Concepts / Risk and surprise
The black swan.
A black swan is a rare event with a very large impact that lies outside what past experience suggested was possible. Once it has happened, people tend to explain it as if it had been predictable all along.
The idea was set out by Nassim Nicholas Taleb in The Black Swan (2007). The name recalls an old European belief that all swans were white, which centuries of sightings seemed to confirm until Dutch explorers recorded black swans in Western Australia in 1697.
How it works
What makes a black swan.
Taleb names three features: the event is an outlier, its impact is extreme, and it is explained only after the fact. All three play out against a long record that seemed to rule it out.
- 01
A calm record
Experience builds up a picture of what is normal, and every new case seems to confirm it.
- 02
Rare and unexpected
The event lies outside that picture. Nothing in the record pointed convincingly to it.
- 03
Extreme impact
Its consequences are very large, far larger than those of ordinary events.
- 04
Explained afterwards
Once it has happened, it is fitted into a story that makes it look foreseeable.
Why it matters
Mediocristan and Extremistan.
In some areas, such as people's heights, no single case can change the total much. Taleb calls this Mediocristan. In others, such as wealth or the size of disasters, one case can outweigh everything before it: Extremistan. In the second kind of world, a long calm record can make people more confident just when it should not. Try it in the graphic: switch between a mild and a wild world, and watch what happens to confidence.
Where it can show up
Where past data guides plans.
These are general patterns, not findings about any particular party, institution, government or election.
Forecasts and models
Models built on past data can understate how large extreme outcomes can be, because the record contains few or none of them.
Elections and public mood
A sudden, unforeseen event can change the issues on which an election is fought, faster than plans can adjust.
Plans and institutions
Plans that assume the future will resemble the past can leave institutions unprepared for a shock outside it.
Lessons drawn afterwards
Simple stories told after a shock can create confidence that the next one will be foreseen too.
Living with black swans
Preparing for what cannot be forecast.
If black swans cannot be forecast, the useful question is how exposed you are to them.
- Build in slack and robustness, so that a shock does not break everything at once.
- Do not lean on a single forecast. Treat confidence built on a calm record with care.
- Test plans against extreme scenarios, including ones that have never happened.
- Limit exposure to catastrophic losses, even when they seem very unlikely.
- Be wary of tidy explanations afterwards. Ask what was really knowable at the time.
Origins and further reading
Where the idea comes from.
A black swan depends on the observer: what surprises one person may have been expected by another. Two related ideas describe different kinds of extreme: the grey rhino, an obvious threat that is ignored, and the dragon king, an extreme event with its own mechanism.
- Taleb, N. N. (2007). The Black Swan: The Impact of the Highly Improbable. New York: Random House.
- Taleb, N. N. (2012). Antifragile: Things That Gain from Disorder. New York: Random House.
- Popper, K. (1959). The Logic of Scientific Discovery. London: Hutchinson. (On why no number of white swans proves that all swans are white.)
About this concept
A general idea, not a verdict.
This page explains a general concept from political science, economics and the study of risk. It does not describe or assess any particular party, institution, government or election. Related: The grey rhino and The dragon king.