The Narrative Fallacy

I've been reading The Black Swan by Nassim Nicholas Taleb. I caution you this is a highly enjoyable reading and not for the faint of heart. It will require more of you than the casual ten point business book.

Taleb approaches the impact of the highly improbable through multiple literary, philosophic and narrative references. I worked for years in risk management. The topic fascinates me.

The book has a whole chapter titled Umberto Eco's antilibrary. The idea is that the more you know, the larger the rows of unread books. So antilibrary means a collection of unread books, which the author dubs surprises. The Black Swan comes from our misunderstanding of the likelihood of surprises, because we take what we know a little too seriously.

In the section on knowledge, Taleb inserted a chapter on "The narrative fallacy". I found it particularly interesting given our recent discussion on Made to Stick, by Dan Heath and Chip Heath. Made to Stick explains how when we craft a story that adheres to certain criteria of simplicity, concreteness, credibility, and unexpectedness that are emotionally charged, the story, and our message, stick.

We like stories, we like to summarize, and we like to simplify, that is to reduce the dimension of things. In Taleb's words, "the fallacy is associated with our vulnerability to overinterpretation and our predilection for compact stories over raw truths." The chapter begins with a poignant story from an encounter the author made and ensuing exchange:

"I am a fan of your ideas, but I feel slighted." said a professor from a university in southern Italy after a speech by the author in the fall of 2004.

"These are truly mine too, and you wrote the book that I (almost) planned to write," he continued.

"You are a lucky man; you presented in such a comprehensive way the effect of chance on society and the overestimation of cause and effect. You show how stupid we are to systematically try to explain skills."

He then added: "But, let me tell you something: had you grown up in a Protestant society where people are told that efforts are linked to rewards and individual responsibility is emphasized, you would have never seen the world in such a manner. You were able to see luck and seaprate cause and effect because of your Eastern Orthodox Mediterranean heritage." [part of the dialogue is edited for brevity. Addition to this post suggested by Taleb via email]

It's hard to avoid interpretation -- brain functions often operate outside our awareness. I came across this concept in the study of neurological development and more simply in the biological fact that consciousness does not need to be present for us to think. The thinking part goes on anyway. If you've ever tried to meditate, you'll know what I mean.

We store patterns in our memory because that way we no longer need to memorize all the information we come across. Our heads afford us limited storage space, we are limited by time and most importantly, we have limited attention spans. The more we summarize, the more order we put in, the less randomness. So the same condition that makes us simplify pushes us to think that the world is less random than it actually is.

The Black Swan is what we leave out of simplification, the randomness. What happens when we remember something with less effort? As Dan and Chip Heath taught us, we can in turn sell it to/share it with others -- market it as a packaged idea. There is another interesting angle: causality. Because causality possesses chronological dimension, it can give us a sense of time. Causality makes time flow in a single direction, and so does narrative. They are both symptoms of the same reduction of dimension.

Think about history. In hindsight it may be much easier to explain what happened than it actually was to live through it. Memory is more of a self-serving dynamic revision machine: you remember the last time you remembered the event and, without realizing it, you change the story at every subsequent remembrance. I will add that while you renarrate and rearrange events, you also attach an emotional response to your past.

Take the news. It is often crafted to give you a cause-effect relationship that can help you understand what is happening by making it more concrete. I'm sure that while the media will tell us about the reasons why some of the candidates will not make next elections, user-generated swiftboarding, as Paolo Giussani over at Lunch Over IP wrote, will inject some chaos in the election theory.

"The problem with overcausation does not lie with the journalist," continues Taleb, "but with the public. We want to be told stories, and there is nothing wrong with that -- except that we should check more thoroughly whether the story provides consequential distortions of reality." [emphasis mine]

Journalists check the facts and then weave them into a narrative so they convey an impression of causality, making the world more complicated, not simpler. Stating 'we don't know why that happened' would be simpler. But that is a conversation for another day, and post.

What makes seemingly random matters more plausible? It's the because we add as a glue to the story. Taleb states we worry about the wrong likely events. He offers two varieties of rare events:

1. The narrated Black Swans, those present in the current discourse -- think of lottery winnings.

We overestimate because we can visualize our chance of winning. One in a million is not one in a thousand, yet we confuse them as we focus on the payoff. We base our prediction of these events on experience, so they are highly charged by emotion. Malcolm Gladwell talks about these quick acts or shortcuts in Blink.

2. Those nobody talks about, since they escape models -- the very nature of randomness lies in abstraction and we're not very good at gauging the impact of the improbable.

Statistics remain silent in us. Saying 'x' number of victims dies in the attack is very different form saying the names of the individuals who died. We gloss over the number, a curtain comes over our eyes and all we see is the abstraction of 'x'. We understand a pile of bodies and people. This is where a dispassionate observation of our experiences would come in.

So where is the lesson for us? Experiment, experience, and acquire clinical knowledge. Storytelling is good when we convey the right message with authenticity and honesty.

Comments

[Joe Raasch]

Valeria,

Where do you find this stuff? I was hoping you were going to read "The Starbucks Experience" next. (incredibly sarcastic and kidding!) Thank you for bringing this to light.

My friends at Amazon are shipping to me today. I should have my copy by week's end.

As someone who revels in storytelling, this book will be an incredible learning opportunity to elevate the reality AND the randomness in everyday life. Awesome.

[Kare Anderson]

Valeria
First I heard the author interviewed on NPR, then reading your thoughtful post (twice) I am persuaded to buy the book. Thank you! Consider rading M. Naim's book, Illicit for another take on causality, how the "illicit" organizations have adapted faster than companies or countries to the New Normal world.
- Kare

[Roger von Oech]

I read his first book, "Fooled By Randomness," and walked away with several ideas (which is all I ask for). Sounds like you benefited from his current effort.

[Valeria Maltoni]

Joe -- the answer to "where I find stuff" is it finds me. Nassim sent me an email earlier this year to inquire if I wanted to read his new book. Since my former CEO, who now had a consulting business, used his other book, I accepted the galley copy. I then made the connection for Nassim with my former CEO. It all works out, always.

Kare -- thank you for the tip, I will look it up. Say it better sounds intriguing.

Roger -- it is a very enjoyable reading, especially for someone with a love for the classics and philosophy. Nassim tells me it's already on the #3 nonfiction list in London and the book just came out.

[Herb]

Your ideas sound just like the new book Herd by Mark Earls.

[Valeria Maltoni]

Hello Herb:

Welcome to the conversation. I worked with brain-injured children for six years and had a cousin who spent her life learning about her own neurological development. That is the basis for my experience and the comments I appended to Taleb's new book. I had not heard of Herd, but will check it out. Thank you for the tip.