Nassim Taleb’s Black Swan Theory

The pandemic. Brexit. The social crisis in the United States. The terrorist attacks. The impact of technology on our lives. Nassim Taleb’s Black Swan theory defines many of these phenomena that have undoubtedly altered our personal, psychological, economic and political balance. In fact, many people emphasize that we live in an era marked by this metaphor.

It is evident that we live in an age marked by the unpredictable. While it is true that crises are a constant in the passage of time and in the personal existence of each one of us, we are never prepared for their arrival. They surprise and destabilize us, and they’re something no one likes.

If there’s one thing human beings tend to cling to, it’s stability. The brain is not very receptive to changes, uncertainties and anything that is unexpected. Perhaps this is why we tend to establish a routine in which we take it for granted that today’s stability will continue tomorrow. We rarely leave room for chaos, for the possibility of disaster, for the emergence of sudden change.

Figures like Nassim Taleb encourage us to be aware of this. The unexpected is always around, and we must be prepared for it.

What is Nassim Taleb’s Black Swan Theory?

As you read the term “Black Swan,” you might think of the 2010 movie of the same name starring Natalie Portman. However,  any expert on economic risk is well acquainted with this metaphor.

The Black Swan theory was presented by Lebanese essayist Nassim Nicholas Taleb  in his book  The Logic of the Black Swan: The Impact of the Highly Unlikely, published in 2008. The essence of its formulation is simple: the world can be greatly affected by rare and rare events. difficult to predict. The implications of your proposal are aimed at the world of financial markets and investments.

However, since the publication of his work, his theory seems to apply to many other fields, given its impact and usefulness. Because if there is something we cannot deny, it is that everyday life is marked by unexpected events for which we do not always have resources to deal with, both in public settings and in the more private and personal spheres.

Next, we analyze the components that define Nassim Taleb’s Black Swan theory.

These are events with a low probability of occurrence

Of course, many of the things that happened were within what was possible. However, (almost) no one predicted them. At the very least, they were assigned only a very low probability of occurrence, and even less of immediacy.

Nassim Nicholas Taleb formulated this theory based on the experience that seventeenth-century explorers had upon arriving in Australia. Until then, all swans in the wild were assumed to be white. However, when they arrived in the country of Oceania, they discovered the existence of black swans.

Today, we all know about the existence of black swans, but we don’t imagine that we will ever see one. The same happens with adversity, crisis and disaster. We assume they can happen, but not tomorrow or the day after.

These events, according to Nassim Taleb, have a great impact

When a black swan appears, everything changes. Its emergence shakes almost all scenarios, be they social, economic, political and even cultural. We are often surprised, without resources and without a clear response and coping capacity.

Retrospective predictability: after it happens, “everyone knew it was going to happen”

This fact is remarkable and well known to many of us. Once this event, this crisis, this disquieting and unforeseen situation has occurred, there is no lack of expert voices proving that this event was imminent. Worse still, they claim that everything could have been avoided. That’s when we start assigning responsibilities.

In complex times, prepared minds: black swans have always been present

Epidemiologists have been warning about the emergence of new pandemics for many years, so  the scientific community is not experiencing the current crisis under the Black Swan theory. The same goes for events like Brexit, the rise of terrorism or the way technologies are changing our lives.

It is true that there are events that unfold in completely unpredictable ways, events that do not fit into any calculus of probability. However, there are realities that, far from being highly improbable, leave clues in everyday life that show their probability of occurrence.

While it is true that many of the things that have happened in recent times (and are going to happen) could not be avoided, we must be prepared to deal with them.

Thus, we must prepare ourselves mentally and accept that the world is unpredictable to face adversity a little better. This process is not easy. However, it is a mechanism that we can all implement.