I’m continuing with yesterday’s application of Nassim Nicholas Taleb’s ideas on robustness and fragility to the human mind. Taleb says:
“There is an environment that creates Black Swan problems; a man made environment that I call ‘extremistan’ … where the exception plays a very large role“.
There can be no more “man made environment” than the human mind.
The universe neighbouring Exremistan is Mediocristan. In Mediocrostan you will have a reasonable chance of guessing the height of a person you’ve never met, in Extremistan how likely are you to guess the wealth of a person you know nothing about? Mother Nature puts maximum and minimum limits to height. Humans ignore their mother’s advice. The range between the most-in-debt and the richest person in the world is enormous.
In Extremistan there are few limits preventing the system from running away with itself – and eventually collapsing. In systemic terms, there are insufficient self-balancing feedback loops to prevent the self-amplifying feedback loops from snowballing out of bounds. Whereas Nature has ways of dampening run-away. I love the example of clover. When clover has a bad year it protects itself by limiting the size of the next generation of predators. By increasing production of formononetin, a birth-control chemical, clover temporarily sterilises would-be parents and prevents the birth of baby grazers, thereby giving itself time to recover. How cool is that?
The mind, on the other hand, has the capacity to runaway with itself. Molehills can very quickly become mountains, dramas can become crisis, and difficulties can become catastrophes. ‘Catastrophising’ as Albert Ellis called it can happen in seconds and without a single piece of new information. Nature acts on hard evidence.
In Extremistan, single events can have out-of-proportion effects. A life-long phobia can be established by a single incident. David Grove paid particular attention to “defining moments” after which “nothing can be quite the same again” and our life heads in a different direction. These are equivalent to the evolutionary biologists Niles Eldredge and Stephen Jay Gould’s moments of ‘puncutuated equilibrium’. When periods of short, rapid change punctuate longer periods of relative stability we are shocked out of the complacency that Mediocriostan breeds and reminded that we live in Estremistan. For a moment we realise that our faith in the longevity of Mediocriostan was largely wishful thinking. But then things recover and the inconvenient truth fades into the background – until the next time. the mind operates in Extremistan or at least has the potential to do so, then our everyday Mediocristan intuitions will, at these moments fail us. We will be so off base that our inappropriate responses can end up adding to the problem.
“I was at a conference in Korea and a gentleman from the IMF was showing us forecasts for 2010, 2011, 2012, 2013 and 2014 without showing us his forecasts for 2007 or 2008 or even 2001, 2002 or 2003.” (Taleb)
Perhaps we could ask clients to show us the accuracy of their previous forecasts about the changes they were planning to make! How long do their New Year’s resolutions last? How many times have they said they are going to quit smoking? How many diets have they been on? The aim of these questions is not to make people look dumb, but to highlight how often we don’t learn from our own experience. The convenient byproduct of our ability to not learn (that we don’t learn) is that we never actually have to change.
To paraphrase Douglas Adams: Some people live and learn, some people just live.
Continued in Robustness and Fragility Part 3
[Amended 31 Jan 2011][Amended 31 Jan 2011]
