He's saying more than that, actually. He's saying that the academics, in lecturing the birds, have made flying more difficult. Like John Seo—like a lot of traders who both understand the math of Black-Scholes and the reality of the marketplace—Taleb believes that the model has a pernicious effect: By leading investors to think they understand complicated financial risk when they actually do not, and by mispricing that risk, Black-Scholes encourages them to take more chances than they rationally should. The big Wall Street firms, oddly enough, are the most foolish in this regard. In a post-Black-Scholes world, these companies, more than anyone else, would be compelled to reduce their exposure to financial catastrophe and to raise the prices at which they sell financial insurance to others. Indeed, if no one has made too much of a stink about mispriced risk until now, it may be because the chief victims have been the big Wall Street firms that typically wind up with it. "The main reason there isn't a fundamental public outcry against Black-Scholes," says Seo, "is that the main losers from its mispricing are broker-dealers." The crashes happened, yet only Wall Street traders—rather than living and breathing human beings with whom the world could empathize—suffered.

The collapse of the subprime-mortgage bond market is different from the general run of modern financial panics in this respect: It involves millions of blissfully oblivious people who have never heard of the Black-Scholes options-pricing model. Nevertheless, it was Black-Scholes that gave them—and the rest of the financial system—the excuse to risk the roof over their head. They were followed by the mortgage brokers who lent them money and the banks that funded the brokers. Black-Scholes is no longer just a model; it has evolved into a climate of opinion about a certain kind of financial risk. It wasn't only big Wall Street firms, but a lot of small real estate speculators—otherwise known as homeowners—who, in effect, sold put options too cheaply against the risk of extreme, rare events. That many of these people literally live inside the investment that they've speculated on sharpens the pain but fails to drive home the point. Financial panics have become almost commonplace; events that are meant to occur once in a millennium now seem to occur every few years. Could this be because the financial system was built on an idea that badly underestimates the risk of catastrophes—and so conspires with human nature to create them?