Black Swans, Long-tails or just Willful Blindness? – Expect more Sandys

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Our sympathy goes out to those in the NE impacted by Superstorm Sandy. Regardless of your stance on global warming, the facts are clear on one thing. We are into a period of increasingly extreme weather. NOAA reports that total precipitation amounts haven’t changed much but the rain/snow is coming in fewer, more extreme events. We see hotter summers followed by record snows.

Modern weather forecasting can give us some warning of the most severe events, but that will only help us if we take the risk of a surprise event in our area very seriously. In NJ, Gov. Christie had a public dispute with Atlantic City Mayor Lorenzo Langford over allowing people to stay in city shelters, including a school a block away from the boardwalk. Since it’s never happened exactly that way in our area before, we can ignore what we’ve seen from Miami, New Orleans, Houston in spite of the danger the weather service tells us might be in store for us.

New York hospitals tell us they never anticipated problems with underground generators flooding. Really? FEMA reports that on Jun 9, 2001, during Tropical Storm Allison “flooding quickly severed electricity running underground through the TMC [Texas Medical Center]. Many TMC facilities lost both primary and back-up power. . . more than 1,000 patients were evacuated. . .. Nine of the 13 hospitals in the TMC were closed.” Damage estimates exceeded $2.0 billion It may be true that it is not cost-effective to flood-proof every low-lying medical facility in the US, but when it’s clear a flood is coming, some preparation might be expected.

A police spokesperson says he never expected anything like the few feet of water that rushed through the area. Have they never seen pictures of Gulf Coast storm surges? Are we totally unable to learn from other people’s experience?

Those impacted by these “first-instance-of” events would like us to think that these are examples of N. Taleb’s Black Swans [The Black Swan: The Impact of the Highly Improbable]. In 2011, the Wall street Journal warned us that pretending we don’t see obvious risks doesn’t make them go away, pointing out the “Neon Swan” of the debt crisis. To be fair, the first Superstorm to hit the northeast probably can’t be labeled a Neon Swan due to the short warning, however it is not unexpected. We simply don’t know exactly when, where and how bad the next massive storm might be. It’s absolutely certain there will be one.

This particular disaster belongs in the class of long-tail events [Beware the Long Tail]. In the natural world, things statisticians treat as following a Bell curve, often have much higher instances of extreme events than Bell statistics predict. This turns out to be true of massive hurricanes. As we continue to foolishly allow development in storm-prone areas the economic impact of these long-tail events becomes larger and larger. Large weather events such as Katrina and now Sandy can hit several heavily populated areas, causing massive property damage and sever economic disruption. As of this evening, CBS reports 50 dead, 8.2 million homes without power, travel at a stop, and economic damages that could hit $50 billion.

In her book, Willful Blindness: Why We Ignore the Obvious at Our Peril, Margaret Heffernan argues that the biggest threats and dangers we face are the ones we don’t see – not because they’re secret or invisible, but because we’re willfully blind. It’s time to take these long-tail events more seriously.