Quote: Predicting Poorly, Unawares

The inability to predict outliers (events which lie outside the realm of regular expectations) implies the inability to predict the course of history, given the share of these events in the dynamics of events.

But we act as though we are able to predict historical events, or, even worse, as if we are able to change the course of history. We produce thirty year projections of social security deficits and oil prices without realizing that we cannot even predict these for next summer — our cumulative prediction errors for political and economic events are so monstrous that every time I look at the empirical record I have to pinch myself  to verify I am not dreaming. What is surprising is not the magnitude of our forecast errors, but our absence of awareness of it…

Our inability to predict in environments subjected to the Black Swan, coupled with a general lack of the awareness of this state of affairs, means that certain professionals, while believing they are experts, are in fact not. Based on their empirical record, they do not know more about their subject matter than the general population, but they are much better at narrating — or worse, at smoking you with complicated mathematical models. They are also more likely to wear a tie.

From the Prologue of  The Black Swan by Nassim Nicholas Taleb.

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