You're getting there. Also consider the impact of each individual occurrence. Is the general rule (as determined by probability) or the exception more significant?
I thought a visual aid might be useful for presenting this topic, again using the "weight versus income" comparison. These examples require an understanding of what standard deviation is.
This is something from Mediocristan:
Notice that the guy who weighs 1,500 lbs, while very exceptional and quite rare (as indicated by his position on the standard deviation curve), ultimately is not very significant. On his own, he would not raise the average weight by more than a tiny bit, unless this graph were taken from a very small sample of people. Nor does he particularly skew the gene pool. The bulk of humanity still falls within a predictable range.
In this typical Mediocristan event, things that fall to the far end of the bell curve may be impressive or surprising, but they have little to no long-term influence. They are flukes, quirks, and generally ignorable.
Now let's look at something from Extremistan:
Not only does someone like Bill Gates practically fall off the chart because of his wealth, those few people who have annual incomes in the billions cause a graph of worldwide average income to become distorted. The number of people who actually fall into the "average" range is much less than standard probability dictates.
So we see that in Extremistan, the people and things which are at the tail ends of the probability curve are actually far more significant than the people and things which fall into the more predictable range. The extreme concentration of wealth in the hands of a small elite, and the subsequent enormous population of poor people, has far more impact than the so-called average annual income of the world's population.
(Note: even though it is from Extremistan, this is not an example of a true Black Swan because everybody already knows about it)
(Graphs not to scale, you pedantic spags)
I thought a visual aid might be useful for presenting this topic, again using the "weight versus income" comparison. These examples require an understanding of what standard deviation is.
This is something from Mediocristan:
Notice that the guy who weighs 1,500 lbs, while very exceptional and quite rare (as indicated by his position on the standard deviation curve), ultimately is not very significant. On his own, he would not raise the average weight by more than a tiny bit, unless this graph were taken from a very small sample of people. Nor does he particularly skew the gene pool. The bulk of humanity still falls within a predictable range.
In this typical Mediocristan event, things that fall to the far end of the bell curve may be impressive or surprising, but they have little to no long-term influence. They are flukes, quirks, and generally ignorable.
Now let's look at something from Extremistan:
Not only does someone like Bill Gates practically fall off the chart because of his wealth, those few people who have annual incomes in the billions cause a graph of worldwide average income to become distorted. The number of people who actually fall into the "average" range is much less than standard probability dictates.
So we see that in Extremistan, the people and things which are at the tail ends of the probability curve are actually far more significant than the people and things which fall into the more predictable range. The extreme concentration of wealth in the hands of a small elite, and the subsequent enormous population of poor people, has far more impact than the so-called average annual income of the world's population.
(Note: even though it is from Extremistan, this is not an example of a true Black Swan because everybody already knows about it)
(Graphs not to scale, you pedantic spags)
