Tag Archives: The Black Swan

Coronavirus and Black Swan Theory

Historians will look back, I believe, at the Coronavirus Pandemic of 2020 as a ‘black swan’ event. For the rest of us, memories of this may fade, but they’ll never go away.

What’s a black swan event? According to Nassim Nicholas Taleb, author of The Black Swan: The Impact of the Highly Improbable, a black swan event has three properties: (1) It is a surprise; (2) It has a major effect; and (3) After it occurs, people consider it to have been inevitable.

We’re still in the middle of the pandemic and the accompanying economic disaster, but I believe they both meet all three criteria. Some have written articles denying this, on the basis of Criteria (1). Medical scientists had warned us about pandemics, they say, and we’ve even had pandemics before. Novels and movies about disease outbreaks were warnings, too.

No. For most of us, the COVID-19 outbreak and the economic shutdown came as a sudden shock. If anything, those who deny this pandemic is a black swan are just proving it satisfies Criteria (3). It’s to be expected that some will claim we should have known.

Let’s get beyond that. I’m less interested in arguing about criteria than in what we do now. How do black swan events change us? How do we prepare for future ones? 

When this is over, I believe most people will revert back to their pre-virus lives without much change. They might wash their hands more often, but that’s about it. They’ll go to concerts, sporting events, and church. They’ll shake hands. They’ll fly on planes.

However, for everyone now alive, this pandemic will linger on in memory. It can’t un-happen for us. We’ll think about it when we meet strangers, when we buy toilet paper, when we choose investments or apply for our next job. No matter what we do from now on, a corner of our mind will remind us of the risks we’re taking. Future generations will shake their heads at our curious hygiene fixations and risk-averse financial strategies.

For us, that small voice in our head, that conscience, represents part of the solution to the Black Swan problem. As Taleb recommended, you should make decisions that allow you to exploit positive events while still guarding against black swans.

In other words, hug your family, but fist-bump strangers. Go to the basketball game, but don’t scratch that nose itch until you’ve washed your hands. Invest some of your portfolio in stocks, but keep some money in safer accounts. Take that job aboard a cruise ship, but keep your list of grocery store contacts.

Despite their low probability, black swan events happen. The Stock Market Crash of 1929, Pearl Harbor, the Kennedy Assassination, 9-11, and Coronavirus 2020 are all examples, but more await us in the future. They’ll be unpredictable, significant, and, afterward, strangely inevitable.

You can’t plan for what you can’t predict. But reserving a few resources for imaginable worst-case scenarios might prove wise if the worst case comes to pass.  

One more thought about black swan events. As a species, we’ve survived them all. No matter what the future hurls at us, we’ll be inventive and adaptable. We’ll fight our way through. We’ll come out the other side—roughed up, perhaps—but standing tall.

Welcome to the battle for the future. In this corner, you’ve got a black swan. And in this corner, the entire human race. Let’s get ready to rumble! With all my money bet on the humans, I’m—

Poseidon’s Scribe

April 12, 2020Permalink

Writing and the Black Swan

My question is, once you understand how the Black Swan relates to writing fiction, will you be so dejected that you’ll abandon any idea of becoming an author?

black swanNassim Nicholas Taleb wrote The Black Swan: The Impact of the Highly Improbable and it was published in 2007. A statistician, the author was trying to get readers to think about low-probability events and our estimation of their risk.

He defined a black swan event as having three properties: (1) it is very rare, to the point of being almost impossible; (2) it has a huge impact on people, either positively or negatively; and (3) people do not (or cannot) predict it in advance, but after it occurs, everyone sees that it should have been predicted since it was obvious all the time.

By the way, Taleb chose the metaphor of a black swan because most swans are white, and black ones are very rare. In fact, people were convinced that all swans were white, until proven wrong. That’s part of Taleb’s point. If a rare event hasn’t occurred today, or yesterday, or for your entire life, you come to believe it cannot happen. Since black swans have a massive impact when they do occur, there is a huge difference between impossible and improbable.

I read the book about two and a half years ago, but I recall Taleb discussing success in writing as a black swan event. For our purposes, let us define success by the amount of money earned from writing. Success in writing, therefore, is rare, has a huge impact on a few writers, and is difficult to predict in advance but obvious afterward.

Taleb would conclude that if we could compile the relevant accurate statistics, the resulting graph would look like this:

black swan and writingThe vast majority of authors earn very little money, while very few earn a large income from writing.

Why is that? I believe Taleb would say that an author’s income is related to the popularity of his or her books. That popularity is determined by readers when they hear about the book, learn that their friends like it, and when they read it and recommend it to others.

People hear about books from various media outlets, so the media plays into book popularity. Luck has a role too, since poorly written books sometimes become bestsellers despite the writing quality.

Let’s say you’re an aspiring author, and let’s assume all the above is true. Does it depress you to know how much the odds are stacked against your success? Does it make you want to give up on your dream?

If you truly are writing for the money, there are things you can do to position yourself for the black swan. You can become really good at marketing; you can seek out (or pay for) media attention. You can practice your writing until you become more skilled at it.

No guarantees come with any of that, but your odds of success will improve a bit. The trouble is, you could strive for years, doing everything right, and still not achieve success because that intangible luck eludes you. That’s disheartening.

Alternatively, you could redefine what success means for you. You could decide you’re not after money, but seeking the pure enjoyment of writing, or the thrill of seeing your name in print. That’s a much more probable event, not a black swan at all.

Still, it’s my hope that the black swan of financial success from writing pays a visit soon, to both you and—

Poseidon’s Scribe

July 12, 2015Permalink