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This is what Nassim Nicholas Taleb has been writing books about. He calls them black swan events, because if you took a sample of 1000 swans, chances are you'd

This is what Nassim Nicholas Taleb has been writing books about. He calls them black swan events, because if you took a sample of 1000 swans, chances are you'd conclude that all swans are white, but it just isn't so. People tend to round down the probability of very rare events to zero, even when the upside of them is small and the downside is catastrophically bad. Examples: the 2008 housing crisis, Fukushima, and our current supply chain problems.

stevage 5y ago
It's such an annoying metaphor for those of us who live in a country where all swans are black.
- pessimizer 5y ago
  It's an annoying metaphor anyway. If you've defined a swan as a particular type of white bird, it's impossible for a black swan to ever come. "Black swan" is just a tautological term for new thing we've never seen before, but pretending to be a term for known thing that suddenly behaved differently. Sometimes things happen that, in order to make money or cut costs, we convinced people were impossible.
  - tshaddox 5y ago
    > "Black swan" is just a tautological term for new thing we've never seen before, but pretending to be a term for known thing that suddenly behaved differently. Right. "Black swan" means "a new thing we've never seen before," but of course few people go around thinking "I will never encounter a new thing that I've never seen before."
dan-robertson 5y ago
Maybe you’re right but I don’t see why this addresses the reply to (at least when I loaded it) the first comment on the post which claims the same thing and is disagreed with by the author.
CobrastanJorji 5y ago
If you get to the end of the article, the author explains why black swan events are not what he is talking about.
scoofy 5y ago
These are NOT black swan events. These are probably all White Swan events (possibly grey swan events, but i'd have to review stuff that i don't want to right now). E.g. High certainty, just low predictability. From the book, when you know the statistics of a rare event, and then the even occurs, it's absolutely not a black swan event. For an event to be a Black Swan event, you literally need to have no possibly for the event in your deductive framework (e.g. the problem of induction which is what the book is actually about). In every single one of these examples, the possibly of the event occurring is accepted by everyone. This is why Taleb lost his mind when people started calling the Covid Pandemic a "black swan event," which it was absolutely not. We know pandemics happen, we know about what power law they happen at. The fact we were not prepared at all is a problem of not being prepared for something we know will happen with certainty. https://medium.com/incerto/corporate-socialism-the-government-is-bailing-out-investors-managers-not-you-3b31a67bff4a https://medium.com/incerto/corporate-socialism-the-governmen...
- PaulHoule 5y ago
  When I was doing a postdoc in Germany I would go eat mushrooms in Amsterdam and have the same trip about "exceptional events" over and over again. Than Taleb wrote that book and I wished I'd written something about "exceptional events". Then Taleb just coasted, drifted and became irrelevant.
  - scoofy 5y ago
    Lol, sure, starting Universa after basically inventing tail-risk trading strategies is definitely "becoming irrelevant."
- XorNot 5y ago
  We know pandemics happen but we have no idea which viruses will become pandemic viruses - until one emerges, we're generally confident that there is not an imminent pandemic.
  - lolc 5y ago
    After SARS and MERS, the risk of another coronavirus-outbreak was well established.
ppsreejith 5y ago
IIRC, a black swan event highlights the problem of induction when there is _no_ prior event that you can use to learn from. Eg: humans thought all swans were white until the first black swan was encountered. So not just exceedingly rare but outside what you know AND extremely rare. Eg: Neither the housing crisis, Fukushima, supply chain crisis, nor the pandemic are black swans (they were seen before and was predicted/theorised) but the internet is.
NewEntryHN 5y ago
I think it's what he calls "fat tails" : events happening at low frequency at the tail of the probability distribution, but which have a significant impact.
eclat 5y ago
Not black swans but another and related topic he writes about called ergodicity.

stevage 5y ago

It's such an annoying metaphor for those of us who live in a country where all swans are black.

pessimizer 5y ago
It's an annoying metaphor anyway. If you've defined a swan as a particular type of white bird, it's impossible for a black swan to ever come. "Black swan" is just a tautological term for new thing we've never seen before, but pretending to be a term for known thing that suddenly behaved differently. Sometimes things happen that, in order to make money or cut costs, we convinced people were impossible.
- tshaddox 5y ago
  > "Black swan" is just a tautological term for new thing we've never seen before, but pretending to be a term for known thing that suddenly behaved differently. Right. "Black swan" means "a new thing we've never seen before," but of course few people go around thinking "I will never encounter a new thing that I've never seen before."

dan-robertson 5y ago

Maybe you’re right but I don’t see why this addresses the reply to (at least when I loaded it) the first comment on the post which claims the same thing and is disagreed with by the author.

CobrastanJorji 5y ago

If you get to the end of the article, the author explains why black swan events are not what he is talking about.

scoofy 5y ago

These are NOT black swan events. These are probably all White Swan events (possibly grey swan events, but i'd have to review stuff that i don't want to right now). E.g. High certainty, just low predictability. From the book, when you know the statistics of a rare event, and then the even occurs, it's absolutely not a black swan event. For an event to be a Black Swan event, you literally need to have no possibly for the event in your deductive framework (e.g. the problem of induction which is what the book is actually about). In every single one of these examples, the possibly of the event occurring is accepted by everyone. This is why Taleb lost his mind when people started calling the Covid Pandemic a "black swan event," which it was absolutely not. We know pandemics happen, we know about what power law they happen at. The fact we were not prepared at all is a problem of not being prepared for something we know will happen with certainty. https://medium.com/incerto/corporate-socialism-the-government-is-bailing-out-investors-managers-not-you-3b31a67bff4a https://medium.com/incerto/corporate-socialism-the-governmen...

PaulHoule 5y ago
When I was doing a postdoc in Germany I would go eat mushrooms in Amsterdam and have the same trip about "exceptional events" over and over again. Than Taleb wrote that book and I wished I'd written something about "exceptional events". Then Taleb just coasted, drifted and became irrelevant.
- scoofy 5y ago
  Lol, sure, starting Universa after basically inventing tail-risk trading strategies is definitely "becoming irrelevant."
XorNot 5y ago
We know pandemics happen but we have no idea which viruses will become pandemic viruses - until one emerges, we're generally confident that there is not an imminent pandemic.
- lolc 5y ago
  After SARS and MERS, the risk of another coronavirus-outbreak was well established.

ppsreejith 5y ago

IIRC, a black swan event highlights the problem of induction when there is _no_ prior event that you can use to learn from. Eg: humans thought all swans were white until the first black swan was encountered. So not just exceedingly rare but outside what you know AND extremely rare. Eg: Neither the housing crisis, Fukushima, supply chain crisis, nor the pandemic are black swans (they were seen before and was predicted/theorised) but the internet is.

NewEntryHN 5y ago

I think it's what he calls "fat tails" : events happening at low frequency at the tail of the probability distribution, but which have a significant impact.

eclat 5y ago

Not black swans but another and related topic he writes about called ergodicity.