Positive black swans take time to show up while the negative ones (destruction) happens very quickly.The critical fact is that they are more consequential. It isn’t that whether Black Swans are more frequent than our imagination or not.We see Black Swans in extremistan, single incidents which have huge influences on history.Mediocristan does not care about extremes. However, if the stock market, which belongs to extremistan, goes down by 20%, then the likelihood of another 20% fall the next day isn’t any lower. If you encounter someone 7 ft tall, the likelihood of encountering another 7 ft tall person is low. Standard statistics like Gaussians are valid here. Most outcomes of the biological process like height, weight, age expectations belong to mediocristan. One single observation can disproportionately impact the aggregate.
Bill Gates’s net worth is a million times more than that. The average net worth of an American household is ~100,000. Now, consider the wealth you can encounter 99 humans with a net worth of ~100$, and if you meet Bill Gates next, the average will become $1 Billion!!! A single sample can skew the average drastically. Once your sample set is large, no single instance will significantly change the aggregate. A single sample of 8 ft where the average is 6 ft can skew the overall ratio by only 0.08 ft (1 inch). The tallest human is about 8 ft tall the shortest is about 2 ft. If you are trying to find the average height of humans by sampling 100 humans, then no single sample will have a significant impact. Let’s illustrate this with human height vs.
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