Nassim Taleb and the Black Swan Theory
The pandemic. Brexit. The social crisis in the United States. Terrorist attacks. The impact of technology in our lives. Nassim Taleb’s black swan theory defines many of these phenomena that have, without a doubt, upset our personal, psychological, economic, and political balance. In fact, many people agree that we’re living through a period that’s more than adequately represented by this theory.
Undoubtedly, we’re living in unpredictable times. We experience continual crises yet never seem to be prepared for them. They disturb, surprise, and cause us to lose our balance. Indeed, they’re the kind of dynamics that nobody likes.
If there’s one thing that we, as humans, tend to cling to, it’s stability. In fact, our brains don’t tolerate change, uncertainty, and unexpected events particularly well. This is probably why we tend to get into a routine and we take it for granted that the stability of today will continue tomorrow. In fact, we leave no room for chaos, the possibility of disaster, or a 180º change.
However, figures like Nassim Taleb encourage us to become aware of this. He states that we should be mindful that the unexpected is always around the corner and that we must be prepared for it.
Nassim Taleb’s black swan theory
When you hear the term black swan, you may well think of the 2010 psychological horror movie starring Natalie Portman with the same name. However, any expert in economic risks is very aware of this metaphor in daily life.
Lebanese essayist Nassim Taleb first introduced black swan theory in his book The Black Swan: The Impact Of The Highly Improbable, in 2008. His theory is simple. It concerns the fact that the world is greatly affected by rare events that are difficult to predict. His proposal is focused on the world of markets and economic investments.
However, since the publication of his work, many areas have started to integrate his theory. That’s because it can’t be denied that the day-to-day is marked by those events that happen unexpectedly. Indeed, both the large public stages and the most private and personal spheres are conditioned by these kinds of events. Events that knock us sideways, shake the ground under our feet, and for which we don’t always have the resources to cope.
Here are the components of Nassim Taleb’s black swan theory.
They’re events with a low probability of occurrence
Many of the things that happen are of course, possible. Nevertheless, almost nobody foresees them. For this reason, they weren’t considered as likely to occur, even less so immediately. Nassim Taleb formulated this theory based on an experience that the explorers of the seventeenth century encountered when they arrived in Australia.
Until then, it was assumed that all swans were white. However, upon reaching Australia, they discovered the existence of black swans. Thinking along the same lines, we now all know that there are black swans. However, we take it for granted that we’ll never see them. The same thing happens with adversity, crises, and disasters. We know that they can happen, but we don’t expect them to, either tomorrow or even the day after.
They have a great impact
When a black swan arrives, everything changes. Its appearance shakes almost any scenario: the social, the economic, the political, and even the cultural. In fact, it alters everything. Indeed, the waves of its impact reach almost any area of our reality. Furthermore, it tends to catch us unawares when we have no resources or coping strategies at our disposal.
Hindsight predictability
This feature is striking and, without a doubt, has been experienced by many of us. It’s the fact that, once the crisis has occurred, there’s never any shortage of expert and not so expert opinions from people who apparently saw it coming. Worse still, they’ll claim that that the disaster could’ve been avoided.
In complex times black swans are always there
Epidemiologists have been warning about the emergence of new pandemics for many years. For this reason, the scientific community isn’t experiencing the current situation under the terms of the black swan theory. The same thing happens with events like Brexit, the increase in terrorism, or the way in which technologies are changing our lives.
It’s true that there are some events that happen completely unexpectedly. Events that seem to have zero probability of happening. However, there are certain dynamics and realities that leave us clues on a day-to-day basis that indicate the probability of such occurrences happening in reality.
Therefore, although it’s true that many of the things that have happened in recent times (and that will happen) can’t be avoided, we must be prepared to handle them.
For this reason, we should prepare ourselves mentally and enable ourselves to accept that the world is unpredictable. This will allow us to face adversity a little better. It’s no easy task. Nevertheless, it’s a mechanism that we can all develop. Furthermore, it’s an ability that’ll undoubtedly enable us to navigate far more successfully through this particular era. An age in which black swans have the unfortunate tendency to appear increasingly frequently.
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- Taleb, Nassim (2011) El cisne negro. El impacto de lo altamente improbable. Madrid: Paidós