Stories and Russian roulette

My mother had no possibility to get any academic education. "She is good enough for the plywood factory." her mother said to the teacher who came to tell her that the daughter should be sent to a secondary school. Instead of getting an academic education my mother became a specialised children´s nurse and a midwife. Today she is an enviable representative of the Finnish well-schooled generation who re-built this this country after the war and she can enjoy a proper retirement allowance.

There was a time in the late 1960´s going on through the 70´s that Finnish people still believed in Paradise. And it was not a matter of belief only. They had concrete evidence of its existence. In the autumn many members of their own family, their friends and neighbours left their houses still and empty and travelled away by bus and by train. Next summer they came back looking happy and driving their own new cars. My mother was a midwife in the south of Lapland, where this was very normal and little by little she had less and less work, because the majority of the babies of the municipality were now born in Sweden.

Mother wanted to learn to speak Swedish, just in case. She applied for a scholarship to take part in a course. In the application form she was asked about her previous knowledge of Swedish. She had never learned Swedish at school so I asked how she had defined her level of knowledge of it. "I wrote that I read, but I do not understand." she said. The same happens to me when I read Fooled by Randomness, The Hidden Role of Chance in Life and in the Markets by Nassim Nocholas Taleb (ISBN: 978-0-141-03148-4). I do not understand the text, but I keep on reading.

Taleb´s text is worth reading just because it is highly enjoyable. It carries you forward to the next chapter, to the next page and then again to the next. I keep on reading as if I were addicted to it. Additionally Taleb describes a world I have very few ideas and no experience about, except that last summer I met Sergey from St Petersburg. It is nice to think that he is an actor in the trading world that Taleb describes like this:

"One of the attractive aspects of my profession as a quantitative option trader is that I have close to 95 % of my day free to think, read, research (or "reflect" in the gym, on ski slopes, or, more effectively, on a park bench). I also had the privilege of frequently "working" from my well-equipped attic."

I do not know if this is exactly true in Sergey´s case, but he looked relaxed and he was enthusiastic about his job. Because it was summer, we did not meet on a ski slope, but by a small lake in a water-skiing competition. I think there are enough matching facts here.

Taleb says that the human mind is not designed to understand how the world works. It is designed to get us out of trouble rapidly and have children - equally rapidly, I would like to add.

He also states that although life looks like a sequence of hesitation and bewilderment and feels like that, in the hindsight it is not. In retrospective everything looks as if we had always known what to do and how to choose. When looking back at our past, we see it well-planned and beautifully organised. There is no doubt nor vacilation, just straight lines and well motivated direct routes. Everything looks neatly ordered and reasonable. This phenomenon is called the ´hindsight bias´, the conviction that what has happened was bound to happen.

Because of the hindsight bias any catastrophy looks to us having been predictable before it actually happened. The Twin Towers collapse is one example of this phenomenon. Similarly, if something is regarded as an error in the present, it is as if the erroneus character of the matter had been recognizable in the past as well. Taleb says that it was not. Nobody could have told beforehand what would happen (to the Twin Towers). He also says that nobody will be able to say what the nect catastrophy is, but it having taken place, we will interprete some phenomena to be its traces. After we will have defined what these traces are, they become visible. Once visible, we will be unable to wipe them out.

Narrative approach to life and meaning making would say that we abhore chaos. Chaos is like a puzzle the pieces of which have been thrown into the air. There is no meaning in the separate pieces. However, life needs to make sense. A healthy human mind invents order and starts making sense, if there is none readily detectable in the experience. As this tendency is - and has been - common to all of us, we have developed sense-making systems, slots or plots in which the chaotic elements are fitted. In this process what was chaotic, becomes a well-organised story. Individual meaning-elements get trapped into stories and stories are the currency we exchange when we communicate with each other.

What does this have to do with normal life? To be an expert in any field means that you understand the stories and jokes related to it. A necessary prerequisite to understanding is that you have acquired enough personal knowledge to be able to evaluate what is normal and acceptable and what is not. If you are unable to distinguish the normal from the deviant, you do not know how you are supposed to react to a story and when you should laugh if someone is telling a joke.

When reading Taleb´s text I know that I am able to enjoy it as a form of literature, but I miss a lot of the knowledge and information he delivers. I do not know exactly when to laugh and how to feel. It is irritating. Sergey and his colleagues would gain much more from Fooled by Randomness, because they know what is normal in the trading and probability business and what is not.

Books contain universes. It is a privilege to be able to even try to visit them. One more thing I learned when reading Fooled by Randomness is that probability is a qualitative subject, not just a number game. 10 million dollars earned through Russian roulette does not have the same value as the 10 milloin dollars earned through diligent and artful practice of dentistry. Sorry to say that I am not a dentist either. There seems to be just the Russian roulette left. - And maybe, it looks perfectly normal in the hindsight.