Assumed Equilibrium Bias
Taleb recalls Beirut’s wartime blackouts and questions assurances of stability. He uses a comparison with astronomical equilibrium to express doubt about assuming that an apparently stable system will remain so.
THE IDEA
The Starred Night
The next time you experience a blackout, take some solace by looking at the sky. You will not recognize it. Beirut had frequent power shutdowns during the war. Before people bought their own generators, one side of the sky was clear at night, owing to the absence of light pollution. That was the side of town farthest from the combat zone. People deprived of television drove to watch the erupting lights of nighttime battles. They appeared to prefer the risk of being blown up by mortar shells to the boredom of a dull evening.
So you could see the stars with great clarity. I had been told in high school that the planets are in something called equilibrium, so we did not have to worry about the stars hitting us unexpectedly. To me, that eerily resembled the stories we were also told about the “unique historical stability” of Lebanon. The very idea of assumed equilibrium bothered me. I looked at the constellations in the sky and did not know what to believe.
When to use it
Evaluating investments in long-stable markets for hidden risks.
Assessing political or social systems that have been peaceful for decades but may be fragile.
Personal relationships: challenging the belief that a relationship will continue unchanged without effort.
Scientific theories: questioning whether a model's equilibrium assumption applies to real-world dynamics.
FROM THEORY TO EVERYDAY LIFE
In practice
Beirut Blackout and Starry Sky
During the Lebanese war, frequent power outages allowed clear views of the stars, contrasting with the assumption that the political situation would remain stable.
Stock Market Stability
Investors may assume the market will continue its steady growth because it has been stable for years, ignoring the possibility of a sudden crash.
A MOMENT TO REFLECT
Put it to work.
In what areas of your life do you assume stability that might be unwarranted?
How can you actively recognize when you are falling for an assumed equilibrium bias?
Think of a historical event that surprised many people because they believed the system was stable.
CONTINUE THE CONVERSATION
Source texts
- The Black Swan The Impact of the Highly Improbable With a new section On Robustness and Fragility (Nassim Nicholas Taleb)