When someone tells you it was a 10 sigma event, meaning it is 10 standard deviations and it is Gaussian; unless the information came from God, you can reject the Gaussian distribution for that domain. We show the derivations.
Nassim just posted this one-page refutation to Stephen Pinker’s claim that violence has dropped since 1945. On his facebook page he says that “journalist-passing-for-scientist” Pinker cites “political science bloggers innocent of fat tails, who seem clueless about the difference between data and information. How to separate anecdote from evidence, sampling error from truth, journalism from science? Well there is something called a “test statistic.” This also illustrates how to do rigorous statistics in the absence of a textbook recipe for a fat-tailed process, by means of Monte Carlo analyses. I will be teaching a course called “Extreme Risk Analytics” at NYU-Engineering this fall and will have to produce an 80 page lecture notes booklet, which I will write progressively from interaction with the class. SILENT RISK is too advanced, so I need a more introductory book.”