The Fourth Quadrant: A map of the limits of statistics by Nassim Taleb

RANDOM WALK

RANDOM WALK

Random Walk—Characterized by volatility. You only find these in textbooks and in essays on probability by people who have never really taken decisions under uncertainty.

Nassim Nicholas Taleb, the man who wrote of the black swans, the highly improbable and unpredictable events that have massive impact, has recently written an essay for EDGE about how those who are putting society at risk are “no true statisticians”, but merely people using statistics either without understanding them, or in a self-serving manner. its entitled THE FOURTH QUADRANT: A MAP OF THE LIMITS OF STATISTICS and can be found on the EDGE site here>

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).

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