I enjoy reading books by Nassim Nicholas Taleb, such as The Black Swan, Aphorisms and Skin In The Game. I am currently rereading Antifragility.
Although I think Taleb is clever and innovative, I often disagree with his views. He kind of reminds me of a smarter, economic version of Jordan Peterson, and he talks about ethics and virtue with little trace of humility. I was wondering what people thought about Taleb and his books, or antifragility in general.
If you are unfamiliar with this, his idea is that a lot of systems are complicated but fragile, easily perturbed by infrequent and costly errors. His opposite of fragility is not robustness - which denotes something resilient which survives moderate stressors but is not improved by them. Antifragility refers to improving in the face of adversity - like the mythical hydra that grows two heads for every one cut off. Something like a Phoenix would be merely robust. He applies this in many diverse settings from investing to ethics to political systems, although his examples are contrived enough to be only somewhat practical.
Well, Taleb spent a couple of decades working as a derivatives trader, hedge fund manager, and arbitrager in various roles, and if his press is to be believed beat the market at every major economic downturn. He certainly did well enough to become finanacially independent and basically write books and make Youtube videos as he pleases where he basically criticizes the standard quantitative analytics beyond conventional financial modeling.
The comparison to Jordan Peterson may seem appropriate on a superficial level, but while both tend to expound on areas far removed from their field of expertise, Peterson often comes off as a pseudo-intellectual with rapid fire parenthetical references to the classics and various sciences—especially research neuroscience of which he has a pretty superficial pop-sci grasp—seemingly just to remind you of how much smarter he is than everyone else even if they have little to do with the actual point he is making.
Taleb, on the other hand, does seem to have a fairly deep knowledge of various areas in which statistical and mathematical modeling is used, particularly in epistemological studies, and particularly where such applications overreach actual knowledge. I would love to see him have a conversation about the foundations and current approaches in modern physics with Sabine Hossenfelder because I think they’d have complementary views about the purely theoretical models approach to M-theory and the general emphasis on just building incrementally larger particle colliders in hopeful fumbling of discovering new physics (e.g. supersymmetry). I find his arguments for eliminating the Nobel Prize in Economics highly persuasive, particularly given the various failures of macroeconomic “theories” that are largely unfalsifiable and often constitute little more than essentially religious belief in mechanisms that are figments of an overactive imagination.
As for “antifragility” it is an interesting concept with some very good analogues in biological and ecological systems, but designing human constructs to be antifragile is complicated and fraught with the difficulty of actually quantifying it in any measurably way. I think it is a good guiding principle for things like machine learning but the general applicability to social systems, monetary policy, systems engineering, et cetera requires far more development if it is really possible at all.
So far I’ve only read part of Skin in the Game, but I’m finding the opposite to be true: I agree with him more often than not, but he argues his position so poorly that I find myself less convinced of the thesis than when I started.
Frankly, “skin in the game” is one of those ideas that’s so obvious (though admittedly, underused) that it almost goes without saying. And in Taleb’s case, perhaps it should.
It is vaguely ironic that a Wall Street type like Taleb should argue for “skin in the game,” when they are the masters of the opposite: commissions on total capital instead of positive returns; arbitrage; high-frequency trading; hedging via options and the like; government bailouts; and a zillion other mechanisms are all ways of exporting risk exposure. The perfect Wall Street trader is one that captures all the gains while leaving the losses to someone else.
Of course, Taleb makes those very criticisms of the finance and investment industries, and would be the first to argue that government bailouts create a perverse incentive to adopt a caviler attitude toward risk-taking. Having worked within the system in a wide variety of roles gives him a mechanic’s view of the actual flaws and problems. It is one thing to stand apart from the financial system, shaking one’s fist and making vague screeds to “break up the banks”; it takes a deep understanding of how risk management and mathematical modeling principles are misapplied (and indeed, fundamentally misunderstood) by investment bankers and hedge fund managers to make detailed criticisms and recommendations for structural change.
I’d say his real weakness is that he often assumes that the reader (or viewer of his videos) is making the same connections that he is. He often provides a very dense explanation of complex topics assuming that general readers have a fundamental understanding of the philosophical underpinning of statistical methods, i.e. not just how to apply them but the assumptions that underlie them, which results in readers misunderstanding his point. An example of how he popularized the term “black swan”, only to have people completely misapply the term to mean any ‘unexpected’ event rather than an event that was not expected because of a failure to understand the application of the model or probability distribution within it. So many people kept referring to the emergence of SARS-CoV-2 virus and the COVID-19 pandemic as a “black swan” event that he went on a media interview blitz explaining how it is actually the opposite; a completely foreseeable and indeed long anticipated event that had entirely predictable effects on the economy and complex global supply chains.
It’s ironic that a champion of “antifragility” is one of the most fragile public figures around, based on his extreme responses to even the mildest of criticism.
I noticed this years ago when I came across a largely favorable review on Amazon of one of his books. Taleb went way off the rails responding to the review, accusing participants in the discussion of being paid by Monsanto and cut-and-pasting similar semi-gibberish every time he was called on his nuttiness.
Maybe he has some valid points, but his arrogance, refusal to acknowledge error and notoriously thin skin undercut his message.
Many of the most intelligent people I know are far from humble and the combination is reasonably rare as many people with a little knowledge feel the need to propagate it. This combination is even rarer in successful authors and I can forgive bona fide intellectuals this weakness. Taleb is not Yuval Noah Harari.
I can understand Taleb’s philosophical underpinnings and find he argues some of his points quite convincingly. Others, not so much. However, I am not an expert in this and it is difficult for me to assess how original his arguments are. I know a lot about mathematic modelling and am not discouraged by the financial slant; indeed, his acknowledgement of the randomness and even immeasurablity of markets cuts through much of the pseudoscientific claptrap I learned when doing an MBA - where the goal often seemed to be minimizing the complexity of the math involved - and ignoring inconvenient assumptions which often limited the usefulness of economic theory - fragility is easier to estimate than risk.
The reality, however, is a world run by Fat Tony’s would be a terrible place to live - was here based on Cuomo? Taleb exalts compassion and virtue while considering those with those qualities to be naive suckers. This is sometimes true, of course, but the majority of people who serve society or their government care about doing so well.
Perhaps so, but it is not very evident in Skin in the Game. Instead, he spends most of the time whining about, for example, how the designer of the new trains he uses decided to angle the small ledge near the window, making it impossible to put his coffee there. He ascribes this to the designer not actually riding said trains and thus not having skin in the game. He doesn’t consider that the designer may have thought of all of this and more, and that the angle is intended to stop people from putting things there. Taleb does not have “skin in the game” when it comes to train maintenance, for example; he is not paying the cost for all the people that spill their drinks.
Where Taleb becomes anti-convincing is his bringing up of part of the code of Hammurabi:
Hammurabi’s best known injunction is as follows: “If a builder builds a house and the house collapses and causes the death of the owner of the house—the builder shall be put to death.”
That certainly fits with the thesis: no better skin in the game than to be put to death if you make a mistake (Taleb allows that he isn’t actually proposing having the death penalty everywhere). But there’s a good reason we don’t run society this way–you’ve created immense perverse incentives (such as driving off competent builders in favor of insane ones), and you’ve also failed to learn anything about why the house collapsed.
Before there was anything like engineering, houses were built and some of them collapsed and some didn’t. Each new house was like a new experiment except that nothing was learned. Eventually though, people learned about things like gravity and materials science and applied mathematics to calculate loads. They could compute safety margins and have confidence that if you built something a certain way, it wouldn’t fall down. All these lessons got baked into building codes, which weren’t written in a vacuum, but rather resulted from the lessons of a failure (written in blood, as they say).
That particular law of Hammurabi is the absolute antithesis of that. It makes no distinction between a builder being negligent vs. applying known best practices and the house still collapsing. The latter is how things are learned.
I stopped reading just after I got to this part:
A confession. When I don’t have skin in the game, I am usually dumb. My knowledge of technical matters, such as risk and probability, did not initially come from books. It did not come from lofty philosophizing and scientific hunger. It did not even come from curiosity. It came from the thrills and hormonal flush one gets while taking risks in the markets. I never thought mathematics was something interesting to me until, when I was at Wharton, a friend told me about the financial options I described earlier (and their generalization, complex derivatives). I immediately decided to make a career in them.
All of that is utterly foreign to me. Very nearly the exact opposite of my own internal motivations. That’s his demon to deal with, of course, but it’s clear that he thinks the same forces apply to everyone. If the entire rest of the book is going to be written with the assumption that people are dumb unless exposed to the “hormonal flush” of risk exposure, I’m not sure it’ll have much value to me.
To some extent, but not really. Stability is important in engineering and robustness, a stable equilibrium, relevant in control systems. But Taleb is mostly talking about antifragility, things that gain from disorder rather than returning to a set point or previous state.
For example, exposure to stressors is often bad for an individual but through evolution, good for the many. Bacteria exposed to medicine may die, but those that live may be stronger and more resilient. Same thing with climate, or how plane crashes increase aviation safety if one can learn from error. Annealing metals make them purer. Steam engines work better when governors loosely but not tightly control compensations to variations - so do blood sugars in the ICU.
He argues in detail that the economy, restaurant sector, entrepreneurism and venture capital are stronger as a whole when some businesses fail. And weaker when things too big to fail have lobbying power unavailable to others. A collection of city states or a country governed at the municipal level may have low level volatility but may not be powerful enough to cause global war. Some volatility is good for countries and marriages if it avoids putting off real problems until they become insurmountable. Post-traumatic growth is better than post-traumatic stress, but is much less common.
Or that small skirmishes or occasional forest fires may prevent bigger problems. Exposing children to randomness (instead of over programming and helicopter parenting) may lead to resilience; same for their immune systems or propensity for peanut allergy.
I couldn’t finish “The Black Swan.” It was just a dreadfully conceived book; there was no coherence to its structure at all, and the bit where he tells a story about a woman who writes an unconventional but wildly successful novel and then a few pages later admits he made it up - for no discernible reason - just left me angry.
By “often” you must mean “always.” Peterson comes off to me as simply a blowhard; I have never, ever heard him say anything that was not, when you went back and actually thought about what he said, the most empty-headed silliness.
Wait, I thought we should do away with regulations and instead simply ensure every flight has a few of the engineers that designed the plane. That motivates the engineers to do their job properly, and if not then we’ve reduced the number of incompetent ones. At least that’s the argument I’m hearing from Skin in the Game.
Whenever I read philosophy, I usually find most of it fits into one of two categories: stuff I think is fairly obvious and stuff I think is probably wrong.
I have read two of Taleb’s books, Antifragility and The Black Swan. Some of his writing would seem dense, hard-to-follow, and with made-up characters or terminology, but I would keep reading because just when I was ready to give up, I would read something brilliant enough to change my perspective on the world.
His essential premise seems to be that we try to cling to the ideas of predictability and knowledge, when the most world-altering things are the unpredictable and highly unlikely turns of events, and that our need for control is leaving us very unprepared to manage unexpected events.
Looking back at my notes and highlights from the two books, I think my key take-away has been that the likelihood of an event happening is not nearly as important as the impact of an event if it were to happen.
I think a lot of the ideas Taleb presents are interesting, and many of them were new to me. The writing is dense and I know many people who just did not get through them.
Taleb applies his thoughts to many fields - some of which I know more about than others. With regard to medicine, I agree with Taleb a little more than half the time but consider some of his views misinformed on the subjects I know a lot about. The closer he stays to his expertise the better his thought; his best ideas are deeply true and the false precision of mathematics has very often been misapplied in many fields.
I’d have to recheck Antifragility, but will do so later. Essentially, he falls into some of the same logic traps he identifies in others. Occasionally he gives a lot of relevance to obscure papers and opinions that do not really represent mainstream medical thought, for example, but are presented as if they do. (Picking his arguments, straw men). Sometimes there are good reasons for practices he dislikes and it is not at all clear he knows them (if so he does not say). This is not to say that many of his other ideas about medicine are true and rarely expressed. Of course these are my opinions.
He is talking about naive interventionism and states how he went to the emergency room after falling during a walk because his nose was swollen. He was given some ice and he asked the doctor if “this treatment [was] just naive interventionalism?”
ER doctors are sometimes looking after ten or twenty different patients and I cannot see many wanting to get into a philosophical discussion with precisely defined terms. Icing a bruise brings some comfort and reduces swelling somewhat, but probably does not make a big long-term difference to inflammation.
The doctor (says Taleb), clearly not wanting to talk, says something like “you have a nose the size of Boston, and you want to use words?”.
The doctor is not worried about the swelling. He is concerned if there is bleeding, and might be wondering if he has to fix a dislocated broken nose by pulling it back into place. (Or if he fell due to a heart problem, or low blood sugar or pressure, say, which happens more than you might think even if the patient says they just lost their balance after the event). This is easier to do well with reduced swelling even if the effect is temporary. Ice might also reduce blood flow which can be relevant.
Taleb goes onto the web and finds out that although ice is used for inflammation, some see no benefit and some see a modest one. He then concludes the intervention is doing something for the sake of doing something. It is hard to know what the doctor saw, but presumably he also got pain medicine, neurological exams, a full investigation of why he fell (which has many different causes), a CT or radiograph of his nose and facial bones, etc.
This is not germane to his discussion and is excluded. But at most he is only partly right. He criticizes many people for saying “where is the evidence” while justifying fossil fuels or, in the past, smoking - the absence of evidence is not the evidence of absence. He does this to medicine, where evidence on interventions differs a lot, but the heuristics are very logical, and criticizes what he praises elsewhere.