Of Black Swans and Tigers: The Power of Episteme

Tulsi Jayakumar

Author: Tulsi Jayakumar

Date: Sun, 2016-09-04 19:05

I encountered a ‘Black Swan’ recently. The term has been used by Nassim Nicholas Taleb (NNT) as a metaphor for ‘random’ events that underlie our lives, in his best-seller book 'The Black Swan: The Impact of the Highly Improbable'. Though old, the book ranks among one of the best I have read. In fact, Taleb was on my mind again, when a news item indicated his being chosen for an honorary doctorate by the American University of Beirut.

Taleb’s random events are outliers and impossible to predict, their impact is huge and yet, after they happen we try to rationalise their occurrence. Historical events, the 9/11 attack, the financial crises, not to mention elements of our own personal lives, according to NNT, are Black Swans.

Living in ‘Extremistan’ as we do, predictions of the irregular, almost always ultimately fail. Equating guessing and predicting, the book comes up with strong statements and prescriptions.  (Sample this, for instance, marginalize the economics and business school establishments, shut down the Nobel in economics, put the bankers where they belong etc.)

In particular, I found NNT to be particularly disdainful of economics as well as economists as a community.

He writes: "Economics is perhaps the subject that currently has the highest number of philistine scholars - scholarship without erudition and natural curiosity can close your mind and lead to the  fragmentation of disciplines."

Further, "……… a review of articles and working papers in economics….. show no convincing evidence that economists as a community have an ability to predict, and if they have some ability, their predictions are at best just ‘slightly’ better than random ones - not good enough to help with serious decisions."

Being an economist, I got to ‘test’ some of Taleb’s theories during a recent vacation in Corbett National Park, India’s oldest national park, located in two districts of Uttaranchal- Nainital and Pauri. Corbett covers an area of 521 sq. km and together with the neighbouring Sonanadi Wildlife sanctuary and Reserve Forest areas, forms the Corbett Tiger Reserve of over 1288 sq.km. According to current estimates, the number of tigers in Corbett is between 160-180, making it India’s most densely populated tiger zone.

So what would be the chances of spotting a tiger in the reserve? Could you, for example, predict your chances of spotting a tiger and increase your probability of getting the bang for the buck? If you went by what the locals said, it was a ‘luck by chance’ event (Wonder whether Zoya Akhtar could be sued by the locals for infringement of copyrights for her film bearing the same title!). In the words of my friendly, well–meaning Punjabi neighbour, “Tiger-shiger to Ji, naseeb (luck) ki baat honde nein". In NNT’s terms, it would constitute an unpredictable, random event; and so it would have been, had there not been a series of events to falsify the ‘luck’/ ‘random event’ theory.

As 'predicted’, the ‘luck by chance’ did not work its magic on us. We had to be content with spotting deer and other sundry animals, which are seen in any National Park or wildlife sanctuary worth its salt. However, the envy of all in the resort we stayed in, happened to be a family which managed to catch sight of tigers, not once, but both times they went on a safari. Were they merely lucky, or did they use the power of knowledge to transform the improbable and unpredictable into the ‘predictable’. I suspect it was more of the latter, contrary to NNT’s theories of ‘unknowledge’.

It turned out that out of the five entry points and hence areas earmarked as tourist safari Zones, there were two – Dhikhala and Bijrani –that were the most likely zones for tiger spotting. We had been booked on a safari in the Durgadevi zone, which lies right on the outskirts and is a mountainous area, with very little forest (green) cover.

A wild life film screened later in the evening revealed that tigers are found in areas with dense foliage, which support prey; also, they usually follow their tracks, walking along the same track several times, making it extremely easy for hunters to hunt tigers. If this were the case, people in charge of the safari ought to have known the extreme unlikelihood of spotting tigers in the mountainous Durgadevi area, as also the most likely areas to spot tigers.

Additionally, a ‘jeep safari’, though modern, comfortable and with its premise and promise of covering vast tracts of the large park, is in no way comparable to the ‘traditional’ elephant safari. The latter has a greater likelihood of success on account of the tiger accepting the elephant as part of its natural habitat. This was also revealed in the wild life film, which documented a project involving filming tigers in their natural habitat by using elephants as the carriers of the cameras. As it turned out, the 'successful couple’ had gone to Dhikhala and Brijrani as also an elephant safari later in the evening, with a hit rate of 2 on 3.

It appears that knowledge of ‘where, as also how to find the tigers’ helped in finding tigers. This power of ‘episteme’ was sadly, lacking in us. Which now makes me come to my Black Swan moment!

The next morning arrived, with its promise of leopards, wild boars and the like, in another resort this time -- to be spent in Binsar, another hill station in Uttaranchal. Much to my dismay, my husband asked the driver to turn around and drive back to Delhi. Not for him this wait for the elusive tiger. And thus, tigers put paid to my ‘all-paid’ vacation; it was a ‘black swan’ moment like no other-unpredictable, momentous in its impact (I had to forego a well-deserved non-refundable pre-paid vacation)  and which I am still trying to rationalise- and yet totally avoidable, had we possessed the epistemic arrogance which Taleb derides.

Could it be that NNT is being rather harsh on academicians and their ilk as also unnecessarily dismissive of the power of knowledge? I would assume so. The disappointment and the ‘Black Swan’ moment could have been avoided, much in the same manner as the global financial crisis which could have been avoided had the power of knowledge been heeded. It was a surfeit of knowledge – ‘misknowledge’ - rather than ‘unknowledge’ that was responsible for the global financial crisis as also NNT being, in his own words, a ‘Black Swan’ author.

 

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Comments

<p>Whoa! Your blog made me go read the excerpts from Taleb's book. Profound it is! With my limited knowledge of life and beyond, the concept may seem quite overwhelming, larger than life and to an extent a little more than i can totally believe and digest. But when he says that life could be just a cumulative effect of a handful of shocks, i can resonate with it. Totally... at least at a personal level. :) But again, reconfirming his theory, I am just nodding to a fact that he presented and not thought about it myself! What should i be thankful about then? That we now know that we do not know.. or that the faster reacting cousin of my introspective ancestor actually ran for cover when that saber came charging at him! :)</p>

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Just like you mam, “The Black Swan” by Nassim Nicholas Taleb (NTT) is one of my favorite books. It introduced me to the concept of black swan theory where a major emphasis is laid on the unpredictable nature of various life events and their enormous impact on our lives. Be it the economic depression of 2008 or a case of serendipity at office, it is prevalent in every domain of our lives. The book also lays importance on the fact that some events are wrongly predicted due to a dependence on the past patterns of similar situations. The terrorist attacks, natural disasters or the bank crisis hold a host of unpredictable events where the stakeholders are hit immensely by its impact. On one hand I believe that unpredictable is just another term for the lack of knowledge. Every situation or event can be studied, analysed and thus can be forecasted with a degree of surety. The meteorological department forecast the unpredictable through a hosts of technology variants and intelligent heads. With the advent of better techniques the effect floods in your region or the tsunami near the sea shore had has been altered. It has been effectively transformed from being completely unpredictable to being predictable to a certain degree. The concept which NTT terms as “Future Blindness” can be reduced through the similar past experiences. On the other hand I feel that to completely study every aspect of a situation is out of reach of the human race due to limited availability of time and thus some part of it always remains untapped or unpredictable. It is the percentage contribution of the unpredictable part in the predictability of an event that determines the overall impact of the event. On looking at the other aspect which FTT calls “Fallacy of silent evidence” suggests that we tend to look at data that suits our thought process and beliefs. As pointed out by mam the evidence of spotting tiger through the other two entrances as told by a family was completely biased as they had no knowledge of the instances wherein tigers were not spotted in those regions. After attaining a biased fact we always try to retrospect it and assign certain believable supports to that argument. Like in this case the probability of finding tigers through the other two passes was made more credible by stating that they had higher forest cover and thus more chances of spotting a tiger. This tendency of human to search for instances that confirm the thesis and ignores everything that weakens it is known as “Confirmation Error” or “Platonic Confirmation”. In real life one must always portray humility and not “Epistemic Arrogance” to ensure that they are relying on something that has been tested. Also mam you subtly highlight the fact that knowledge of where and how to find tigers would have significantly increased your chances of spotting one which concludes the idea that after a degree of analysis and knowledge gather a part of the event still remains unpredictable which is out of the realms of humans.

Ma’am your article was extremely thought provoking and intriguing and Economists have indeed been accused of redundancy in their subjects of study plenty of times. While I haven’t read NNT, I find myself disagreeing with the Black Swan theory described above. It is true and correct when it says that the numerous models built by economists fail to predict major events in the world. I mean all the major financial crises have been termed that only because they went beyond the models used by academicians and were wholly unpredictable. It was only after the crisis that the economists analysed the terrain through a different lens and identified probable reasons for its occurrence. Yet, this new theory proved incorrect and unable to predict the next fiasco! However, does this mean that the academic knowledge of these economists cannot be used as a preventive measure and only as an understanding to identify the causes of what has already happened? I think not. There are several smaller crises and issues that have been warded off by their knowledge. These explanations and improved understanding of a seemingly one-off crisis event also help governments deal with the issues better. Whether to use contractionary or inflationary monetary policy, how to boost demand, how to handle balance of payments, what interest rates to select – are all decisions that are based on forecasts of metrics in the future and these forecasts are done based on the knowledge and predictive models created by economists. The crisis occurs when the world derails and moves off these models. So, one can say that it is an exception. However, unlike normal exceptions to rules, these exceptions have tell-tale signs which if identified help in predicting their occurrence. Before the Wall Street crash or the sub-prime crisis there was ample evidence that the world was going off track. However, everyone existing in a happy bubble was quite reluctant to burst it and see the reality. As a result it occurred and the economists were blamed for not having foreseen it. But the models designed by them had not expected this kind of behaviour and had thus not accounted for it. To have successfully predicted and warded off this crisis, they needed to have identified these anomalies and adjusted their models rather than remaining complacent and believe in their infallibility. Secondly, while we focus on the unpredictable crises and seek to conclude that the economists can’t predict events on this meagre proof, we ignore the hundred other situations where crises were warded off because of timely corrections and changes. Just because they didn’t eventually culminate in events of epic proportions, cause them to get discounted when analysing the ability of economists and passing judgements on their work and it is a futile attempt to explain these ‘Black Swans’. However, the counter to this result begs examination as in hindsight we always identify the mistake we made and realize how we could indeed have predicted it. To conclude, I would like to say – ‘to human is to err’. Economists too are humans. While they try their utmost to create models and theories to explain the happenings around them, they make mistakes every now and then. And as NNT puts it, it may be possible that the world is beyond our understanding.

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