You are here:   Reputations >  Overrated > Overrated: Nassim Nicholas Taleb


You cannot know the chance of very unlikely events by observing how often they occur. They do not occur often enough for that. But you can still sometimes know their probability. For example, we know that the probability of 100 consecutive coin tosses landing heads is 1/2100, not because we have seen this happen, but because we know that the probability of each toss landing heads is 1/2.

For many other improbable events, however, the matter is not so simple. Not only are they too rare to observe their long-run frequency, but we do not understand their underlying causes well enough. For example, because the causes of weather and of economic events are so varied and complicated in their interactions, meteorology and economics remain inexact sciences, unable to tell us the chances of unlikely, extreme events. 

And because we humans are inclined to certain errors of reasoning, such as seeing patterns where there are none and underestimating the chance of things we have not previously seen, we get shafted by unlikely events more often than is strictly necessary.

This is a short version of The Black Swan, the 2007 best-seller by Nassim Nicholas Taleb, a (now) 50-year-old Lebanese former investment banker. His Fooled by Randomness, published in 2001, explored similar themes. But it did not enjoy the same success because its timing was not as good: Black Swan was published during a financial crisis that Taleb had predicted. 

He was quickly propelled to stardom. Bryan Appleyard described him in the Sunday Times as "the hottest thinker in the world". He has since added a post at Oxford University's Said Business School to his position at the Polytechnic Institute of New York University, and he is in great demand on the speaking circuit. 

It is ironic that Taleb should be credited with genius on account of the coincidence of Black Swan's publication with a financial crisis he had predicted. It displays exactly the kind of erroneous thinking that he complains of. If the financial crisis were an unlikely "black swan" event of the kind that Taleb discusses, then he could not have known its probability.

Taleb's central hypothesis in Black Swan is right. But it is simple and worth only a chapter rather than an entire book. Taleb inflates its significance with an absurdly combative and grandiose writing style. It is Taleb versus the corrupt fools of the financial establishment; Taleb versus the false mathematical rigour of the academy; Taleb returning us to the wisdom of the ages.

View Full Article
November 9th, 2014
10:11 PM
"If the financial crisis were an unlikely "black swan" event of the kind that Taleb discusses, then he could not have known its probability." What? You can still calculate the probability, a black swan is a multi-standard deviation event. Author is obviously not mathematically inclined, not understands statistics very well.

April 23rd, 2014
4:04 PM
Idiotic. Even if you have tossed the coin 100 times the probability of the next throw is 1/2 even if the previous 100 were all heads, and that's not accounting for dropping the coin down a drain or suffering a sudden aneurism as a result of living in your left brain instead of the messy dynamic real world. - Doing some maths about what's likely to happen next does not tell you what will happen next. The more we build upon blocks of false certainty based on conceptual models the more a collapse is inevitable - the point of the book to some degree is that the collapse ws not a black swan - it was entirely predictable because we live in a world full of people like you lot - conditioned by Acadaemia you make the world static, certain and simple to fit into your reductive categories of comple equivalence. I think you missed the point spectacularly.

Marty Brandon
February 23rd, 2014
3:02 PM
I'd just finished the first two chapters of the The Black Swan, and had a growing feeling of nauseating postmodernism. Thanks to this article and the video link posted by Fabian, I believe I can skip the rest of the book. Thank you both for saving me a bit of time.

January 26th, 2014
11:01 PM
Uh, why is Taleb's distinction between risk and uncertainty being attributed to him? University of Chicago economist Frank Knight worked all of this out, and quite famously, back in the 1920's.

Pallab Basu
October 31st, 2013
6:10 AM
Whyte defending science is like pope defending Islam. Whyte does not have a clue on how scientific method works and why Taleb is against economics. It is very common for scientists to fall into "action bias", where people overdo things to think they are improving situation, when in reality nothing is chaning. However with all its error and biases, modern science is a self-correcting data-driven mechine, which improves over time. An economists can hardly say the same for his subject.

October 25th, 2013
12:10 PM
I have read both the book by Taleb and some of the popular writings of Jamie Whyte. I am connsiderably more impressed by Taleb than Whyte, though can undertsand why some might find Taleb's style not to their tastes. He uses wide-ranging analogies in a popular book, some of which can be misconstrued or are obscure. However,Taleb's argument is considerably more subtle than Jamie Whyte seems to appreciate. It is partly spelled out in The Black Swan but more explicit in Fooled by Randomness. The idea of a 'black swan' is an event which comes out of nowhere and proves that our previous model of the world was false. That their should be such things is a severe challenge to the methods used in financial markets, where practitioners use statistical models of financial behaviour and estimate the parameters based on past observations. This is a perfectly valid approach, argues Taleb, if whatever is being nmodelled follows a process that can be approximated to the Normal distribution. A great many phenomena can but Taleb argues, extremely convincingly that others cannot. Crucially, it is not possible to determine the parameters of the distribution however many observations one takes as one single 'black swan' changes everything. Taleb then explains why such distributions exist, the mathematics of them and how they relate to the real world. It seems clear to me that Jamie Whyte has no appreciation of this-hence his review. As an aside, I have read some of Whytes popular articles where he touts the merits of a philosophical approach to real world problems. I was impressed as they seemed an excellent parody of eroneous reasoning.After a while, it dawned on me that,far from being works of comedy, Whyte was for real. Reviews are of course subjective, but I feel Taleb is more worthy of detaile reading.

Mark Tsomondo
April 24th, 2013
10:04 PM
Taleb is courageously onto "something" that eludes, and perhaps now, offends, guru prognostications and prescriptions. He warns us not to be suckers for naive economic rationalizations, including new high-sounding sophistry. In my view, Taleb is a rare thought-democrat, a naked philosopher, when it comes to the appreciation of diverse and often "unpublishable" native knowledge systems, including Brooklyn Fat Tony's wisdom. Not many Geologists that I have met are comfortable with the idea that over 80% of what became the largest gold mines in Zimbabwe were founded on sites of pre-colonial mining by "native" people, who, un-enamoured by geological theory, went about the practice of discovering and mining gold for trade to fend off hunger. Taleb would acknowledge this pay-off of exchanging gold for food.

November 26th, 2012
4:11 PM
I wholeheartedly agree with the author's sentiment. Just listen to Taleb's 5 minute stream of bullshit at the said conference in Mexico: - it is painful...

November 25th, 2012
11:11 AM
For Jamie Whyte to take someone to task for vanity really is Black Kettle rather than Black Swan

November 24th, 2012
7:11 PM
Taleb does not argue that the financial crisis was a black swan. He maintains it was entirely predictable (just a matter of when, not if). But of course, he's arrogant. Let's count a management consultant to provide insight; that's surely a genius move.

Post your comment

This question is for testing whether you are a human visitor and to prevent automated spam submissions.