Elephants in the clouds, elephants in the toilet －雲にいる象、お手洗いにいる象－

“Humans see elephants in the clouds instead of understanding that  they are in fact randomly shaped clouds that appear to our eyes as elephants.”

“Humans look for explanations even when there are none.”

“We see the winners and try to learn from them, while forgetting the huge number of losers.”

“{Some traders} eat like chickens and go to the bathroom like elephants.”

Last week an incident with my white cane reminded me of a book that I read some years ago.  The book is “Fooled by Randomness: The hidden role of chance in life and in the markets” (2001) by Nassim Nicholas Taleb.

The main point of the book is that the human brain is not good at dealing with randomness.  We like to pretend that there is order where there is only chance.  So we see elephants in clouds, or invent superstitions to explain why we were successful one day but failed the next.

We fool ourselves into believing that future risks can be pretty well judged by examining the patterns of the past.  Thus, we tend to under-estimate the impact of unique or rare events.  Taleb gives the example of a stock market trader who bets on the market continually going up year after year.  He might make small gains which build up for years.  And then if he keeps gambling because he has been successful in the past, he might lose everything if the market suddenly crashes.  He sums this scenario up with the amusing description of a man who eats like a chicken (taking in money in lots of small portions) and goes to the toilet like an elephant (when he loses, he flushes huge amounts of money down the drain at once).

Last week my white cane, which I use to feel for obstacles in front of my feet as well as to let other people know that I am blind, suddenly broke.  I had been using it safely for five years and when it split into four pieces it was completely unexpected.  When I first started using a cane, I worried that it might suddenly break if it collided with a bicycle or car and I used to carry a second cane with me, folded up and placed in a shoulder bag.  When it didn’t break for month after month and year after year, I started to forget about the danger and stopped carrying a second cane with me.  Like a chicken, I was happily eating my good fortune day after day and thinking nothing of any elephant-sized trip to the toilet I might have to make tomorrow.

Actually, I am glad to report that I was very lucky.  My cane broke when I was with my wife and father.  So they were able to guide me to a safe spot until we could find another cane.  If I had been out in the street by myself, it would have been a very awkward situation.

So I guess the moral of today’s blog is not to dismiss avoidable risks which seem unlikely but which will have a big impact if they occur.  Enjoy your chicken feed while it lasts.  There is a long queue for the toilet...

 

Vocabulary:

randomness – The lack of a pattern or predictability in events.

a superstition – A belief without a logical basis, such as luck, the supernatural etc.

to under-estimate - to make a guess about value, probability, cost etc. which is too low

a drain – A pipe or channel used to carry water away

a cane – A stick used to help people walk, or blind people to walk safely

to split – To break into separate parts

to collide – For two or more objects to hit each other

awkward – Causing difficulty; hard to deal with

to dismiss – To treat a theory or idea etc. as unimportant, impossible, unworkable etc.