandomness.com|access-date=November 5, 2017}}</ref> Giles Foden, writing for ''The Guardian'' in 2007, described the book as insightful, but facetiously written, saying that Taleb's "dumbed-down" style was a central problem, especially in comparison to his earlier book, ''Fooled by Randomness''.<ref>{{cite news|last1=Foden|first1=Giles|author-link1=Giles Foden|title=Stuck in Mediocristan|url=https://www.theguardian.com/books/2007/may/12/society|access-date=7 January 2015|newspaper=The Guardian|date=12 May 2007}}</ref> The Nobel Prize–winning psychologist Daniel Kahneman wrote "''The Black Swan'' changed my view of how the world works" and explains the influence in his own 2011 book ''Thinking, Fast and Slow''.

==See also== * Antifragility * Apophasis * Baryon asymmetry * Benoit Mandelbrot<ref>The Black Swan was dedicated to Mandelbrot.</ref><ref>{{cite magazine|url=http://www.time.com/time/magazine/article/0,9171,2026995,00.html#ixzz2EgXRffvg|archive-url=https://web.archive.org/web/20101026142615/http://www.time.com/time/magazine/article/0,9171,2026995,00.html#ixzz2EgXRffvg|url-status=dead|archive-date=October 26, 2010|title=Benoît Mandelbrot|first=Nassim Nicholas|last=Taleb|author-link=Nassim Nicholas Taleb|date=1 November 2010|magazine=Time|access-date=5 November 2017}}</ref> * Black swan emblems and popular culture * Cognitive bias * Confirmation bias * Efficient-market hypothesis * Falsifiability * Illusory correlation * Raven paradox * Sextus Empiricus

==Notes== {{Reflist}}

==References== * {{Citation | first = Nassim Nicholas | last = Taleb | author-link = Nassim Nicholas Taleb | title = The Black Swan: The Impact of the Highly Improbable | year = 2007 | publisher = Random House | isbn = 978-1400063512 | url-access = registration | url = https://archive.org/details/blackswanimpacto00tale }}

==External links== * [http://www.fooledbyrandomness.com Author's website] * [http://www.fooledbyrandomness.com/glossary.pdf Black Swan Glossary] * [https://web.archive.org/web/20081221082332/http://www.fhi.ox.ac.uk/teaching%20and%20posters/MT07/LudicFallacy.ppt Slideshow lecture explaining the Ludic Fallacy with clarity By Peter Taylor of Oxford University]. * [http://www.econtalk.org/archives/2007/04/taleb_on_black.html Nassim Taleb podcast interview on The Black Swan]. * [https://www.youtube.com/watch?v=BDbuJtAiABA YouTube Video Explanation] *[https://www.c-span.org/program/after-words/nassim-taleb/180126 ''After Words'' interview with Taleb on ''The Black Swan'', September 22, 2007]

{{Nassim Nicholas Taleb}}

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{{DEFAULTSORT:Black Swan}} Category:2007 non-fiction books Category:Books by Nassim Nicholas Taleb Category:Contemporary philosophical literature Category:Epistemology books