Niall Ferguson in one of last year’s Conversations with Tyler:
The epistemic problem, as I see it is — Ian Morris wrote this in one of his recent books— which is the scenario? Extinction-level events or the singularity? That seems a tremendously widely divergent set of scenarios to choose from. I sense that — perhaps this is just the historian’s instinct — that each of these scenarios is, in fact, a very low probability indeed, and that we should spend more time thinking about the more likely scenarios that lie between them.
This is bananas thinking! [Note: Probability space replacing the river in this well-known Talebism. ] If the probability space is 4 feet deep on average you don’t just wade into it as if every part is just 4 feet. You need to know the variance, and from Ferguson’s own telling it goes from unlimited upside to complete ruin.
Worse yet: Ferguson is confusing improbable with the impossible. [Note: And also hasn’t heard of ergodicity, again courtesy of Taleb. ] Given a long enough time span, an extremely low-frequency event is a near-certainty. If you don’t believe me, how about a game of Russian roulette?
Is it because Ferguson is a historian? Everything he encounters professionally would have ex post likelihood of 100% so probability theory may not be his area of strength. Don’t ask a historian for predictions, I guess.