Black swans a critique
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A critique of Nassim Nicholas Taleb's concepts of the black swan event and antifragility.
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Black swans a critique
- 1. WHY BLACK SWANS DO NOT EXIST IN DISASTER RISK REDUCTION a critique of Nassim Nicholas Taleb's theory Prof. David Alexander
- 2. THE CONCEPT
- 3. Europeans believed that all swans were white until they went to Australia and saw a black one. It was a totally unpredicted discovery. No theory or tendency pointed towards the existence of swans of a different colour.
- 4. The black swan: an extreme outlier Black swan theory - Nassim Nicholas Taleb (b. 1960), Lebanese-American economist
- 5. "The central idea in The Black Swan is that rare events cannot be estimated from empirical observation because they are rare." - Nassim Nicholas Taleb
- 6. "We know from chaos theory that even if you had a perfect model of the world, you would need infinite precision in order to predict future events. With sociopolitical or economic phenomena, we do not have anything like that." - Nassim Nicholas Taleb
- 7. Concerning his intellectual abilities, Taleb has been the subject of supercharged hype. Closer analysis shows that his ideas have merit but should not be accepted unquestioningly.
- 8. He is fond of aphorisms which, if they are apposite, are distilled wisdom, and, if they are not, are misleading oversimplifications.
- 9. In disaster risk reduction, the use of scenario methods enables us to combine elements from past disasters with forecasts of future developments. Very few impacts in the future will be entirely unanticipated.
- 10. Conventionally, we have used a Gaussian ('normal') distribution of magnitude versus frequency: many small events have little effect and so do few large events. The greatest problem is with medium events, perhaps with a frequency of once in ten years.
- 11. Falling hazard probability Rising vulnerability Optimum mitigation level? 'Fat-tailed' (negatively skewed) distribution Magnitude Frequency EXTREME EVENTS MAY BE MORE LIKELY THAN PREDICTED UNDER A GAUSSIAN DISTRIBUTION
- 12. ECONOMICS
- 13. DISASTER Destruction damage casualties CAPITAL LABOUR (fast) reformation (slower) repopulation temporary boom in employment Reconstruction Recovery capital displaces labour unemployment and social consequences Slump
- 15. "The track record of economists in predicting events is monstrously bad. It is beyond simplification; it is like medieval medicine." - Nassim Nicholas Taleb
- 16. ANTIFRAGILITY
- 17. vere magnum habere in se fragilitatem hominis ac securitatem Dei It is a sign of true greatness to have the fragility of a man together with the self- confidence of a god. Lucius Annaeus Seneca, 4BC - AD65
- 18. Fragility, from the Latin fragilitas, is the quality of being easily broken. For the inanimate world, a fragile material is one that is liable to be damaged or destroyed. If it lacks an adequately robust structure, it can be described as weak: if by its very nature it lacks resistance to applied forces, it can be termed delicate.
- 19. MATERIALS SCIENCE • physics, chemistry • engineering ENVIRONMENTAL ISSUES • climate change adaptation • global change • sustainability • disaster risk reduction PHILOSOPHY • precariousness of the human condition ECONOMICS • risk of financial collapse POLITICAL SCIENCE • fragile states FRAGILITY PSYCHOLOGY • precarious self-image macroscopic microscopic The concept of fragility has at least six dimensions
- 20. "When you ask people, 'What's the opposite of fragile?,' they tend to say robust, resilient, adaptable, solid, strong. That's not it. The opposite of fragile is something that gains from disorder." - Nassim Nicholas Taleb Antifragility - systems exhibit an ability to benefit and grow from volatility.
- 21. "We humans, facing limits of knowledge, and things we do not observe, the unseen and the unknown, resolve the tension by squeezing life and the world into crisp commoditized ideas". - Nassim Nicholas Taleb, The Bed of Procrustes
- 22. CONCLUSION
- 23. Economics is an exceptionalist discipline, one whose ideas cannot be transferred easily to other disciplines, even within the social sciences.
- 24. Self-condemnation? "Being an economist is the least ethical profession, closer to charlatanism than any science." - Nassim Nicholas Taleb "A good maxim allows you to have the last word without even starting a conversation." - Nassim Nicholas Taleb
- 25. "If you give advice, you need to be exposed to losses from it." Taleb, Commencement Address, American University of Beirut, 2016
- 26. The problem is not Taleb and his ideas, but their unquestioning acceptance by people who would rather follow them than think.
- 27. "Failure saves lives. In the airline industry, every time a plane crashes the probability of the next crash is lowered by that. The Titanic saved lives because we're building bigger and bigger ships. So these people died, but we have effectively improved the safety of the system, and nothing failed in vain." - Nassim Nicholas Taleb In systemic terms, the wreck of the Costa Concordia in 2012 was a rerun of the wreck of the Titanic.
- 28. Rare, exceptionally large events are not unpredictable, and neither are their consequences. Each element of an exceptional disaster has occurred before. The combination is unique, but the elements and their antecedents are not.
- 29. I fear that in disaster risk reduction the black swan may be extinct and its ecological niche may be occupied by the red herring.
- 30. DISASTER POLITICS ECONOMICS SOCIAL CONDITIONS PHYSICAL IMPACT Politics in the service of economics VULNERABILITY knowledge is ideology Complexity Ideology • extremism • separatism • isolationism • exclusion • austerity Conflict Climate change Demographic change • human mobility Culture Underlying risk drivers [x]