History and the Triplet of Opacity
History is opaque; we only see outcomes, not the underlying process. The human mind suffers from three cognitive biases: illusion of understanding, retrospective distortion, and overvaluation of factual information (Platonification).
THE IDEA
History and the Triplet of Opacity
History is opaque. You see what comes out, not the script that produces events, the generator of history. There is a fundamental incompleteness in your grasp of such events, since you do not see what’s inside the box, how the mechanisms work. What I call the generator of historical events is different from the events themselves, much as the minds of the gods cannot be read just by witnessing their deeds. You are very likely to be fooled about their intentions.
This disconnect is similar to the difference between the food you see on the table at the restaurant and the process you can observe in the kitchen. (The last time I brunched at a certain Chinese restaurant on Canal Street in downtown Manhattan, I saw a rat coming out of the kitchen.)
The human mind suffers from three ailments as it comes into contact with history, what I call the triplet of opacity. They are:
- the illusion of understanding, or how everyone thinks he knows what is going on in a world that is more complicated (or random) than they realize;
- the retrospective distortion, or how we can assess matters only after the fact, as if they were in a rearview mirror (history seems clearer and more organized in history books than in empirical reality); and
- the overvaluation of factual information and the handicap of authoritative and learned people, particularly when they create categories—when they “Platonify.”
When to use it
When studying historical financial crises, be aware of retrospective distortion that makes them seem predictable in hindsight.
In business strategy, avoid the illusion that you fully understand why a competitor succeeded—there may be unseen random factors.
When reading news about current events, remember that you are seeing only the output, not the complex generator of events.
FROM THEORY TO EVERYDAY LIFE
In practice
Restaurant Kitchen Disconnect
The analogy of a restaurant kitchen shows that what you see (the food on the table) is not the messy reality of the kitchen. Similarly, historical events we witness are not the entire process, which may contain randomness and messiness.
Perceived Predictability of Historical Events
A reader sees a clear chain of causes in an account of World War I and concludes that the war was inevitable. To check for retrospective distortion, the reader asks which outcomes seemed possible to people before the event and which details the later narrative leaves out.
A MOMENT TO REFLECT
Put it to work.
Think of a historical event you believe you understand. How might the triplet of opacity distort your understanding?
How can you avoid the illusion of understanding when analyzing past events?
In what ways do you 'Platonify' complex realities? Can you identify a category you use that oversimplifies?
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)