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A review by brughiera
The Black Swan: Second Edition: The Impact of the Highly Improbable: With a New Section: On Robustness and Fragility by Nassim Nicholas Taleb
4.0
The original version of this book was published in 2007, so I have "discovered" the black swan thesis very late and am unlikely to add anything new in this review. However, I would not discourage others from picking up this book at this late stage, particularly if they have some superficial idea about black swans and the impact of highly improbable events, as Taleb convincingly substantiates his thesis.
I am one of Taleb's betes noires - an economist - although I would prefer to consider myself an "intelligent, curious, open-minded amateur" as i am certainly no econometrician. Indeed, having studied economics when Samuelson, and his British counterpart Lipsey, provided the standard textbooks and having suffered introductory courses on statistics emphasizing regression, standard deviations and probability distributions, I found Taleb's destruction of the Gaussian bell curve eminently satisfying. While Taleb's style is polemical and aggressive, he does back up his arguments with mathematics as well as philosophy.
The main clarifying factor underlying the black swan thesis is the division of the world into Mediocristan and Extremistan. As Taleb explains, the majority of economists, planners and financiers act as if the world were consistently the former, their tools are developed for and appropriate to Mediocristan and therefore incapable of dealing with the black swans characteristic of Extremistan. The reiterated point of no evidence of an extreme event being distinct from evidence of no extreme event is very relevant here.
This second edition contains a postscript wherein Taleb, after dealing with some of the issues arising from the initial reception of his book, pursues further the notion of fragility in the "fourth quadrant" and the scope for enhancing robustness to negative black swans. As he rather wistfully notes, people much prefer an action programme to recommendations for preventive action against essentially unforeseeable events. Yet the financial crisis of 2008, which vindicated the black swan thesis, surely provides the grounds for continuing to listen to this unpopular prophet.
I am one of Taleb's betes noires - an economist - although I would prefer to consider myself an "intelligent, curious, open-minded amateur" as i am certainly no econometrician. Indeed, having studied economics when Samuelson, and his British counterpart Lipsey, provided the standard textbooks and having suffered introductory courses on statistics emphasizing regression, standard deviations and probability distributions, I found Taleb's destruction of the Gaussian bell curve eminently satisfying. While Taleb's style is polemical and aggressive, he does back up his arguments with mathematics as well as philosophy.
The main clarifying factor underlying the black swan thesis is the division of the world into Mediocristan and Extremistan. As Taleb explains, the majority of economists, planners and financiers act as if the world were consistently the former, their tools are developed for and appropriate to Mediocristan and therefore incapable of dealing with the black swans characteristic of Extremistan. The reiterated point of no evidence of an extreme event being distinct from evidence of no extreme event is very relevant here.
This second edition contains a postscript wherein Taleb, after dealing with some of the issues arising from the initial reception of his book, pursues further the notion of fragility in the "fourth quadrant" and the scope for enhancing robustness to negative black swans. As he rather wistfully notes, people much prefer an action programme to recommendations for preventive action against essentially unforeseeable events. Yet the financial crisis of 2008, which vindicated the black swan thesis, surely provides the grounds for continuing to listen to this unpopular prophet.