Yahoo Finance Nassim Taleb: World is NOT more peaceful
As the frequency of wars among great powers dwindles, has the world entered a new paradigm of peace and prosperity? Not quite, says Nassim Taleb, author of Fooled by Randomness and The Black Swan.
In their new paper, statistician Pasquale Cirillo and Taleb examine wartime events of the last 2000 years, and they find no statistical evidence that the frequency or magnitude of wars are declining. The "long peace" theory, which claims that violence has declined, is a falsehood says Taleb. He notes that people are lulled into a false sense of security because of the nature of so-called fat tail – or extreme – events.
"You cannot make claims that violence has dropped," he says. "Simply because, under fat tails, events can take hundreds of years. Large events can take a long time...and between events is totally unpredictable...they occur randomly with no time structure, and we saw no evidence of decline."
They also find that catastrophically fatal wars have fatter tails than those of financial crises, which suggests a propensity for extremes. Taleb notes that black swan events, which are happenings beyond the realm of expected observations, are far more deleterious in cases of war than finance.
"It's much worse in the sense that a smaller number of events determine a larger share of the casualties," he says.
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Taleb adds that the role of randomness is misunderstood. He explains that using a past average to forecast a future average leads to a considerable underestimation of the number of casualties.
Regarding the role of statistical tools, Taleb says, “Physicists get the point. But social scientists do not get it. Their statistical tools do not work for what we call fat tails, as defined as something prone to black swan events," he says. "They can write whatever narrative they want. But we call that journalistic. That's not statistical."
Taleb clarifies the point, as he says, "If someone tells you violence has dropped and shows you fifty years of data, just laugh at the person. That's what we're saying."
