Ugly Duckling

I’ve been incredibly lucky with the books I’ve picked up recently. Though I did it largely on luck (and based on the reviews written on the back) I think that about one in two books so far has turned out to be enjoyable and enlightening.

Now I’m reading the book ‘Black Swan’ by Nasim Nicholas Taleb and it has been both highly original and highly entertaining. I haven’t encountered his way of looking at the world before, which wouldn’t be that terrific by itself, but what he has to say also seems relevant and at least in part believable.

Today I only want to talk about one thing he talks about, namely his idea of ‘Invisible Evidence’, which is best understood through the following thought experiment.

Imagine there is a group of 10,000 people, who are all courageous, risk takers, intelligent, socially capable and motivated. They all try to start their own business and make themselves at least well off, if not rich. Now, imagine that over the next year about 50% ends up being lucky and another 50% ends up unlucky. The unlucky people drop away (in this simplified world picture), while the 5,000 keep going. They work for another year and yet again about 50% is unlucky, while the other 50%’s lucky streak keeps going.

Now there is 2,500 left, the same again, 1,250, the same again, 625, and so forth. After about 10 years, or so, there will be only about 10 of these guys left. These guys will have been wildly successful for the last 10 years and, by all accounts, will probably have saved up a pretty penny. These guys are sitting very pretty.

They then sit down and write (and more importantly publish) books about how pretty they are sitting and what they did to get there. In the mean time, those guys that weren’t successful are forgotten, with no publisher interested in publishing their work, if they are even willing to write it. People then go out and buy these books, thinking that this is the way to be successful. After all, these ten guys went and made it this way! But they forget that the chance to be successful using this method is only 0.1%!

In other words, the odds of being making it in this way are extremely small, yet thousands of people, unaware of how things work, follow these ways avidly, for years at a time.

People look at the positive evidence (i.e. that which proves their belief right), but don’t look for the negative (as in that evidence that proves their beliefs wrong). As a result they believe something is highly likely that, in fact, is highly unlikely.

Fascinating, isn’t it? But wait, there is more! I’m just not going to write about it today. I’ll write about it soon, so check back often; or, better yet, go buy the book.