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The Black Swan Theory - YouTube
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[1]
you are a chicken
[3]
yes you you look around and sometimes
[7]
wonder why your owner takes such good
[8]
care of you
[10]
at first you're not sure you're
[12]
skeptical
[13]
what if he sends you to the
[14]
slaughterhouse you've never been there
[17]
but you know very well none of your
[18]
friends have ever come out of that place
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you remain on high alert for when that
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fateful day might arrive
[25]
but it never does days go by
[28]
and then weeks months even years
[31]
you are now convinced your owner loves
[33]
you more than any of these other
[34]
chickens and he would never do anything
[36]
bad to you
[37]
each passing day is additional evidence
[39]
to say that you will live for the next
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a thousand days go by like this a
[43]
thousand beautiful days
[46]
until of course the thousand and first
[49]
day
[50]
when the illusion of safety breaks and
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you end up on someone's dinner plate
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you should have never crossed the road
[57]
now imagine how betrayed the chicken
[58]
must have felt when it was being taken
[60]
to that terrifying part of the farm
[62]
given the thousand days worth of
[64]
evidence the chicken's trust in its
[66]
owner was ironically at its highest
[67]
level when it was eventually slaughtered
[70]
perhaps if it wasn't so foolish to
[72]
believe that it was special or
[73]
unique maybe it would have at least been
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spared the feelings of betrayal
[77]
that one final day completely changed
[79]
the outlook of the chicken's life
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that one piece of evidence outweighed
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the previous thousand days
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and it's not even a contest this is
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something known as a black swan
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a single event or observation that comes
[91]
as a surprise with disproportionate
[93]
consequences
[94]
radically changing our outlook about
[96]
something
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people used to think that swans could
[99]
only be white
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until they saw a black swan which
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basically reshaped the way people
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thought about what is out there
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the scene nicholas to lead wrote a book
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called the black swan the impact of the
[110]
highly improbable
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to study this very phenomenon and shine
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light on how vulnerable we are to black
[115]
swans
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and how we are only becoming
[117]
increasingly more vulnerable with each
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passing day
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in his book he talks about some
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fundamentals of epistemology that limit
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our ability to understand the black
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swans before they happen
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but first let's talk about why our
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modern society
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as technologically advanced as it is is
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the perfect nesting place for a black
[134]
swan event
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let's say we're going to weigh a few
[137]
thousand people and at the extreme end
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of that sample contains the heaviest
[140]
person in the world
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so long as that person is subject to
[144]
biological constraints like the rest of
[145]
us
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it doesn't really matter how much he or
[147]
she weighs let's say
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two thousand pounds now how much do you
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think that accounts for in the total
[154]
weight of all the people we weighed
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the answer is probably less than half a
[158]
percent
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it shows that even a crazy outlier like
[162]
a two thousand pound person
[163]
doesn't really overwhelm the average
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tele calls this ecosystem
[167]
mediocristin to refer to how the
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mediocre measurements of the average
[171]
person
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do mostly represent all measurements
[173]
quite well
[174]
now let's conduct the same experiment
[177]
but with wealth
[178]
let's gather a few people and include
[180]
just one of the 3 000 or so billionaires
[182]
in that list
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how much do you think that billionaire
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accounts for in the total wealth of all
[186]
the people in that sample
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an overwhelming majority almost always
[190]
close to 99
[193]
contrary to the first scenario here the
[195]
outlier overwhelms everything else celeb
[198]
calls this world
[199]
extremists as it rewards a few people
[201]
extremely well
[202]
believes basically nothing for the
[204]
others celeb says that the modern world
[206]
is composed of circumstances that are
[208]
geared towards extremist
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not mediocre sin because money
[212]
for all intents and purposes is just a
[215]
number in someone's book
[216]
the vast majority of money is completely
[218]
digital it's not subject to physics laws
[221]
or biology to constrain it to minimal
[222]
variance
[223]
sure most people don't make that much
[225]
money but a few people can make a lot of
[227]
money
[230]
similarly if you want to consider
[231]
musicians most musicians don't sell that
[234]
many albums
[235]
but a few artists sell quite a few you
[237]
can conduct the same thought experiment
[239]
with book
[240]
sales scientific publications shoe
[242]
brands and so on
[244]
point is the modern economy is a very
[246]
much a winner-take-all system that
[248]
rewards a very small number of people
[249]
with a disproportionately large portion
[251]
of the pie
[252]
if it was more like the weight example
[254]
we just talked about you wouldn't expect
[256]
the outliers to be so wild
[258]
but the fact that they really are indeed
[259]
so wild just goes to show how
[261]
unpredictable the environment we're
[262]
living in really is
[264]
the forecasts we take for granted today
[266]
often fail to take into account the true
[267]
nature of this unpredictability
[269]
these black swan events you might be
[272]
inclined to say that
[273]
no these billionaires put in the work
[275]
day in and day out
[276]
and therefore they can enjoy the fruits
[279]
of their labor
[280]
indeed most of them probably worked
[282]
really hard
[283]
some of their innovations might later
[285]
pave the way for a better future for
[286]
all of us i'm not discounting that
[289]
however
[290]
the system is not rewarding them
[291]
proportionately more importantly
[294]
it's hard to say how much of their
[295]
efforts are the fruits of their labor
[297]
and how much of it is due to pure chance
[299]
if you were to run a few simulations
[301]
with extremists in type circumstances
[303]
you would inevitably have a few jeff
[305]
bezos like outliers
[307]
we may be biased into thinking that we
[308]
understand what causes bezos like
[310]
outliers in our society
[312]
you know the usual think out of the box
[314]
start a revolutionary company
[316]
work extremely hard for a few years and
[318]
then smell the roses
[319]
happily ever after we've all read the
[322]
autobiographies
[323]
we've all watched the documentaries
[325]
however
[326]
when was the last time you read about a
[328]
person who did all of those things
[330]
and failed when was the last time you
[332]
saw shelves of books about people who
[334]
failed
[335]
chances are probably never these stories
[338]
just never really quite
[339]
make it there is an epistemic bias in
[342]
all of this
[343]
celeb says now take a look at the
[345]
cemetery
[346]
it is quite difficult to do so because
[348]
people who fail don't seem to write
[350]
memoirs
[351]
and if they did those business
[353]
publishers i know would not even
[354]
consider giving them the courtesy of a
[356]
returned phone call
[357]
this is despite the fact that often
[360]
advice about what not to do is more
[361]
useful than what to do
[363]
but that's just the economy that's just
[365]
one facet of society
[368]
[Music]
[371]
we also don't understand the
[372]
socio-political aspects
[374]
take 911 for example which is certainly
[377]
a black swan event
[379]
after it happened you had tons of
[380]
experts come out and say that they had
[382]
known for years that it was about to
[383]
happen
[384]
well why didn't they say anything this
[387]
retrospective distortion of the
[389]
understanding of a problem is one of the
[391]
hallmarks of a black swan event
[393]
none of them really knew if they did
[396]
cockpit doors would have been
[397]
bulletproof long ago pocket knives would
[399]
have never been allowed in the cabins
[401]
and the tsa would have been invented
[402]
much earlier
[404]
but these things were only instituted
[406]
after 911.
[407]
if you were to suggest such policies in
[409]
1991 for example
[411]
you would probably not be taken too
[412]
seriously or would have been shown a
[414]
spreadsheet that suggested airlines
[416]
don't have the money for bulletproof
[417]
doors
[418]
but inevitably they did thankfully
[422]
the likelihood of a 911 style event is
[424]
much lower now than it used to be
[426]
countries around the world are more
[427]
prepared more vigilant
[429]
however that also makes these
[431]
precautions somewhat lose their
[432]
relevance
[433]
you've all know a ferrari in his book
[435]
homo deus cites a paradox about
[437]
knowledge
[438]
he says knowledge that does not change
[441]
behavior is useless
[442]
but knowledge that changes behavior
[444]
loses its relevance
[446]
the more data we have and the better we
[447]
understand history the faster history
[450]
alters its course and the faster our
[452]
knowledge becomes outdated
[454]
despite the measures we have taken for a
[455]
black swan event like 911
[457]
that does nothing to improve our odds
[459]
against a future black swan
[461]
if anything it might lure us into a
[462]
false sense of security
[464]
and in fact worsen our chances of coping
[466]
with the impacts of the next highly
[467]
improbable event
[469]
we tend to convince ourselves that we
[471]
understand risks once we have understood
[472]
a game of dice
[473]
or blackjack however trying to
[476]
approximate the risks in real life
[478]
with the same methods used in a
[479]
closed-loop artificial game is simply
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oversimplification
[482]
a mistake that we commit daily this
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teleb calls is the ludic fallacy
[489]
we learn simple games and immediately
[490]
conclude that the stock market works in
[492]
the same way
[493]
even though one of these things lives in
[495]
mediocristan and the other lives and
[497]
extremists
[498]
if the markets were well understood do
[500]
you think something like gamestop
[502]
or amc would have ever been allowed to
[503]
happen sure
[505]
short squeezing is not a particularly
[507]
new phenomenon
[508]
and yet even a non-black swan event such
[511]
as this one left even the smartest hedge
[512]
fund managers scratching their heads
[514]
and practically chasing bankruptcy this
[517]
false sense of understanding makes black
[518]
swans that much more dangerous
[521]
there are other reasons why we are
[522]
increasingly more vulnerable to black
[524]
swans
[525]
teleps said whereas in the past people
[527]
might have been studying different kinds
[528]
of literature
[529]
and diving deep into a locally developed
[531]
set of ideas
[532]
today arguably the most read book is
[535]
harry potter
[537]
that's of course not to say harry potter
[538]
is a bad book or anything
[540]
but it goes to show that we are much
[541]
less in tune with each other's ideas
[544]
for better or for worse for the most
[546]
part
[547]
everyone is dealing with generally the
[548]
same ideas
[550]
that coupled with the rising complexity
[552]
and reach of technology means when
[553]
something fails
[554]
it fails for more people than ever
[556]
before
[557]
the pakistani government tried to shut
[559]
down youtube in pakistan
[561]
it ended up shutting down youtube
[562]
worldwide to website
[565]
we don't understand these things that's
[567]
just one way for technology to fail
[569]
but it goes to show how interconnected
[571]
things are and while that is often
[573]
touted as a plus
[574]
given sufficiently poor luck that can
[576]
really spell doom for us all
[579]
take coronal mass ejections as an
[581]
example these are regular bursts of
[583]
radiation from the sun that scientists
[584]
on earth know
[585]
and expect the largest coronal mass
[588]
ejection ever on record is the
[589]
carrington event in 1859
[592]
its effects were mostly felt by
[593]
telegraph operators who had some of
[595]
their equipment burnt from the sudden
[596]
surge
[598]
most of the world went on without a
[599]
hitch on the other hand
[601]
if a carrington class event were to
[603]
occur today with all the grids
[605]
electric cars and equipment that we now
[607]
have the damages would be in the
[609]
trillions of dollars
[610]
and repair could take decades if at all
[612]
possible
[613]
and with each passing day with each
[615]
little transition into an electric
[617]
future
[618]
we're becoming more and more vulnerable
[619]
to such an event
[621]
the thing is this isn't even a black
[624]
swan event
[625]
in 2012 the likelihood of a carrington
[627]
event in the next decade was calculated
[629]
to be around 12 percent
[631]
and yet despite that high probability
[634]
we're not particularly prepared for such
[636]
an event
[637]
given the esoteric nature of its risk
[639]
seemingly low probability but high
[641]
impact
[642]
despite all the mounting evidence you'll
[644]
have a very hard time convincing
[646]
governments to make modifications to
[647]
power grids to avoid catastrophic
[649]
failures
[650]
so if that's how little we care about an
[652]
event that we know is bound to occur
[653]
eventually
[654]
imagine how unaware we are of a true
[656]
black swan
[658]
the chicken in the farm where it to
[660]
somehow be spared by some miracle
[662]
would never trust another human being
[664]
ever after the betrayal it endured
[666]
however few are ever so lucky
[669]
meanwhile for the owner the chicken's
[672]
death comes as no surprise
[674]
it is a routine event and therefore no
[676]
black swan
[677]
the idea of a black swan is therefore
[680]
relative to the knowledge one possesses
[682]
hence our objective is to try and be in
[684]
the position of the butcher
[686]
not the butchered teleps says i worry
[689]
less about advertised and sensational
[691]
risks
[692]
more about the vicious hidden ones of
[695]
course
[696]
the idea of a black swan also
[697]
incorporates good things such as wildly
[700]
unlikely positive outcomes of chance
[702]
otherwise known as life the odds of
[705]
being born are 1 in 400 trillion
[708]
but to be fair i just unfollowed my own
[710]
advice
[711]
such a thing can't really be predicted
[713]
can it
[714]
for all we know and for all we don't
[717]
being born is an unimaginably unlikely
[719]
event that nobody really predicted
[722]
so if you are alive whatever that means
[725]
in the end we're actually all the black
[728]
swans we've been trying to avoid the
[729]
entire time
[731]
ironic isn't it
[739]
black swan events are by nature
[742]
unforeseen and unavoidable it's almost
[745]
anxiety-inducing
[746]
knowing that at any moment a black swan
[749]
event could happen
[750]
changing the landscape of everything as
[752]
we know it
[754]
the history of over a thousand days
[756]
tells you absolutely nothing about what
[757]
is to happen next
[759]
probability is everything and with
[761]
brilliant
[762]
you can not only learn about probability
[764]
but also some of the most pressing and
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interesting topics in stem
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after that i'd recommend you check out
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their courses on probability
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there's a bunch of them but i honestly
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believe that learning to think of things
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in terms of probability will give you a
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