Harvard’s Martin Weitzman and I on why it isn’t over ’til the fat tail zings:
Call them “black swans,” “unknown unknowns,” “fat tails,” or “10-foot women.” Whatever you call them, they’re bizarre events. They shouldn’t happen. Usually they don’t happen, but every once in a while they do happen, and then their impact makes daily events mere noise.
This week, one did happen. Sandy and its aftermath have all the characteristics that make fat tails such unique and frightening events.
Continue reading at wsj.com.