On New Years day I received a prescient essay from Nassim Taleb, author of The Black Swan, as his response to the 2008 Edge Question: "What Have You Change Your Mind About?" In "Real Life Is Not A Casino", he wrote:

I've shown that institutions that are exposed to negative black swans—such as banks and some classes of insurance ventures—have almost never been profitable over long periods. The problem of the illustrative current subprime mortgage mess is not so much that the "quants" and other pseudo-experts in bank risk-management were wrong about the probabilities (they were) but that they were severely wrong about the different layers of depth of potential negative outcomes.

Taleb had changed his mind about his belief "in the centrality of probability in life, and advocating that we should express everything in terms of degrees of credence, with unitary probabilities as a special case for total certainties and null for total implausibility".

Critical thinking, knowledge, beliefs—everything needed to be probabilized. Until I came to realize, twelve years ago, that I was wrong in this notion that the calculus of probability could be a guide to life and help society. Indeed, it is only in very rare circumstances that probability (by itself) is a guide to decision making. It is a clumsy academic construction, extremely artificial, and nonobservable. Probability is backed out of decisions; it is not a construct to be handled in a stand-alone way in real-life decision making. It has caused harm in many fields.

The essay is one of more than one hundred that have been edited for a new book What Have You Changed Your Mind About? (forthcoming, Harper Collins, January 9th).

Why do we live in a society that, having ruined its natural environment, is now about to knowingly ruin its social environment and the lives of an entire generation? In his book Collapse: How Societies Choose to Fail or Succeed, Jared Diamond specified the causes that encourage elites to destroy their societies."They feel safe because the perpetrators are typically concentrated (few in number) and highly motivated by the prospect of reaping big, certain, and immediate profits, while the losses are spread over large numbers of individuals."

FRANK SCHIRRMACHER is a German journalist, essayist, writer, and since 1994 co-publisher of the leading national German newspaper Frankfurter Allgemeine Zeitung (FAZ). He is one of Germany's leading journalists.

Frank Schirrmacher's Edge Bio Page

Statistical and applied probabilistic knowledge is the core of knowledge; statistics is what tells you if something is true, false, or merely anecdotal; it is the "logic of science"; it is the instrument of risk-taking; it is the applied tools of epistemology; you can't be a modern intellectual and not think probabilistically—but... let's not be suckers. The problem is much more complicated than it seems to the casual, mechanistic user who picked it up in graduate school. Statistics can fool you. In fact it is fooling your government right now. It can even bankrupt the system (let's face it: use of probabilistic methods for the estimation of risks did just blow up the banking system).

An Edge Original Essay

Introduction

When Nassim Taleb talks about the limits of statistics, he becomes outraged. "My outrage," he says, "is aimed at the scientist-charlatan putting society at risk using statistical methods. This is similar to iatrogenics, the study of the doctor putting the patient at risk." As a researcher in probability, he has some credibility. In 2006, using FNMA and bank risk managers as his prime perpetrators, he wrote the following:

The government-sponsored institution Fannie Mae, when I look at its risks, seems to be sitting on a barrel of dynamite, vulnerable to the slightest hiccup. But not to worry: their large staff of scientists deemed these events "unlikely."

In the following Edge original essay, Taleb continues his examination of Black Swans, the highly improbable and unpredictable events that have massive impact. He claims that those who are putting society at risk are "no true statisticians", merely people using statistics either without understanding them, or in a self-serving manner. "The current subprime crisis did wonders to help me drill my point about the limits of statistically driven claims," he says.

Taleb, looking at the cataclysmic situation facing financial institutions today, points out that "the banking system, betting againstBlack Swans, has lost over 1 Trillion dollars (so far), more than was ever made in the history of banking".

But, as he points out, there is also good news.

We can identify where the danger zone is located, which I call "the fourth quadrant", and show it on a map with more or less clear boundaries. A map is a useful thing because you know where you are safe and where your knowledge is questionable. So I drew for the Edge readers a tableau showing the boundaries where statistics works well and where it is questionable or unreliable. Now once you identify where the danger zone is, where your knowledge is no longer valid, you can easily make some policy rules: how to conduct yourself in that fourth quadrant; what to avoid.

—John Brockman

NASSIM NICHOLAS TALEB, essayist and former mathematical trader, is Distinguished Professor of Risk Engineering at New York University’s Polytechnic Institute. He is the author of Fooled by Randomness and the international bestseller The Black Swan.

Nassim Taleb's Edge Bio Page

REALITY CLUB: Jaron Lanier, George Dyson

These are exhibitions which are not material, but which are more virtual, virtual in the sense of them always being able to be reactualized. They can be revisited and reactualized and updated, and they are also not related to a place. The exhibition can go to where the viewer is. Anybody in the world can download these formulas and pin them on the wall, or they can do their own and trigger their own formulas. We are in the very early days of understanding how the Internet can be used for exhibitions.

15 May – 17 August 2008

Reykjavik Art Museum – Hafnarhús

Experiment
Marathon
Reykjavík

Curated by Hans Ulrich Obrist

In collaboration with artist Ólafur Elíasson

HANS ULRICH OBRIST, a Swiss curator, is Co-director of Exhibitions and Programmes and Director of International Projects, of the Serpentine Gallery in London.

Introduction

By John Brockman

Beginning May 15, Edge travels to Iceland for the Reykjavik Arts Festival, which will reprise the Edge Formulae of the 21st Century project, presented last October at the Serpentine Gallery, London, by curator Hans Ulrich Obrist, Co-Director of the Serpentines Exhibitions and Programmes. ThatWorld Question Center project was a response to Obrist's question: "What Is Your Formula? Your Equation? Your Algorithm?"

One of the highlights of the Reykjavik Arts Festival will be the Experiment Marathon Reykjavík, an exhibition and program of related events organized by the Reykjavík Art Museum and the Serpentine Gallery, London. Lasting from 15 May through August 17, the focus of the project is experimentation. The RAM [Reykjavik Art Museum] will become a laboratory in which leading artists, architects, film-makers, and scientists will create an environment of invention through a series of installations, performances and experimental films. 

Additionally, previous related projects will be presented as archives within the exhibition. The exhibition and related events are curated by Hans Ulrich Obrist, Co-Director of Exhibitions and Programmes and Director of International Projects, Serpentine Gallery, London, in collaboration with artist Ólafur Elíasson. 

The Experiment Marathon Reykjavík builds on the enormous success of the recent Serpentine Gallery Marathons which have taken place in successive Serpentine Gallery Pavilions, an annual architectural commission conceived in 2000 by Serpentine Gallery Director, Julia Peyton-Jones. In the 2007 Serpentine Gallery Experiment Marathon, which took place in the Pavilion designed by Ólafur Elíasson and Kjetil Thorsen, leading artists, writers and scientists performed a huge variety of experiments, exploring perception, artificial intelligence, the body and language. Participants included John Brockman, Steven Pinker, Marina Abramovic and John Baldessari. The event was collaboration with Thyssen- Bornemisza Art Contemporary. The Serpentine Gallery Marathon series began in 2006 with the 24-hour Interview Marathon conducted by Rem Koolhaas and Hans Ulrich Obrist. A presentation of these previous programs will be shown in the Reykjavik Experiment Marathon in a pavilion of archives designed by Ólafur Elíasson and Einar Þorsteinn. Another collection of archives will refer to Hans Ulrich Obrist’s and Barbara Vanderlinden’s exhibition, Laboratorium, from 1999.

A substantial catalogue will be published on this occasion, documenting the Experiment Marathon Reykjavík together with previous marathons and with textual contributions by Bruno Latour and others.

Obrist and I, as Edge readers may recall, have a mutual connection: we both worked closely with the late James Lee Byars, the conceptual artist who, in 1971, implemented "The World Question Center" as a work of conceptual art.

As a curator, he is ever curious about the world around him and this includes the latest ideas and developments in science. Obrist interviewed me for Art Orbit in the 90's. With this Edge feature, I get to ask the questions.

-JB

HANS ULRICH OBRIST, a Swiss curator, is Co-director of Exhibitions and Programmes and Director of International Projects, of the Serpentine Gallery in London.

Hans Ulrich Obrist's Edge Bio Page