Life isn’t fair. Many of the most coveted spoils–wealth, fame, links on the Web–are concentrated among the few. If such a distribution doesn’t sound like the familiar bell-shaped curve, you’re right.
Along the hilly slopes of the bell curve, most values–the data points that track whatever is being measured–are clustered around the middle. The average value is also the most common value. The points along the far extremes of the curve contribute very little statistically. If 100 random people gather in a room and the world’s tallest man walks in, the average height doesn’t change much. But if Bill Gates walks in, the average net worth rises dramatically. Height follows the bell curve in its distribution. Wealth does not: It follows an asymmetric, L-shaped pattern known as a “power law,” where most values are below average and a few far above. In the realm of the power law, rare and extreme events dominate the action.
For Nassim Taleb, irrepressible quant-jock and the author of “Fooled by Randomness” (2001), the contrast between the two distributions is not an amusing statistical exercise but something more profound: It highlights the fundamental difference between life as we imagine it and life as it really is. In “The Black Swan”–a kind of cri de coeur–Mr. Taleb struggles to free us from our misguided allegiance to the bell-curve mindset and awaken us to the dominance of the power law.