[youtube=http://www.youtube.com/watch?v=oee4KVDy9Fs]
… As an empricist, I don’t have to understand the logic behind a system, I just take it as it is
because I’m not smart enough to understand it. I call it the opacity.
From IMD, “International Institute for Management Development,”
Don’t know how I missed having this in here. NNT lists this as one of his favorite interviews as well.
From the highly addictive and always excellent EconTalk.org. (iTunes subsrciption link here. 2007 2008)
Nassim Taleb talks about the challenges of coping with uncertainty, predicting events, and understanding history. This wide-ranging conversation looks at investment, health, history and other areas where data play a key role. Taleb, the author of Fooled By Randomness and The Black Swan, imagines two countries, Mediocristan and Extremistan where the ability to understand the past and predict the future is radically different. In Mediocristan, events are generated by a underlying random process that is normally distributed. These events are often physical and observable and they tend to cluster around the middle. Most people are near the average height and no adult is more than nine feet tall. But in Extremistan, the right-hand tail of events is thick and long and the outlier, the seemingly wildly unlikely event is more common than our experience with Mediocristan would indicate. Bill Gates is more than a little wealthier than the average. The civil war in Lebabon or the events of 9/11 were more worse than just a typical bad day in the Beirut or New York City. Taleb’s contention is that we often bring our intuition from Mediocristan for the events of Extremistan, leading us to error. The result is a tendency to be blind-sided by the unexpected.
“Randomness” by philosopher and scholar of randomness Nassim Nicholas Taleb at the 2008 IdeaFestival – proudly sponsored by the University of Kentucky a Presenting Sponsor of the international IdeaFestival.
Founded in 2000, the IdeaFestival is a world-class event that attracts diverse and leading thinkers from across the nation and around the globe to explore and celebrate innovation and cutting-edge ideas. It is a unique non-linear program designed to stretch people’s thinking, utilizing multiple venues to showcase and discuss important ideas in science, the arts, design, business, film, technology, education, etc. The Festival is designed to appeal to a broad cross-section of people – and presenters are selected for their ideas and accomplishments, and their ability to communicate to a wide-ranging audience.
If you want to be a dentist, it’s rational to assume that if you go to school, get your degree, and set up a dental practice, you will be able to attain a comfortable standard of living. You may be able to project your probable income range with some degree of accuracy.
But if you want to be a rock star, it’s irrational to assume that if you go to rock school, get good at guitar, and start a band, you will become rich and famous.
According to Nassim Nicholas Taleb’s way of thinking, the dentist and the wannabe rock star fall into two distinct categories with drastically different risk characteristics. The dentist falls into the domain he calls ‘Mediocristan’, and the rock star, ‘Extremistan’. Extremistan is dominated by ‘fat tails’, or rare but profoundly significant events. Problems arise when we think we’re operating in Mediocristan but in fact are operating in Extremistan.
“Karl Marx wanted to turn knowledge into action, what I want to do is turn our lack of knowledge into action”. Taleb suggests that by becoming aware of our own ignorance, we can stop taking action where our action is irrational.
I’m on my second reading of Fooled By Randomness and am very much looking forward to The Black Swan. In the meantime I’ve been hunting down all the audio I can find on Taleb because his talks are extremely interesting and he is a very engaging speaker. He has a bit of attitude when addressing an audience, in part no doubt because much of what he has to say offends of lot of people, especially anyone whose expertise is related to forecasting. He has obvious disdain for financial forecasters in particular, probably because he sees the impact these ‘guys in suits riding around in limousines’ have on the lives of ‘people taking the subway to work everyday’ (i.e.pensions).
What Taleb has to say has resonated with me at a very deep level. Much of the facts and studies he brings to light confirm my long lingering suspicion that something about the way the world sees itself is profoundly inaccurate and weirdly irrational.
I’ve listened to each of these talks at least a half dozen times and every time I do I take away another profound insight. Be sure to check out Taleb’s Home Page as well.
Taleb on EconTalk.org April 30, 2007
LongNow Lecture-The Future Has Always Been Crazier Than We Thought Feb. 4, 2007