The Corona Crisis is Not a Black Swan: Nassim Nicholas Taleb

[gwalchmai]

 

[johnbt]

Of course it isn't. Black swan derives from the era when everybody just simply knew that all swans were white. Until one day someone discovered a black swan  and then it was OMG where'd that come from.

This pandemic can't be a black swan because there has already been a similar - but much, much worse - pandemic. Look up the Spanish Flu pandemic of 1918. IIRC, 500 million sick worldwide, 50 million died with 675,000 dead in the US. My grandfather talked about having it, but not often other than to say it was a horrible year with all of the deaths.

[Mrs.Cicero]

If a thing has occurred in the past, or is logically predictable, then it isn't a black swan.

[PPQer]

"Not having a buffer is irresponsible".  

 

True Dat.

[Cali-Glock]

20 hours ago, Mrs.Cicero said:

If a thing has occurred in the past, or is logically predictable, then it isn't a black swan.

That is not the definition of a black swan. 

Black swans are not predictable in the traditional sense, but there is a whole science behind anticipating them.

 

Quote

COVID-19 Resources for Insurance and Risk Management Professionals

The COVID-19 pandemic is an unprecedented Black Swan event that is testing the resilience of countries, economies, businesses, and societies. To help insurance and risk management professionals navigate this rapidly evolving coronavirus crisis, IRMI research analysts are analyzing policy provisions, monitoring state regulatory responses, and curating applicable content from our extensive library.

https://www.irmi.com/online/default.aspx  

Individual Black Swan events such as we are discussing are rare devestating events.   

As far as predictable - the predictions are almost never specific, as they can't be but predictions as in 50% liklihood in the next decade. 

The New Oleans flooding of a few years ago was ENTIRELY EXPECTED and predicted, not the day and time but that it was an inevitable event. 

9/11 - We had been waiting for a signficant attack from Islamic terrorist for almost a decade.  I'll never forget listening to the live national newsbroadcast as the second plane went in - the stupid talking head said something innane about how strange it was that a second plane went into the towers while I screamed at the announcer my radio that it was the Musliums - I am not special - anyone who follows the middle east, Muslium terroirsm world-wide and their vocal hatred of the US was expecting it.   Certainly anyone who studies Black Swan events and knows about Islam was expecting it.

Here is a Black Swan waiting to happen: 

https://www.usgs.gov/news/hayward-fault-it-due-a-repeat-powerful-1868-earthquake?qt-news_science_products=3#qt-news_science_products

https://www.earthquakesafety.com/earthquake-hayward-fault.html

https://earthquake.usgs.gov/earthquakes/events/1868calif/virtualtour/

 https://www.cbsnews.com/news/hawyard-fault-line-zone-usgs-earthquake-warning-7-magnitude-san-andreas/

Another Black Swan event that we are waiting to happen is massive flooding in the greater Sacramento California area. 

[Mrs.Cicero]

Taleb's definition of a "black swan"  From his 2007 book: "First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. (emphasis mine)  Second, it carries an extreme 'impact.' Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable."

 

A rare but devastating event is just a rare, devastating event.  The definition of a Black Swan is more precise than that, and requires meeting all three requirements in the definition.  A repeat of the 1868 Hayward fault earthquake would not, by Taleb's own definition be a Black Swan, because it is already an acknowledged part of our history.   Nor does the flooding of New Orleans fit the definition, for the same reason.  If we know the event has occurred in the past, then we already know of the possibility of it happening, even if we stupidly discount the likelihood of it happening again.  You could argue that the particularities of 9/11 were a Black Swan, because while we had had crazy Muslim terrorist attacks in the past, we had never had one involving multiple commercial airplanes being simultaneously hijacked and flown into separate targets by suicidal maniacs with delusions of raisins in their heads.  That one is a better fit than the others in your post, if only in terms of the exact nature of the attack, not the fact of the attack itself.  Nothing in the past pointed convincingly of the possibility of Muslim terrorists committing that particular form of attack, it had an extreme impact on the US, and after the fact we all slapped ourselves on the head and said we SHOULD have predicted it because 1) we knew Muslim terrorists were nutball crazy and always planning something violent, and 2) it had been awhile since the last one, so we "were due" for another... which meets the third characteristic of the definition.  If it happened again, it would not be a Black Swan.  We are all aware of the history, and recognize the possibility of a reoccurrence.  Just being rare and devastating is not enough to meet the definition.