Keynes's uncertainty is not about white or black swans

Abstract

How does Nassim Taleb's notion of uncertainty compare with Keynes's? In describing "black swan events" as rare, consequential, unforecastable events, Taleb has stressed how statistical risk differs from intractable uncertainty. This difference had been similarly underscored by Keynes in his theory of behavior in a monetary economy. Yet beyond this apparent similarity, Taleb's and Keynes's views of uncertainty are opposite with respect to both method and consequences. This paper claims that even Taleb's black swan argument may face its own "black swan" when it is found that his conclusions do not hold under the more extreme assumption of ontological uncertainty.

Keywords:

• black swan
• epistemic and ontological uncertainty
• financial crisis
• Keynes
• Taleb