Normal distribution: Difference between revisions

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 By comparison, the earth is 1658 billion days old, and the universe itself ten times older than that. So we are talking about an event that you would only expect once in several billion billion billion billion billion lives of the universe, happening ''several days in a row''.
-Enough already of the chutzpah.<ref>But, [[get your coat]], you know?</ref> the practical lesson is that, unless it's a normal distribution, ''99 per cent of the way there isn’t good enough''. ''All'' existential crises sit in the last 1 per cent, because the feature of an existential crisis is everyone panicking and selling at once. These are, by definition, the events a normal distribution says will not happen.
+Enough already of the chutzpah.<ref>But, [[get your coat]], you know?</ref> the practical lesson is that, unless it’s a normal distribution, ''99 per cent of the way there isn’t good enough''. ''All'' existential crises sit in the last 1 per cent, because the feature of an existential crisis is ''everyone panicking and selling at once''. These are, by definition, the events a normal distribution says will not happen.
+The allure of the normal distribution is that you can calculate it, it’s easy to use, and inside those extremes — where people aren’t panicking, stampeding for theatre exits, selling all at once, hanging off transporter plane fuselage — events though not independent, look near enough like they could be. Variations cancel each other out. Bulls offset bears. So, the temptation is to use normal distributions to model risk:<ref>The [[Black-Scholes option pricing model]] is for example.</ref> ninety-nine percent of the time, they work fine. But it’s the ninety-nine per cent of the time you don't really ''need'' your risk model.
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 *[[Social proof]]: the figures implied that it would take a so-called ten-sigma event—that is, a statistical freak occurring —for the firm to lose all of its capital within one year.