'Black Swans' and the Problems of Probability Author Nassim Nicholas Taleb discusses his theory about events he calls "Black Swans" — occurrences that seem to be totally impossible. In his new book, The Black Swan: The Impact of the Highly Improbable, Taleb explains how to understand the structure of uncertainty.
NPR logo

Listen to this 'Talk of the Nation' topic

  • Download
  • <iframe src="https://www.npr.org/player/embed/10300687/10300689" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
'Black Swans' and the Problems of Probability

Listen to this 'Talk of the Nation' topic

  • Download
  • <iframe src="https://www.npr.org/player/embed/10300687/10300689" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

NEAL CONAN, host:

This is TALK OF THE NATION. I'm Neal Conan in Washington.

When calamity strikes, you can tune in to almost any news program, including this one, to hear a raft of experts discuss why in retrospect we should have all seen it coming. In fact, argues author Nassim Nicholas Taleb, there are some events - admittedly rare - that are utterly unpredictable, that these dramatic episodes have huge effect, and that human nature requires us to come up with some plausible-sounding explanation after the fact. He calls those events Black Swans. We'll find out why in just a moment.

but on the basis of all of our experience this Black Swan seems to be totally impossible - stock market crashes and spikes out of the blue, 9/11, some wars. And he says understanding Black Swans explains the world much better than what passes for understanding normality. Later in this hour we'll talk with Ingrid Michelson. MySpace made her a star, talk about the improbable.

But first, the Black Swan. If you have questions about Nassim Taleb's theory of unpredictable events or questions about what it means, our number is 800-989-8255, 800-989-TALK. If you're familiar with the theory of the Black Swan and know about it, call now. If you're not, I suggest you wait a few minutes, listen to our conversation and then call in. You can also send us email, npr.org/blogofthenation.

Nassim Taleb has devoted his life to the problems of probability. He's the former Dean's professor in the sciences of uncertainty at the university at the University of Massachusetts-Amherst. He's new book is called "The Black Swan: The Impact of the Highly Improbable," and he joins us from the studios of member station KPCC, Southern California Public Radio in Pasadena.

Nice to have you on the program.

Mr. NASSIM NICHOLAS TALEB (Author, "The Black Swan: The Impact of the Highly Improbable"): Hi. How are you?

CONAN: I'm well.

Dr. TALEB: Before we start, I wanted to mention one thing.

CONAN: Okay.

Dr. TALEB: About nine-tenths of the book is about what I call positive Black Swans - low probability events that are actually very beneficial to us, just equally unpredictable, like the Internet, Google, the rise of civilization, the laser…

CONAN: Indeed, your birth and mine.

Dr. TALEB: Exactly. I mean, so it's a positive. And I focus on the positive more than on the negative Black Swans, but I also focus negative Black Swans.

CONAN: Okay. But the terminology - for thousands of years, everybody in the old world only sees white swans, in fact nobody even says white swan, white is presumed to be a part of the definition of swan. Then of course comes along Captain Cooke, he lands in Australia, and what happens then?

Dr. TALEB: And they saw a black bird. And of course it took one single observation, that exception, to disprove centuries, perhaps millennia of confirmation. So my idea that you had no reason to believe that it could be a Black Swan, and here you have a black bird, but it's just a bird, it doesn't have huge consequences. And I - but I used that metaphor because of its vividness to - and for another reason that I will tell and, you know, in a few minutes.

But the other reason is because it's, you know, I want to play something I call a narrative fallacy because, you know, we're suckers for narratives. So I wanted to play the game.

CONAN: Well, narrative…

Dr. TALEB: But the…

CONAN: Go ahead…

Dr. TALEB: So I selected that bird, okay, and I call it an event, a Black Swan, if its like the bird, an exception, and no reason to believe it can occur. And, okay, unlike the bird, it has massive consequences; as a matter of fact, I think that almost everything that has happened since we left the Pleistocene that's determining, okay, was a Black Swan. Inventions, most everything was discovered either by accident, was not predicted. And of course one starts to - when we see it, we don't really take it seriously.

CONAN: Because we, as you say, human nature somehow requires us to go back and say, well, of course, that was perfectly understandable.

Dr. TALEB: Yes. For example, take the Great War…

CONAN: World War I.

Dr. TALEB: Of course, the World War I and the sequel, okay, of course, the two wars really in one. The - before 1914 - okay, first of all, I would have deemed completely crazy if someone described, you know, (unintelligible) and said what was going to happen, he will definitely be taken to a mental institution, all right. Yet the world was crazy and is still is crazy. But anyway, so before the fact, okay, we had no reason to believe that such a thing could occur.

But now take history books. Every single student learns about the tension that were mounting in Europe leading to this unavoidable war. I looked at the research and discovered effectively that war bonds - at this rate, you know, shown by Niles - historian Niles Ferguson - the war bonds did not know about that event.

CONAN: In advance.

Dr. TALEB: In advance, so in advance we didn't know it was even plausible. But after the fact, we're going to try to find explanation because we'd like to feed children with the explanations and tell them, oh, it was because there was a mounting tension between Germany and - on one hand - France and Great Britain on the other. But of course you've had a lot of periods of tension that didn't lead to war, you see. So we - by teaching children history, we try to convince them that we understand the world a lot more than we actually do.

CONAN: Yet there is another explanation we're trying to understand what happened, is to say, we didn't foresee this utter disaster followed. Maybe if we studied what lead up to it, we could avoid the next one.

Dr. TALEB: Yeah. But the problem is then you focus on - you have what I call the area of specificity. You're going to focus on one disaster, like the French did after the war, they focus, they said, well, okay, we're going to avoid the next one, going to build a wall. They built that imaginary line. And sure enough, Hitler - it delayed Hitler by a couple of day, you see. He went right around it, maybe a couple of weeks, you see.

So we learn from Black Swans, from specific Black Swans, but we do not learn from the fundamental unpredictability of the world in some domains. So what I try to do with the book is draw a map, okay, a map of how to live in a world that we don't understand in two respects. The first one, that we have large events, you know, events of really large consequence and very low probability that really dominated.

And the second one is that you can do something about some of them, or a lot of them. You can actually benefit from it. That's sort of my book. It's what we can do in the world by figuring out where is it, okay, that the Black Swan dominates, which areas are those in which we cannot predict, and in which the experts is not an expert, and so on. That's what I try to do with the book.

CONAN: Okay. And let's take another of the examples you used, or the methods you used in the book. If you are, for example, trying to determine the average height of the human male, and you got a thousand people, you measured a thousand people, you'd get a pretty good idea of the average height of the human male. Even if you went outside the example and say let's throw in the tallest person I've ever met in my life, and you say, there's Yao Ming and he's seven-feet-six-inches tall. One person in the sample of a thousand does not affect it every much.

If, however, you're also trying to figure out the average wealth of human people, and you put a thousand people into a sample, then you throw in the richest person you've ever heard of, Bill Gates, this skews things considerably.

Dr. TALEB: So I define these two areas - one in which the exception, the tallest man human, won't make much difference. The other one, you know, is not consequential. And the second where the richest makes - is very consequential. You can - I will never be able to become thin in one single day. You can become poor in one single day. So I define these domains. One of them is the one in which we develop our intuition. I call it Mediocrestan. And it's pretty much a world in which the Black Swan doesn't have consequences…

CONAN: It's the physical world.

Dr. TALEB: Most of the physical - a lot of the physical world, okay. The second one is what I call Extremistan. It's an environment, socio-economic environment in which the exception can dominate. So let's see how it can dominate. Take the cultural industry, okay, or culture. A small number of books, you know, in 1994 I think five novels out of 10,000, okay, represented half of sales, okay, 70 percent of the sales. That was in 1994.

Typically, between five and 20 novels represent half the sales of novels, okay. So the exception in that domain dominates, okay. And if you can predict which novel is going to be the next bestseller or which movie is going to set the trend or which idea is going to dominate our thinking, okay - so if you cannot predict those, effectively, you cannot predict the future.

And they are the reason behind our inability. I looked at the track record of experts. Really, we're very good at, you know, at convincing ourselves that we can predict, but we can't predict in a lot of domains. So these are the domains in extremist stand that our (unintelligible). So this is sort of what I did. I drew the map in the book based on that distinction.

CONAN: Let's see if we can get some callers in on this conversation. Our guest is Nassim Nicholas Taleb. He's the author most recently of "The Black Swan: The Impact of the Highly Improbable." Our number is 800-989-8255, 800-989-TALK. Email is talk@npr.org. And you can also go to our blog, npr.org/blogofthenation. And we'll begin with Glen. Glen's with us from Columbus, Ohio.

GLEN (Caller): Yes. If I'm understanding your theory correctly, I thought of two examples. One was the Wright brothers' invention of the airplane during a time when it was considered impossible to do heavier-than-air flight. And so their achievement was not reported for several years simply because the world press thought it was impossible.

The other example was our commonly held belief that 200 years ago or more that the typical person died at aged 45 because that's the average age of death, when there's a big difference between typical and average. When you use the example of a rich person walking into a room full of homeless people, certainly the average is $100,000 a person.

CONAN: Yeah. Do either of those qualify as a Black Swans, do you think?

Dr. TALEB: I think - let me talk about the first one. Yeah, the first one effectively, most technological discoveries are Black Swans.

CONAN: There were an awful lot of people working on heavier-than-air flight. The Wright Brothers happen to get there first, and even that's debated.

Dr. TALEB: And even - no, but after the fact we probably had this idea that it was predictable. I looked at - when I did this, I'd been looking (unintelligible) I looked at the impact of technologies by taking the three - I'm taking probably 200, but let me give as an illustration the three most impacting recent technologies: the Internet, the laser, and the computer. Okay. Certainly the Internet was not designed to enhance the private lives of teenagers, okay, or their sentimental lives, okay. It was designed as a military application, okay. The Internet was not made for word processing, but that's what it ended up doing. It seems…

CONAN: Good at other things, too. But yes…

Dr. TALEB: Yes. But that was - no. Even, you know, when the boss of the IBM…

CONAN: Right.

Dr. TALEB: …the gentleman who owned IBM, said there's no room for this machine. It was mostly made for complex calculation. He said maybe five. We'll get five of this. Why would anybody want to buy this machine? But effectively we discovered uses later. And then of course the laser. The person who, you know, discovered or invented the laser, really, the machine was not - their mind was not on eye surgery or on the digital revolution. He just wanted to impress his friends by splitting the light beams. That was his idea, you see.

So, effectively, we live in a world dominated by technology. We cannot predict the next technology because - and typically those technology we end up - that we predict end up usually going nowhere. So we can't predict them. But it is not a problem if we know it, okay. It's only a problem if you don't know it. Okay.

CONAN: Glen, thanks very much for that call. We're talking about he impact of massive unpredictable events called Black Swans and why we so love to concoct explanations for them after the fact. 800-989-8255, if you'd like to join us. I'm Neal Conan. You're listening to TALK OF THE NATION from NPR News.

(Soundbite of music)

CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington.

We're talking today about the things we can't know, from world events to market volatility. We like to think that risk can be measured and managed. Nassim Taleb's new book, "The Black Swan: The Impact of the Highly Improbable" argues that history is dominated not by the predictable but by the highly unpredictable, massive unforeseeable events he calls Black Swans.

If you have questions about Nassim Taleb's theory of unpredictable events or questions on how to deal with all of this uncertainty, give us a cal: 800-989-8255. 800-989-TALK. Email is talk@npr.org. Check out our blog, too: npr.org/blogofthenation.

And let me ask you about - one of the historical examples you give is the collapse of Lebanon into civil war when you were a kid, an event that had a profound effect on your life. You pointed out that for 1,300 years the Mediterranean society in (unintelligible) what's now called Lebanon, managed to get along with a lot of tolerance on everybody's side, fairly amount of tensions from time to time, but everybody pretty much got along and there was a belief that it would always get along. Of course it dissolved into 15 years of terrible civil strife. But which is more important, really, 13 centuries of predictable peace or the 15 years (unintelligible) the Black Swan that started the civil war.

Dr. TALEB: Well, let me - I will answer you with a great analogy, which is - you know, I was a trader before becoming a probability person.

CONAN: A trader on Wall Street.

Dr. TALEB: On Wall Street, yeah. I was an expert in derivatives. And there is a saying that this gentleman so and so, whom I won't name. And he said he made $8 million in eight years and lost them all in eight minutes, okay. So these events, you know, don't occur often, but when they occur they can be so devastating as to completely change the whole scenery. So you cannot ignore them even if you had, you know, someone can be profitable for a long time.

Banks in America lost 100 percent of the money, every single penny ever made in the history of banking in the summer of 1982, okay. So what I'm taking from this is that there are some areas that are prone to a negative Black Swan and some areas that are prone to positive Black Swan. And we don't seem to make a good distinction between them, you see. For example, banking and insurance, you know, the insurance companies. One single episode - the Asbestos bankrupted the names of the Lloyd's of London.

CONAN: Yes.

Dr. TALEB: The Lloyd's of London is like, you know - so we've had - so there are some sparks in economic life can be dominated by a negative Black Swan and we should watch out for those. On the other hand, you have some spots in the economic life that can only be exposed to positive Black Swans. Say, for example, financial capital, okay. You can lose money for a long time and have an event, a single event that will make you extremely successful. You see. So what matters is not how long you've been successful, how long you've been unsuccessful, but what matters is the total. And that total is typically going to be dominated by the Black Swan.

CONAN: Let's see if we can get another caller on the line. This is DJ. DJ's with us from Sycamore, Illinois.

DJ (Caller): Hi. I wanted to say that I enjoy listening to your show.

CONAN: Thank you.

DJ: Your guest mentioned two examples. One was human height and another was accumulated wealth. Some of these things like human height would have natural limiting factors and is not too much of a deviation. There's no real top-end limit to how much wealth, let say, you can accumulate. Would we be better off looking, learning how to recognize limiting factors or find the things that we were not aware of, you know? Instead of looking for the Black Swan, maybe look for the ripples on the pound that it's leaving so we can know that there is one there, and that way it will be easier to find all these hidden Black Swans.

Dr. TALEB: Bingo. What I did is I made a demarcation between the two domains based on which domain can be dominated doesn't have a limit, okay, like namely wealth or Internet hits and stuff like that. Or these what I call domains are prone to Black Swans. This is how I make the demarcation. Like height. You know, someone, I guess everyone even, you know, has a mother so you can't be, you know, 100, 200 kilometers tall. You have to have a mother, okay. And the mother also needs to be large. So there are structural limits on how tall a person can be. There's no structural limit on how wealthy a person can be. You see. Same with…

CONAN: One of the things you also pointed out, interestingly, is that in Mediocrestan, where you're measuring physical things like height for the most part, this is a pretty fair world as you describe it. While Extremistan, where there's no limit on how rich you can be or how many novels you can publish, nevertheless, as you point out, amidst all those novels published in 1994, five of them got all the sales. It's unfair.

Dr. TALEB: Yeah. It is. Effectively society has been moving from mediocre stand in a lot of professions, okay. If you're a dentist you're in Mediocrestan in a lot of professions. If you're a dentist, you're in Mediocrestan. In other words, you're not going to have most of your income in one single tooth, teeth-drilling episode, you see. But if you are…

CONAN: You charge by the hour and you can only fit 20 patients into the day.

Dr. TALEB: By the hour, exactly, okay. So this is what I call none-scalable profession. You have to be there to perform, okay. So you can't do it long distance or at least not now, and so on.

Whereas if you're an author, okay. In the past, okay, you had to, you know, we did not have - the information age made the world dominated by a very small number of authors. These don't have to write a book every time someone buys it. Like now I have "The Black Swan," my publisher doesn't call me every morning to say, oh we sold x-thousand copies, you have to write them. All right. I just wrote the book and now I can die, it might help sales. There's no need for me to be around to perform the act, okay.

So this is how I separate between these two professions: the first one will be dominated by the average, the second one will be dominated by the exception.

DJ: But did you have - I'm wondering if you had any thoughts of how we can learn to spot the limiting factors that we may not even be aware that they're out there until they suddenly exert themselves?

Dr. TALEB: What I do is I say, okay, this environment is prone to Black Swans. Now I have to figure out if it's open to positive Black Swans or negative Black Swans, okay.

DJ: Thank you, sir.

Dr. TALEB: …if that is prone. So this is how I defined it. If you are in the book business, well, I mean, a book can flop or it can become a bestseller. So the error has small costs, okay, if you do it right, and the payoff can be monstrous, okay. There are some businesses where the error can be monstrous and the payoff is small, okay. And I show that most of - by opening your self, you know, human discoveries it comes from trial and error. Typically, the error is almost, you know, negligible. It doesn't cost a lot and the discovery has a huge payoff. But most people are afraid of the error, you see. We are wise to be afraid of the error.

DJ: (unintelligible)

Dr. TALEB: Sorry.

DJ: I hope your book does that well. Thank you.

CONAN: Thanks very much for the call.

Dr. TALEB: Thank you very much.

CONAN: Let's get another caller in, and this will be Rob. Rob is with us from Three Rivers in Washington.

ROB (Caller): Yes, hi.

CONAN: Hi.

ROB: I've been waiting awhile to say this. This is first time listener, long time caller.

(Soundbite of laughter)

CONAN: That's highly improbable, Rob.

ROB: I know. I'm glad you detected that. That might be some type of swan if we think it of the right way.

CONAN: Maybe a gray one. But let's go on.

ROB: A gray one, an ambiguous one. Anyway, I was calling more to the point of complimenting the author. I haven't, of course, read it, but it does seem to be really reinforcing a very important direction in our world today, which I think from the more scientific point of view you might call the role of complex systems or complex adaptive systems. It turns out that when anything creative happens it usually isn't a linear of thing of one step after the other, but something rather close to the edge of chaos that happens. And it sort of comes out of nowhere almost. And people have a hard time predicting these events because of that. But I think it's something that we're starting to learn more and more about from a sort of scientific point of view. And I think that's a good compliment to the author, because I think he's opening the eyes of people to something rather important.

Dr. TALEB: Yeah. Thank you very much for bringing that up. Effectively, I got a little more technical in the notes in the back, but…

ROB: I look forward to reading the book because that's…

CONAN: A little more technical is a bit of an understatement.

Dr. TALEB: Yeah. Okay. What happened is a mediocre - what I call Extremistan is a complex system. And I have a tableau of simple versus complex system, linear versus nonlinear. But let me explain in two words where the mistakes are usually made.

In a complex system, you cannot easily see the link between action and consequence, okay. Like, for example, next time you want to invade a country, you should take that into account, that what you do, what you think you're going to do, all right, may not necessarily result even in the best of circumstances, okay. If everything happen as planned, it may not really result in what you wanted to yield, okay.

So the predictability of a complex system is very weak, okay. This is the first lesson. If you identify - so wars are hard to predict. We don't know it, of course. But conflicts, smalltime neighborhood conflicts, are very easy to predict, okay. Raids, the result of raids, we're very good at figuring out whether we're going to win and the effect of you're winning, you know, in a given raid.

CONAN: Success.

Dr. TALEB: So we have succeeded. The effect of success, okay. So primates are very good. So we are wired to understand raids and small conflicts. We're not wired to understand something far more complex called war, okay. And this is why almost every war had - the hundred wars since Napoleon have been, you know, completely mispredicted and almost completely mishandled, except for a couple of exceptions, one of which was the first Gulf War, you see? So we have - so this is one thing about complex systems.

The other thing I say in the book, that if you identify which variables are from extremist and difficult to predict, okay, you can have a good life, because they have very simple rules to them - like the climate is complex. We're very good at predicting tomorrow's weather, okay? I mean, I would say rather good, but we're okay.

Okay, your forecast degrades this time. Okay, we're going to be very bad at predicting the climate of the world 100 years from now, you see. We are very good at predicting the mundane, the ordinary in a very short term. We're horrible at predicting the long term. Like, for example, economic and stock market variables, we cannot predict. We are horrible at it.

People that we call experts, effectively, are no better than cab drivers, okay? They can't predict revolutions better than cab drivers. They cannot predict inflation better than cab drivers. And they can hardly predict earning ratios better than cab drivers, okay? But we call them experts, but in these complex - it's not their mistake. The only thing I blame them for is not knowing that they can't predict better than cab drivers, you see? So…

CONAN: I was interested in your whole cab driver conversation. I used to be an editor at various points in my life, and I would always hear - foreign correspondents, their first day in a country, they'd be quoting, as one local said - and I said, is that the guy who gave you the ride from the airport? And if it was, I would make him take that out. I'm now thinking maybe I was wrong about that. You're suggesting cab drivers are just as well informed as everybody else.

Dr. TALEB: They're as good - the difference is that - this is why I recommend, if you want to talk about stock market to talk to a cab driver, not a stock broker, because, you know people talk about the stock market for therapy - not really. There's nothing effective. And if you listen to a cab driver, you're not going to rely on them and take as much risk as if you listened, watched CNBC or listen to experts, you see? And that's what the problem - yes?

CONAN: I was just going to say that we're talking with Nassim Nicholas Taleb. His new book is "The Black Swan: The Impact of the Highly Improbable". If you'd like to join the conversation, our number is 800-989-8255 - 800-989-talk. Email is talk@npr.org. There's also a conversation going on at our blog, that's at npr.org/blogofthenation. And you're listening to TALK OF THE NATION from NPR News.

And let's get another caller on. This is Dave, Dave with us from Bend, Oregon.

DAVE (Caller): Yeah. Good afternoon.

CONAN: Afternoon.

DAVE: Mr. Taleb, I wanted to thank you for taking the time to tell us about your new book. I read your first book, "Fooled by Randomness," a number of years ago. And I've been a trader in the currency market since - oh, geez -1994, and I run a hedge fund. And I just wanted to say that the - what I see you going with in terms of your book, "The Black Swan," it seems as though there's many parallels to your first book.

And I have to say to let the audience know that a lot of great insight in your first book in terms of really getting people to think that, you know, I don't - maybe I'm not as smart as I think I am, maybe my string of successes had been simply right place, right time. And I that's not to say that there may not be some skill involved, but it really put me, specifically, in a different mindset to know that, you know, sometimes you can be just in a very fortuitous situation. So I look forward to reading your new book, and I'll take your comments off air. But I just want to let you know it was a pleasure reading your first book, and I appreciate your insights very much.

Dr. TALEB: Thank you very much. And, you know, you're an insightful person, because typically, most people who are successful don't think that their success - don't have any dose of skepticism. They think their success comes entirely from skills. And effectively, what I say in "Fooled by Randomness" is not that, you know, there are no skills or, you know, it's not all luck. What I'm saying is we're much more likely to mistake luck for skills than skills for luck, you see? And - but some people are introspective, and these are the people who, in the long run, succeed the most.

CONAN: It's interesting also, the two categories you go, a skill would seem to be applicable to Mediocrestan, while luck is a prime element, it seems to me, of Extremistan.

Dr. TALEB: Yes. But what I did in the "Black Swan" is I showed people how effectively, you need - you can do with skills. In Mediocrestan, you can - what I say is the following: with skills in the Mediocrestan, you're going to be very successful, have a happy life, be upper middle class, probably, you know, you're going to definitely do very well with skills in Mediocrestan, because the link between action and reward is going to be very visible, and you know what to do.

In Extremistan, skills are often necessary but highly insufficient, you see? So if you're a writer, you need to, you know, be able to compose sentences. You need - you can have all the ingredients, yet fail because "Harry Potter" is going to take the shelf space and you're going to be, you know, out of print and people are not even going to notice your existence, you see?

So because Mediocrestan, one person wins everything. There's a much higher dose of luck in Mediocrestan. But it doesn't mean - and scientific discovery is the same thing, okay? Everyone, okay, who succeeded - okay, almost everyone succeeded in science tried and worked very hard. But a lot of people were just as skilled, worked very hard, then happened to be right there when, you know, the big thing was discovered.

CONAN: Right. When they found the mold that turned out to be penicillin, or whatever it was.

Dr. TALEB: Exactly.

CONAN: Yes. But this aspect of Extremistan and the "Black Swan" dominated by extreme winner-take-all inequality, something you say we have to accept and learn from. Nevertheless, it's not something we can be necessarily - well, as a humanist, as you say, this is not something you think is very good.

Dr. TALEB: I don't like it, that every attempt to correct it - almost every attempt to correct it - led to worse consequences. You know, that - and the difference, I mean, we're not as financially driven as economists will like us, you know…

CONAN: Like to think we are, yes.

Dr. TALEB: Like to think we are. Okay, we're not as - you know, we like pecking order. Okay, and the Soviets, you know, had an even higher gradient on the pecking order. They had superheroes, okay. You see, they created superheroes. So they had dwarfs and big heroes, okay. These people weren't paid, probably, as much as a Bill Gates, but they were still the big superheroes.

So we have now been able to fight this concentration, which comes from information, that you're going to have a very small number of people in the limelight. These people will live longer. These people will have most of the attention. And, you know, artists crave attention, when in the Extremistan, a large number of people are going to suffer. So, I mean, how to cure it? I have no idea, you see. I'm just applying the problem. I have - and often, the cure - you know, we know what the cure led to, okay - attempts to cure it, what it led to, all right?

CONAN: We're talking with Nassim Nicholas Taleb. His book is "The Black Swan: The Impact of the Highly Improbable". Predictably, we're going to take another call with him after we come back from a short break, and then we're going to go on to talk with unsigned artist Ingrid Michaelson. MySpace found her and "Grey's Anatomy" helped make her famous. If you're an independent artist, how has the Web changed the way that we market and profit from music and other arts? Do you need a record company anymore? 800-989-8255. I'm Neal Conan. It's TALK OF THE NATION from NPR News.

(Soundbite of music)

CONAN: This is TALK OF THE NATION. I'm Neal Conan in Washington.

In a few minutes, how Ingrid Michaelson made it from posting her music on MySpace to maybe one of the most coveted spots on TV. But right now, let's talk about highly unpredicted events that author Nassim Taleb calls Black Swans and how to get even with the vicissitudes of these giant surprises. Nassim Taleb is with us. You can read about how his childhood helped shape his theory of the unexpected. That's at npr.org. In the meantime, let's get another caller on the line. And this is Bill - Bill with us from Cincinatti.

BILL (Caller): Hi, Neal. I'd like to pick up the thread of an idea introduced by one of your earlier callers. Until very recently, we have assumed that our universe was a very Newtonian universe, a very linear universe, which says that if you have enough data, everything is predictable.

On the other hand, we have recently discovered that the universe is not Newtonian. It is, in fact, chaotic and complex, which says that we can essentially predict nothing. Now, that comes with some caveats, but predictability is not a component of chaos theory, which we think now rules our universe. I just like to add that comment.

CONAN: Mm-hmm. Is that a factor in your thinking, Nassim?

Dr. TALEB: Yeah, definitely. In the book, I take that story of the butterfly in India, you know, where how butterfly floating in India can cause a storm in Oklahoma, okay. And I - but I explained what we can do with this idea. I show - if you are in a - you know, you have a billiard - billiard balls on a table and you're trying to predict the second or third bounce, anybody could do it. Not a problem. Okay? Which means you can predict two, three bounces.

The ninth bounce, you need to have an equation that includes every single person around, because the gravitational pull of a man, okay, in a room, will impact the trajectory, okay. So you have to have a complicated equation. To predict the 53rd bounce, okay, of the billiard ball on the table - the 53rd bounce, every single elementary particle in the universe needs to be part of your equation, okay?

CONAN: That's a big equation.

Dr. TALEB: It has to be. So you see how - the lesson I take from this, first of all, it's unpredictable, but that it gets worse faster. In other words, that with time, okay, time, your ability to predict degrades very, very fast, which is why you can predict tomorrow's - I mean, even in Washington, I'm sure you can sort of predict tomorrow's weather, okay? But we cannot predict climate 30 years from now.

CONAN: All right. Bill…

Dr. TALEB: And socioeconomic events, you know, being also complex. It's very hard to predict. It's impossible to predict what's going to happen 10 years from now in America.

CONAN: Bill, thanks very much for the call.

BILL: You're welcome.

CONAN: All right. And let's get one last caller in. And this is going to be Hugh. Hugh's with us from Oakland, California.

HUGH (Caller): Hi. What about Black Swans that seem to be staring one in the face but people don't pay attention to and can also create other Black Swans? Specifically, most of our news media coverage - this program and NPR an exception - cover news and information in black and white instead of shades of gray, which can lead to our politicians and ourselves covering matters in the same way.

Dr. TALEB: That's a good - that's a very good question. Effectively…

CONAN: Thanks for the kind words, Hugh.

Dr. TALEB: Oh, thanks. Sorry?

CONAN: I'm just saying thanks for the kind words, but go ahead with your explanation.

Dr. TALEB: Yes. The - what happened is, what you're going see particularly in the digital media, okay, is going to distort your - the bat of reality in your mind, and you don't have to think, you know, that the world is dominated by a certain number of Black Swans, okay, which effectively are not as consequential as they make them out to be.

Like, for example, plane crashes kill much, you know, fewer people than car crashes, okay? But the media will - is likely to talk about plane crashes, okay? So this sort of distorts what representation you have of reality, because the sensational guides the commercial media, when effectively the statistical is boring, okay? So this is one of the problems I discuss in the book, and it has consequences, is that when you - the political discourse is dominated by the sensational.

HUGH: What amazes me is we even have an expression, an ostrich sticking its head in the sand - and we still don't know how to apply such exceptions when it comes to things like the media.

Dr. TALEB: Yeah, this is…

CONAN: Well, one of theories of your book is, in fact, that we can create Black Swans, and not necessarily a high proportion of good ones, by our failure to recognize the obvious.

Dr. TALEB: Yeah, we fail to see the - because we're not - I mean, most people fail to see the obvious because of - they have too much information, and you drown in it. And that sort of explains what impact it has on your brain, why information is bad for you if you supply a clinical person - say, a clinical doctor - with 50 pieces of information, his ability to diagnose what you have will degrade, okay. If you go to 10 pieces of information, you'll do better. Okay. Not because 50 pieces of information is not better than 10 pieces, but that a - what happens is our brain cannot handle too much information.

CONAN: Hugh, thanks very much for the call.

HUGH: Thank you for the program.

CONAN: Appreciate it. And I'm sure that Nassim Nicholas Taleb would argue that every single piece of information in his new book is absolutely critical, and you should review them all carefully. "The Black Swan" is the name of the book. It's subtitled "The impact of the Highly Improbable". Nassim Taleb, thank you very much for being with us today.

Dr. TALEB: Thank you very much inviting me. Thanks.

CONAN: Nassim Taleb joined us today from the studios of KPCC in Pasadena.

Copyright © 2007 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.