Beware the London Traffic Jams
Expertise in probability and risk in one domain (e.g., finance) does not automatically transfer to other domains (e.g., physical risk), leading to ironic and sometimes fatal oversights.
THE IDEA
Beware the London Traffic Jams
A couple of years after we left him looking at John smoking a cigarette with a modicum of schadenfreude, Nero’s skepticism ended up paying off. Simultaneously as he beat the 28% odds, up to the point of complete cure, he made a series of exhilarating personal and professional victories. Not only did he end up sampling the next level of wealth but he got the riches right when other Wall Street hotshots got poor, which could have allowed him to buy the goods they owned at very large discounts, if he wanted to. But he acquired very little, and certainly none of the goods Wall Streeters usually buy. But Nero did engage in occasional excess.
Friday afternoon traffic in London can be dreadful. Nero started spending more time there. He developed an obsession with traffic jams. One day he spent five hours moving west from his office in the city of London toward a cottage in the Cotswolds, where he stayed most weekends. The frustration prompted Nero to get a helicopter-flying license, through a crash course in Cambridgeshire. He realized that the train was probably an easier solution to get out of town for the weekend, but he felt the urge for a pet extravagance. The other result of his frustration was his no less dangerous commuting on a bicycle between his flat in Kensington and his office in the city.
Nero’s excessive probability-consciousness in his profession somehow did not register fully into his treatment of physical risk. For Nero’s helicopter crashed as he was landing it near Battersea Park on a windy day. He was alone in it. In the end the black swan got its man.
When to use it
Personal risk management: Recognizing that being careful in finances doesn't make you automatically careful in health or safety.
Professional decision-making: Check that risk models in one domain are not blindly applied to other domains.
Education: Teach that expertise is domain-specific.
Safety training: Emphasize that overconfidence in one area can lead to neglecting basic precautions in others.
FROM THEORY TO EVERYDAY LIFE
In practice
Nero's Helicopter Crash
In Taleb’s story, Nero, a successful Wall Street trader, was highly skilled at assessing probabilities in finance. However, he did not apply the same risk awareness to his personal life. Frustrated by London traffic, he learned to fly a helicopter and eventually crashed it, illustrating the danger of domain-specific expertise.
Domain-Specific Risk Neglect
A renowned doctor who meticulously follows evidence-based medicine for patients but smokes heavily, ignoring the obvious health risks to themselves. This shows how professional risk awareness does not automatically generalize.
A MOMENT TO REFLECT
Put it to work.
When have you observed someone who is an expert in one area take foolish risks in another?
Where might your habits for assessing professional risks fail to carry over into your personal life?
What practical check could help you notice a risk outside your area of expertise?
CONTINUE THE CONVERSATION
Source texts
- Fooled by Randomness The Hidden Role of Chance in the Markets and in Life (Nassim Nicholas Taleb)