I think Taleb’s point was more that humans don’t have a good intuition for extreme events, layperson or expert. See the housing crisis during which experts and laypeople were equally fooled. We’re good at understanding eg height of people (small variation) but have no sense of wild scale, eg stock market movements or a huge bank imploding within days.
> See the housing crisis during which experts and laypeople were equally fooled.
Not discounting your main point, but there were plenty of experts and laypeople that were completely unsurprised by the housing crisis. If anything, I think the housing crisis was more of a case that so many people had a vested interest in thinking/pretending the music would never stop.
Totally, I’ll claim to have been very pessimistic before it happened. Referenced the likely downturn in an economics assignment that didn’t impress my very optimistic lecturer. I missed the bottom though, was convinced we were going down a lot further. Don’t fight the Fed, I guess.
Yeah I think he used the word intuition. Exactly same insight though. I think “recency” is the bias that causes our view that tomorrow will be pretty similar to today. I’ve noticed it in myself, for sure. Market at X? Yup that seems rational. Hard to imagine the market at 2X or 1/2X. Bitcoin blew my mind during the ultra-growth phases.
Anecdotally, I see a lot of pseudo-rigor in Business oriented statistics. Leadership selects the statistics and statisticians which make the most rigourous plausible model that achieves the desired outcome.
It's a case where highly-educated people often make errors that laypersons would not.