Happy Election Day!!! Did you see it coming? The 2016 campaign between the first female presidential candidate and non-Republican insider Donald Trump? I admit I didn’t. But what I can predict is that election 2016 will become the most significant Black Swan event in American politics….until another, that is!
The Black Swan Theory, coined by writer, finance professor and probability philosopher, Nassim Nicholas Taleb, [in his book ‘The Black Swan: The Impact of the Highly Improbable’ and The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: “On Robustness and Fragility”] defines an event that is unforeseeable, has a major impact, and is explained or rationalized as probable after the fact. Hindsight is 20 /20, after all. But Taleb explains that these Black Swan events are not predictable in traditional (think of your standard bell-shaped curve) risk analysis primarily and especially because the occurrence is as unknown as the possibility of the occurrence. Taleb describes this as being blindsided by ‘unknown unknowns.’
Taleb refers to these unprecedented, outlier events with low predictability but high consequence as ‘Black Swans’ using a medieval English phrase alluding to the impossibility of seeing a black swan as, of course, at that time all the Queen’s swans in England were white. When black swans were found in Australia, the metaphor for a Black Swan took on new meaning – being something that is unknown. Taleb has used his Black Swan Theory to explain the short comings for financial risk assessment based on standardized statistical formulas, such as the normalized bell curve. However, Taleb also describes cultural and historical events as Black Swans, exacerbated and made possible by their mere unexpected nature. And here we are. Election Day 2016.
Taleb continues discussing how the lack of what we know and the limitations of our limits of what we know prevent us from properly analyzing probabilities for ‘unknown unknown’ events which equates to ineffectual risk assessment. Confusing, eh? Although the predictability and probability of this campaign was an unknown outlier, the fact that it is here and it is now is not.
So whatever color you vote or whichever spirit animal you follow, get out there and make history!
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