OP-ED CONTRIBUTOR
Learning to Expect the Unexpected
By NASSIM NICHOLAS TALEB
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9/11 commission has drawn more attention for the testimony it has
gathered than for the purpose it has set for itself. Today the
commission will hear from Condoleezza Rice, national security adviser
to President
Bush, and her account of the administration's policies before Sept. 11
is likely to differ from that of Richard Clarke, the president's former
counterterrorism chief, in most particulars except one: it will be
disputed.
There is more than politics at work here, although politics explains a
lot. The commission itself, with its mandate, may have compromised its
report before it is even delivered. That mandate is "to provide a `full
and complete accounting' of the attacks of Sept. 11, 2001 and
recommendations as to how to prevent such attacks in the future."
It sounds uncontroversial, reasonable, even admirable, yet it contains
at least three flaws that are common to most such inquiries into past
events. To recognize those flaws, it is necessary to understand the
concept of the "black swan."
A black swan is an outlier, an event that lies beyond the realm of
normal expectations. Most people expect all swans to be white because
that's what their experience tells them; a black swan is by definition
a surprise. Nevertheless, people tend to concoct explanations for them
after the fact, which makes them appear more predictable, and less
random, than they are. Our minds are designed to retain, for efficient
storage, past information that fits into a compressed narrative. This
distortion, called the hindsight bias, prevents us from adequately
learning from the past.
Black swans can have extreme effects: just a few explain almost
everything, from the success of some ideas and religions to events in
our personal lives. Moreover, their influence seems to have grown in
the 20th century, while ordinary events — the ones we study and discuss
and learn about in history or from the news — are becoming increasingly
inconsequential.
Consider: How would an understanding of the world on June 27, 1914,
have helped anyone guess what was to happen next? The rise of Hitler,
the demise of the Soviet bloc, the spread of Islamic fundamentalism,
the Internet bubble: not only were these events unpredictable, but
anyone who correctly forecast any of them would have been deemed a
lunatic (indeed, some were). This accusation of lunacy would have also
applied to a correct prediction of the events of 9/11 — a black swan of
the vicious variety.
A vicious black swan has an additional elusive property: its very
unexpectedness helps create the conditions for it to occur. Had a
terrorist attack been a conceivable risk on Sept. 10, 2001, it would
likely not have happened. Jet fighters would have been on alert to
intercept hijacked planes, airplanes would have had locks on their
cockpit doors, airports would have carefully checked all passenger
luggage. None of that happened, of course, until after 9/11.
Much of the research into humans' risk-avoidance machinery shows that
it is antiquated and unfit for the modern world; it is made to counter
repeatable attacks and learn from specifics. If someone narrowly
escapes being eaten by a tiger in a certain cave, then he learns to
avoid that cave. Yet vicious black swans by definition do not repeat
themselves. We cannot learn from them easily.
All of which brings us to the 9/11 commission. America will not have
another chance to hold a first inquiry into 9/11. With its flawed
mandate, however, the commission is in jeopardy of squandering this
opportunity.
The first flaw is the error of excessive and naïve specificity. By
focusing on the details of the past event, we may be diverting
attention from the question of how to prevent future tragedies, which
are still abstract in our mind. To defend ourselves against black
swans, general knowledge is a crucial first step.
The mandate is also a prime example of the phenomenon known as
hindsight distortion. To paraphrase Kirkegaard, history runs forward
but is seen backward. An investigation should avoid the mistake of
overestimating cases of possible negligence, a chronic flaw of
hindsight analyses. Unfortunately, the hearings show that the
commission appears to be looking for precise and narrowly defined
accountability.
Yet infinite vigilance is not possible. Negligence in any specific case
needs to be compared with the normal rate of negligence for all
possible events at the time of the tragedy — including those events
that did not take place but could have. Before 9/11, the risk of
terrorism was not as obvious as it seems today to a reasonable person
in government (which is part of the reason 9/11 occurred). Therefore
the government might have used its resources to protect against other
risks — with invisible but perhaps effective results.
The third flaw is related. Our system of rewards is not adapted to
black swans. We can set up rewards for activity that reduces the risk
of certain measurable events, like cancer rates. But it is more
difficult to reward the prevention (or even reduction) of a chain of
bad events (war, for instance). Job-performance assessments in these
matters are not just tricky, they may be biased in favor of measurable
events. Sometimes, as any good manager knows, avoiding a certain
outcome is an achievement.
The greatest flaw in the commission's mandate, regrettably, mirrors one
of the greatest flaws in modern society: it does not understand risk.
The focus of the investigation should not be on how to avoid any
specific black swan, for we don't know where the next one is coming
from. The focus should be on what general lessons can be learned from
them. And the most important lesson may be that we should reward
people, not ridicule them, for thinking the impossible. After a black
swan like 9/11, we must look ahead, not in the rear-view mirror.
Nassim Nicholas Taleb, the founder of a risk research and
trading firm, is the author of "Fooled by Randomness: The Hidden Role
of Chance in Life and in the Markets."
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