Taleb Confronts His Critics

The ever amusing Nassim Taleb has penned yet another response to his critics. He simply oozes defensiveness, which combined with his arrogance, strong opinions, and popularity, makes him incredibly fun to write about (if you haven't been accused of WEB VANDALISM by NNT, you are missing out).

So, here's his new summary, which he notes parenthetically, "I have had to repeat continuously" (perhaps his emphatic reassertion is not compelling?). Anyway, he notes that "theories fail most in the tails; some domains are more vulnerable to tail events." I agree. Newton's theories don't work at the Plank length, cosmology has trouble explaining the first minute of the universe, and evolutionary biologists have trouble explaining the Cambrian explosion 500MM years ago. Explaining most of the data is easier, and generally more important.

Now, one may protest, it's not a new point. However, Taleb argues that "nobody has examined this problem in the history of thought", highlighting the common problem of autodidact philosophers, that they tend to be too dismissive of the scientific literature. He notes what he is not talking about includes most everything that is directly related to extreme events and uncertainty: falsification, power laws, Hume's problem of induction, Knightian Uncertainty, Austrian Uncertainty, integrating fat tails into models, etc. He's aware of these arguments, but claims his idea is different

His big twist: that rare events can't be estimated, because they are rare, especially, when they are rare and have large impacts. Well, I would argue this issue is addressed in the literature he notes is unrelated to this point, as long disquisitions on the difficulty in estimating an event like WWI, or standard errors on order statistics, seems like the same subject to me. He can say these earlier discussions are flawed, but they address his key point. The more he explains himself, the more he sounds like some passage from Knight, Keynes, Hume, Minsky, etc. once you translate his neologisms (historia, ludic fallacy). I would argue Taleb is much less clear than these writers, because he's trying so hard to make the old sound new. Saying it's really new doesn't make it so.

He ends with a strong plea to not be wedded to a theory, to look at the facts and avoid fitting them into a preconceived theory. I'm sure the vast 'preconceived, untestable theory' crowd has a lot of soul searching to do. Yet, I think he's the best example of their kind. He has a theory: that he's saying something really 1)new, 2)true, and 3)important. He says many things, often contradictory, but he never manages more than 2 of those attributes in any assertion.