The Black Swan

Have you ever wondered where our desire to learn comes from? The answer is not simple. Many of us want to learn for mere curiosity, some others to feel more intelligent or gain self-confidence. Whatever is the motive that pushes you to learn, be careful, it matters a lot.

Knowledge and uncertainty

Knowledge at times can feel as a panacea against uncertainty, but is it really? Is that the case to assume that the more we know, the more we can predict what is next? In other words, is it worth to acquire this great deal of information to feel safer? Think of the many hours spent watching TV news, reading newspapers, talking about current events with people in our community? Is it all this information worth pursuing?

Information vs. Knowledge

In today’s world, we often associate information with knowledge. Although it is true that part of being knowledgeable requires you to have information others don’t, which kind of information is the one that makes the difference? Social networks, TV, newspapers, and Media, in general, give us a sense of “(mis)understanding” of the world. Indeed, most of the news reported is plenty of noise, in other words, the information we get is unfiltered. You may say, “of course, information needs to be unfiltered. Otherwise, it would be manipulated.” However, unfiltered means removed from noise. In fact, the more we try to be updated with current events the less we can get a real sense of what is going on. Think of when something like a homicide of a famous person happens. As soon as the news breaks, journalists start to make dozens of conjectures, hypotheses, and so on. Assume that you watch the news and read newspapers several times a day, in that time window, you will get hundreds of different hypotheses, all of which probably wrong. Imagine this thing going on for several months. Until eventually they find out that the person committed suicide! You invested dozens of hours of your precious time listening or reading to sensational news (that, of course, made you excited for awhile) that represented one hundred percent noise! How does it feel?

Taleb running after The Black Swan

Nassim Nicholas Taleb, an options trader from Lebanon. Which eventually became a New Yorker (this is a Platonized biography of our hero) spent his life running after black swans. Undeniably, his book “The Black Swan” is a pleasant work where the noise to knowledge ratio is inexistent. In short, you can expect to learn more about humanity from this book than form spending your entire life watching TV or reading newspapers. Taleb is a master of non-conventionality, and what he calls “empty suits” are often targets of his wit. According to Taleb:

“When you are employed, hence dependent on other people’s judgment, looking busy can help you claim responsibility for the results in a random environment, The appearance of busyness reinforces the perception of causality, of the link between results and one’s role in them.”

What he is referring to is the the fact that many of us believe to live in a causal world where events can be easily explained. When it comes to many life phenomena, instead, this isn’t true. What we call causalities is just plain randomness. Therefore, we tend to deem predictable what is not.

Unicuique Suum (Everyone’s due)

Luke was admired in his community. He was a good man, with a nice job, and wife. He always smiled, and was charismatic, until one day (after ten years of marriage) he killed his wife and then committed suicide. When the journalists harried up on the crime’s scene, the people interviewed in the neighborhood seemed surprised of the occurrence. All of them declared to journalists “Luke was a nice guy, we don’t have an idea of how could this have happened.” That is what they declared, but in private when meeting with each other, all seemed clear now. The people in the community remembered that time when Luke smirked to his wife or the other time when he looked at his wife with frightful eyes. For sure, he was a terrible individual, but how could they have missed it? It was plain evident that there was something wrong with him!

This is the so-called “hindsight bias.” People suddenly see things that before they did not notice and apparently Luke was not anymore the good guy they believed but a killer ready to do anything.

The Platonic world vs. The Real world

What Luke’s story has to do with the Platonic world? As Taleb explains in “The Black Swan” (although the idea is matured from the philosopher Karl Popper), we love to Platonize everything. In other words, we have a built-in tendency for simplification. Part of it is due to our DNA; part of it was inherited from the Greek philosopher “Plato” (although Plato developed his theories from previous philosophers, he eventually became the most influential in the western world, therefore the one who caused many false beliefs). In other words, Plato and his theory of ideas gave birth to the historicism phenomenon. Historicists believe that the future can be predicted as a mere projection of the past. Though here we are simplifying (we apologize for our built-in tendency for Platonizing) Plato’s theories gave birth to many (wrong) dogmas that brought to superstitions and false beliefs.

False Experts

In many instances, such as predicting the future (economically speaking), theorizing is worthless. The so-called “experts” in this field are a bunch of people who “don’t know that they don’t know.” In other words, according to Taleb economics has had the propensity to develop theories and principles that used mathematics as an alibi, although those models were formed on wrong assumptions. The worst of all that, a model (a super-simplified version of reality) could be good enough to tell us what will happen in the future. The reason those models are not good at predicting anything (except what happened the day before) is that they do not take into account the black swans or the rare events.

Theorizing is meaningless in particular fields

Another tendency that we have as humans (and we can’t help it) is theorizing. We love to find patterns everywhere (especially when they do not exist) because we have this innate necessity for order. This leads to mindless theorizing about anything that surrounds us. Although we feel more confident in doing so, it is an illusion. In fact, what we call objectivity in judgment gets lost in our “confirmation bias” and “belief perseverance.” For example, if you formed a theory about something, you will hardly leave it, since it is part of yourself (you would rather sacrifice your mother rather than your ideas!). Therefore, by navigating the world, you will just pick up the things that you deem important (although irrelevant to others) believing that the world is like you think it is when it is not! (Sounds confusing?)

How to avoid noise and theorization

One way to avoid noise is to watch less TV as possible (avoid the TV news where the noise to knowledge ratio is incredibly high), don’t waste time reading newspapers (jump the political and economic section) and repeat this mantra “I know that I know nothing.” This is not going to keep you away from all troubles, but it is a good starting point. Thanks to Taleb and his skepticism. Join the circle of the “Modern Skeptics.”

To know more about the topic read 3 Most Common Human Fallacies in Decision-Making

Published by

Gennaro Cuofano

Gennaro is the creator of FourWeekMBA which he brought to reach about a million business students, professionals, and entrepreneurs in 2019 alone | Gennaro is also Head of Business Development for a high-tech startup, which he helped grow at double-digit rate and become profitable | Gennaro is an International MBA with emphasis on Corporate Finance | Subscribe to the FourWeekMBA Newsletter | Or Get in touch with Gennaro here

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