In his book The Black Swan, Nassim Taleb develops two ideas, Mediocristan and Extremistan, to help explain his Black Swan Theory.

Mediocristan is where normal things happen, things that are expected, whose probabilities of occurring are easy to compute, and whose impact is not terribly huge. The bell curve and the normal distribution are emblems of Mediocristan. Low-impact changes have the highest probabilities of occurring, and huge, wide-impact changes have a very small probability of occurring.

Bell curve describing Mediocristan


Examples
: Nature is full of things that follow a normal distribution. Height of humans is a simple example. If you take a few hundred people, and take their average height, there is no human whose height would significantly disrupt the average if added to the sample. Height/weight of people, or life expectancy, are from Mediocristan.

Properties: In Mediocristan, nothing is scalable, everything is constrained by boundary conditions, time, the limits of biological variation, the limits of hourly compensation, etc. Because of such constraints and the limits of our knowledge, random variation of attributes exists in Mediocristan, and can be usefully described by Gaussian probability models. In such “orderly” randomness models, probability distributions are such that no single instantiation of the value of an attribute can greatly affect the sum of all values in the distribution. Even the most extreme attribute values do not materially affect the mean value of a distribution, because the more extreme any value is, the more improbable it is that the extreme value will actually occur in nature.

Exstremistan is a different beast. In Extremistan, nothing can be predicted accurately and events that seemed unlikely or impossible occur frequently and have a huge impact.

Examples:  In Extremistan, a single new observation can completely disrupt the aggregate. Imagine a room full of 30 random people. If you asked everyone their salary and calculated the average, the odds are the average would seem pretty reasonable. However, if you added Bill Gates to the room and then calculated the average salary, your average would jump up by a huge margin. One observation had a disproportionate effect on the average. This is Exstremistan. Things like book sales, whether a movie becomes a hit, or a viral video on the internet all have similar characteristics, and therefore reside in Extremistan.

Properties: A winner takes all competitions.  As in: a small number of individuals or companies win everything.  More inequality and less social justice are inevitable. Actions by individuals and small groups generate increasingly extreme results. As in: “eventually, one man might be able to declare war on the world and win.” Systemic events, both negative and positive, will occur at a high frequency, faster and with more extreme outcomes than ever before.

An interesting video for Nassim Taleb explaining his theory can be found here.

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Comments
  1. This is an extremely interesting post – thanks. I had never heard of this approach.

    It strikes me that this phenomenon of Extremistan could also be used positively – unless I misunderstand – if the addition of Bill Gates skews the average vis a vis salaries, then a bigger than average positive action might, by the same logic also change the overall balance of positive growth/development?

    Which (in thought experiment terms) means it is really possible that one person (or a small group) can change the world?

    Unless I misunderstand (completely possible btw!).

    Thanks again.

    • Assaad says:

      Indeed, thanks for your comment! that’s what’s interesting in Extremistan and we have many big examples: Look at Sergey Brin and Larry Page, they change dramatically the world of technology by creating Google. Look at Mark Zuckerburg, look at Ghandy. A single person or a small group can achieve more than a whole society.
      Look at scientists, there are millions of scientists, just few are very very well known.
      You can find more examples in Taleb’s book.

  2. […] Well, blogging belongs to Extremistan: […]

  3. Peter Cotton says:

    The Extremistan/Mediocristan distinction was laid before us in The Black Swan and can only be interpreted as meta-guidance for applied mathematicians. Actually it was meta-nonsense for people who had never applied mathematics, never intended to apply mathematics, but wanted to think deep thoughts about other people who applied mathematics … but let’s set that aside and examine it on it’s merits.

    Taleb presented a perfectly clear instruction manual. The world has linear and non-linear phenomena. But mathematicians have to be careful, he argued, not to use the wrong kind of mathematics. You wouldn’t want to use linear mathematics to model a non-linear problem best treated with fractals, power laws and so forth now, would you? And I suppose you wouldn’t want to use fractals to model a linear system either – though Taleb is highly skeptical that any exist so that is a decidedly less important topic.

    Take web page popularity. It follows a Zipf distribution, landing it squarely in the groovy world of power laws. So it would be a massive mistake to try to apply linear mathematics to it, right? To me more precise I’d say it would be a massive mistake, a violation of a universal principal no less, to apply Linear Algebra to it, much less a singular value decomposition which is about as close to the center of “linear mathematics” (to humor that ridiculous phrase) as one could surely get. Strange then, that Larry Page sought fit to do so when inventing Page Rank, the algorithm distinguishing Google from Yahoo that powered the greatest commercial success in recent history.

  4. dreamers_ed says:

    Could anyone please explain to me these terms “mediocristan and extremistan” in more understandable statement?

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