Book Review: The Black Swan
Tuesday, February 26th, 2008
Taleb, Nassim. The black swan : the impact of the highly improbable.
Random House, 2007.
The Black Swan is a follow-up to the author’s 2001 best-seller, Fooled by Randomness, about the role chance plays in life. Fooled was controversial when released and continues to be a classic text in the hedge fund industry. Writing a general-interest book about probability is in itself quite an accomplishment. With Black Swan, it looks like the author (Lebanon-born, Wharton MBA, doctorate in mathematical finance, Wall Street hedge trader) has done it again.
This time, Taleb uses the image of a black swan to describe an event that is highly improbable yet causes a huge impact. Plus, after the event occurs, people concoct explanations for its occurrence in an attempt to make it seem predictable. The terrorist attack of 9/11 is a black swan. So is Black Friday in 1987. So is the development of the internet. Black swans can be either positive or negative, but either way, they have a huge influence on history.
The Black Swan considers fundamental questions about the nature of randomness. The central thesis is that the outliers, not part of the bell curve, are too often ignored by social scientists and these outliers have enormous importance for individuals, government, science and society.
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