Saturday, November 24, 2018
Fooled By Randomness And The Black Swan
written 19 November 2018
published24 November 2018
"Fooled By Randomness", by Nassim Taleb, describes his experience as a mathematician and stock trader. He suggests we ignore low-probability, high-risk events, at our peril. For example, is it worth playing a game that, 999 times out of 1,000, pays you one dollar, but sometimes costs you $10,000? On each play, the mathematical expectation of winning is 999/1000 x $1 = $0.999, and the expectation of losing is 1/1000 x $10,000 = $10. Added together, the expectation of each play is a loss of $9.001. The low-probability, but high-consequence event, also known as a black swan, skews the entire game.
We are fooled by the randomness of black swans, and think the luck we have experienced so far will continue into the future, leaving us unprepared. This applies when investing in the stock market, or just living in the 21st century California. The market crash of 2007 was an unexpected black swan which destroyed the net worth of millions of people because they had not taken any precautions against such an unlikely event as a collapse of the housing industry. Destruction by fire is a similar risk, but climate change, development expansion, and outmoded forestry practices, have changed the odds, and new black swans appear every year.
A friend who used to live in Paradise, arrived by bus this week, carrying everything she owns. The previous Thursday morning, a small fire started east of town. Her first warning was a call from her daughter at 6:30 am, but there was no official news or alert. An hour later the power went out and cell service ended. She started packing things for a possible evacuation, but still thought the fire was small and would be contained. A few hours later, she left town in a neighbor's car, traveling through fire on both sides of the four-lane freeway. As I write this, the Camp fire continues to burn and has destroyed 11,713 residences and killed at least 77 people, setting state records in both categories.
The hills west of Ukiah last burned in 1959. The Western Hills Fire Safe Council, part of a larger county effort, is working to organize neighborhoods to become more fire aware and resilient by improving community and personal infrastructure, emergency communications, and personal preparedness.
The community bulldozed ridge-crest firebreaks two years ago, which are being refurbished and expanded. A shaded fire break was created thirteen years ago along the western edge of the city limits, running from the south end of town to Low Gap road. This break is 100' wide, with undergrowth cleared and trees thinned and limbs removed up 10', reducing fuel and allowing access for fire equipment. Work is underway to widen the break and extend it south to the Boonville road and north to Orr Springs.
Individual homeowners can prepare their properties by removing brush and trees close to their houses, removing lower limbs on trees, and investing in fire resilience roofing and siding materials.
While these preparations will help in a slower moving fire, the fire storms we have seen in the last few years will sweep through unhindered, so evacuation preparedness is important. While life and property are not being threatened, create a detailed list of material goods, including photo or video documentation of everything. Plan what you would take if you had time for an orderly evacuation. Don't forget supplies for an extended time, including support for your pets. Make copies or digital files of your important documents, including insurance, automobile pink slips, bank accounts, and address books. However, fires can move rapidly, so create a "grab and go" kit, in case you have only minutes to evacuate.
Another component of preparedness is communication. The Redwood fire showed the necessity of local alert networks, as there was little official notification in that fast-moving fire. Personal communications between families and friends saved lives that night. The county now has two notification systems in effect, MendoAlert and Nixle. You can sign up for alerts on several devices at:https://www.mendocinocounty.org/government/executive-office/office-of-emergency-services/emergency-notifications-and-alerts.
For more information about the county Fire Safe Councils, or to get involved in your own neighborhood, go to: https://firesafemendocino.org. As the saying goes, the life you save could be your own.