Tag Archives: Nassim Taleb

Extension on “Wrong Question” post

I’ve picked up Nietzsche’s Beyond Good and Evil again. Nassim Taleb’s particular brand of pragmatic epistemology made me think back to Nietzsche’s brand of the same, and the similarities are interesting. Taleb talks about “Platonicity”, or formalized ideas that are disconnected from practical uses for various reasons — the Gaussian “Bell Curve” probability distribution is one example. Nietzsche talks about the “Will to Truth”, which is a mistaken human drive towards truth and rationality at the fault of leaving room for tail events that defy explanation under such “truths”.

Both Taleb and Nietzsche have their reasons to favor an epistemology that offers more explanatory values than just true or false. Taleb’s epistemology must account for Black Swans, and “Platonified” epistemologies cannot do this because they can’t arrive at an idealized conclusion without ignoring some messy, inexplicable details. Nietzsche’s epistemology seeks to overcome unnecessarily rigid types of thinking or being (e.g. Hegel’s dialectic, Christian theology, positive science). While it’s important to qualify one’s reasons for doing away with traditional epistemic models, these two appeal to me towards the end of keeping my mind clear of cob webs and alert to opportunities I might miss while adhering to business as usual.

If you haven’t read Antifragile or Beyond Good and Evil, they’ll handsomely repay careful reading.

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The Problem With Smart People

The problem with smart people is that they think of ideas before I do. I keep getting a sinking feeling that Nassim Taleb has anticipated the entire contents of this blog: the more I read Antrifragile, the more I want to transcribe passages of his book here and follow it with a simple, “Ditto.” However, his project revolves around decision making in a world that we don’t understand. This isn’t quite the same as mine: living the good life, which is described by so many, yet unheeded by many more. So, I’ll soldier on, pointing out Taleb’s sharp wit and good ideas frequently, and applying his work to my goals as I can. There are, of course, others who have anticipated much of the content on this blog, and I’ll cite them as I pluck their good ideas from the tree of knowledge too.

The problem with smart people is that they make you realize you’re not alone. Now, most of the time, folks like good company. But when your a writer, it’s easy and desirable to fool yourself into believing that your breaking new trail. When it’s just the case that you’re reading too little, and your writing is too superficial. If my writing covers ideas that others have already described, it’s time to read those writers more closely, and cover the topic more deeply.

So, all of this is a long preamble to a brief update. The completion of the “How to Press Olives” series is on the way, as is a new article about science and religion — one of my favorite false dilemmas to explore!

Navigation & Hurricanes

Rita, Katrina, Andrew, the list goes on. Every year, the weather forecasters go to work plotting the courses of hurricanes. Every so often, a hurricane doesn’t listen to the prognostications of forecasters, and things get messy. In risk management, these “every so often” events are also known as “tail events”: they are events with a statistically low probability of occurring, but when they do, big problems can occur.

Nassim Taleb’s book, Antifragile, explores these tail events. He hopes to describe how to survive, and maybe even prosper, in a world where they happen. The conventional solution to surviving tail events is better and more frequent forecasting. Taleb criticizes this solution because more and better forecasting doesn’t improve the odds of navigating through a hurricane when it changes its course. The problem ought to be “building a better boat”. In other words, the way to survive and prosper in a world with hurricanes is to build lifestyles that successfully coexist with them, rather than building a fragile lifestyle that relies on the accurate forecast in order to evacuate and get out of the way.

Detractors might claim that building systems robust enough to survive tail events is expensive, and they are correct. However, it is also expensive to insure the millions of lives that live in the paths of these events, and supporting the forecasting systems that inaccurately predict tail events. If we spend money designing systems that can survive despite tail events, we will have front-load our expenses, paying less in the future once the initial design work is finished. The current system of insuring a fragile system against tail events has a high recurring cost that we cannot escape unless we focus on designing systems that survive in the face of tail events.

Taleb describes a spectrum from “fragile” to “robust” to “anti-fragile” in order to make sense of different responses one might take towards tail events. Fragile systems rely on forecasting to prevent them from toppling over: think of a house of cards — any small disturbance would upset the house of cards. Robust systems can survive tail events, but repeated exposure to tail events might cause them to fail; think of over-engineering a bridge, such that it can survive powerful earthquakes and heavy trucks; eventually such a bridge would fall down, but it would be robust enough to avoid this catastrophe for a very long time. Anti-fragile systems actually thrive on tail events: to use one of Taleb’s examples, the airline industry improves after each plane crash by gathering information about the details surrounding the incident, and then improving guidelines for airline operation and design. Taleb uses the mythical tropes of The Sword of Damocles, The Phoenix, and The Hydra to illustrate fragile, robust, and anti-fragile systems respectively: The Sword will fall if the thread holding it snaps, The Phoenix rebuilds itself after each destruction, and The Hydra grows two new heads in the place of each one that is destroyed.

It is important to note that antifragility is relative to the system it is describing. For example, individuals in a Darwinian population are fragile because they die, but the population is (hopefully) antifragile because natural selection removes the weaker individuals from the gene pool, thereby improving the genetic material available for reproducing the population. Populations may be fragile in an ecosystem, as various populations compete for common resources, but the ecosystem is (hopefully) antifragile because of the redundant, or overlapping, roles played by various populations competing for resources. It is important to note how the concept of antifragility applies to the individual or population that it is describing, since the concept depends on the behavior of the object in the system in order to determine whether it is antifragile.

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We can apply this idea of antifragility to the goal of living a good life. We should seek to live our lives in such a way that tail events don’t harm us, and in the best case, help us. Financially, this means diversifying streams of income to avoid relying on one source too heavily, because if a single stream of income fails, or several streams of income that depend on a single source fail, we would be up the creek without a paddle. It also means reducing debt, to be less dependent on all sources of income, increasing our the redundancy of our financial resources: with fewer payments to make, we can save more of our income and have it available to support us. If you’re an investor, it means diversifying your investments across asset classes and individual assets. (There are problems with the current economic system, according to Taleb, since it is inherently fragile, but it is possible to build a more robust investment portfolio versus a more fragile one, despite this systemic fragility.) Personally, it means developing a network of friends and neighbors who can help you; this is probably different from your LinkedIn and Facebook contacts. We are talking about people you meet for movies and meals, who may be your friend on Facebook, but who would also help shovel your car out of a snowbank in a blizzard. It means having hobbies that fit your income: collecting Gibson guitars, or Versace dresses, on a quickie mart salary probably lies closer to the Sword of Damocles than it does to the Hydra.