Monday, January 11, 2010

The Black Swan

I started reading Nassim Nicholas Taleb's The Black Swan (Random House 2007) last night. This morning, after giving it one more try, I gave up. Niall Ferguson's blurb on the back of the book is quite accurate, "Idiosyncratically brilliant." Taleb is nothing if not idiosyncratic, and the book's brilliance is undeniable; reading it is like staring into a very bright lamp. But it struck me as primarily a self-indulgent exercise in proving to us (the readers) how much Taleb knows about epistemology and uncertainty, which is a great deal; what he agrees with and disagrees with in decision theory; and what philosophers he likes (Popper) and dislikes (Wittgenstein). (As it happens, I agree with his preference for Popper over Wittgenstein. In fact, like Taleb, I have a portrait of Popper hanging on a wall of my office.) The writing is bombastic, and the author comes across as more than a little condescending.

On the merits, I disagree with Taleb that the Black Swan poses anything like an archetypal problem for epistemology, prediction or forecasting. All it seems to me to require is constant updating (and sometimes replacement) of theories in light of new information. The empirical assertion "All swans are white" was, in Popper's sense, falsified by the first black swan to be observed. But that observation hardly proved that making empirical predictions is a fruitless enterprise. For example, we can still predict quite accurately that most swans are white. In fact, we can know make fairly precise predictions of the proportion of swans that are white based on our knowledge of genetics and probability theory. In short, prediction improves with the quantity and quality of data. Forecasting errors are inevitable but reducible over time.

This leaves untouched Taleb's larger claim that everything interesting or important that happens deviates from what is known or predicted, but that is really just a truism. We are always more likely to be impressed (and upset) by unexpected storms than those the weather forecasters accurately predicted. There's no denying, however, that the advent of computers and radars has made short-term weather forecasts generally more accurate.

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