The Black Swan: The Impact of the Highly Improbable

FIGURE 5

We look at a broader scale. Hey, other models also fit it rather well.

FIGURE 6

And the real “generating process” is extremely simple but it had nothing to do with a linear model! Some parts of it appear to be linear and we are fooled by extrapolating in a direct line. [38]

So not only can the past be misleading, but there are also many degrees of freedom in our interpretation of past events.

For the technical version of this idea, consider a series of dots on a page representing a number through time – the graph would resemble Figure 1 showing the first thousand days in Chapter 4. Let’s say your high school teacher asks you to extend the series of dots. With a linear model, that is, using a ruler, you can run only a straight line, a single straight line from the past to the future. The linear model is unique. There is one and only one straight line that can project from a series of points. But it can get trickier. If you do not limit yourself to a straight line, you find that there is a huge family of curves that can do the job of connecting the dots. If you project from the past in a linear way, you continue a trend. But possible future deviations from the course of the past are infinite.

This is what the philosopher Nelson Goodman called the riddle of induction: We project a straight line only because we have a linear model in our head – the fact that a number has risen for 1,000 days straight should make you more confident that it will rise in the future. But if you have a nonlinear model in your head, it might confirm that the number should decline on day 1,001.

Let’s say that you observe an emerald. It was green yesterday and the day before yesterday. It is green again today. Normally this would confirm the “green” property: we can assume that the emerald will be green tomorrow. But to Goodman, the emerald’s color history could equally confirm the “grue” property. What is this grue property? The emerald’s grue property is to be green until some specified date, say, December 31, 2006, and then blue thereafter.

The riddle of induction is another version of the narrative fallacy – you face an infinity of “stories” that explain what you have seen. The severity of Goodman’s riddle of induction is as follows: if there is no longer even a single unique way to “generalize” from what you see, to make an inference about the unknown, then how should you operate? The answer, clearly, will be that you should employ “common sense”, but your common sense may not be so well developed with respect to some Extremistan variables.

THAT GREAT ANTICIPATION MACHINE

The reader is entitled to wonder, So, NNT, why on earth do we plan? Some people do it for monetary gain, others because it’s “their job”. But we also do it without such intentions – spontaneously.

Why? The answer has to do with human nature. Planning may come with the package of what makes us human, namely, our consciousness.

There is supposed to be an evolutionary dimension to our need to project matters into the future, which I will rapidly summarize here, since it can be an excellent candidate explanation, an excellent conjecture, though, since it is linked to evolution, I would be cautious.

The idea, as promoted by the philosopher Daniel Dennett, is as follows: What is the most potent use of our brain? It is precisely the ability to project conjectures into the future and play the counterfactual game – “If I punch him in the nose, then he will punch me back right away, or, worse, call his lawyer in New York”. One of the advantages of doing so is that we can let our conjectures die in our stead. Used correctly and in place of more visceral reactions, the ability to project effectively frees us from immediate, first-order natural selection – as opposed to more primitive organisms that were vulnerable to death and only grew by the improvement in the gene pool through the selection of the best. In a way, projecting allows us to cheat evolution: it now takes place in our head, as a series of projections and counterfactual scenarios.

This ability to mentally play with conjectures, even if it frees us from the laws of evolution, is itself supposed to be the product of evolution – it is as if evolution has put us on a long leash whereas other animals live on the very short leash of immediate dependence on their environment. For Dennett, our brains are “anticipation machines”; for him the human mind and consciousness are emerging properties, those properties necessary for our accelerated development.

Why do we listen to experts and their forecasts? A candidate explanation is that society reposes on specialization, effectively the division of knowledge. You do not go to medical school the minute you encounter a big health problem; it is less taxing (and certainly safer) for you to consult someone who has already done so. Doctors listen to car mechanics (not for health matters, just when it comes to problems with their cars); car mechanics listen to doctors. We have a natural tendency to listen to the expert, even in fields where there may be no experts.

Chapter Twelve: EPISTEMOCRACY, A DREAM

This is only an essay – Children and philosophers vs. adults and nonphilosophers – Science as an autistic enterprise – The past too has a past – Mispredict and live a long, happy life (if you survive)

Someone with a low degree of epistemic arrogance is not too visible, like a shy person at a cocktail party. We are not predisposed to respect humble people, those who try to suspend judgment. Now contemplate epistemic humility. Think of someone heavily introspective, tortured by the awareness of his own ignorance. He lacks the courage of the idiot, yet has the rare guts to say “I don’t know”. He does not mind looking like a fool or, worse, an ignoramus. He hesitates, he will not commit, and he agonizes over the consequences of being wrong. He introspects, introspects, and introspects until he reaches physical and nervous exhaustion.

This does not necessarily mean that he lacks confidence, only that he holds his own knowledge to be suspect. I will call such a person an epistemocrat; the province where the laws are structured with this kind of human fallibility in mind I will call an epistemocracy.

The major modern epistemocrat is Montaigne.

Monsieur de Montaigne, Epistemocrat

At the age of thirty-eight, Michel Eyquem de Montaigne retired to his estate, in the countryside of southwestern France. Montaigne, which means mountain in Old French, was the name of the estate. The area is known today for the Bordeaux wines, but in Montaigne’s time not many people invested their mental energy and sophistication in wine. Montaigne had stoic tendencies and would not have been strongly drawn to such pursuits anyway. His idea was to write a modest collection of “attempts”, that is, essays. The very word essay conveys the tentative, the speculative, and the nondefinitive. Montaigne was well