Just published. Probably my favorite Taleb book so far ...
If you want to know what mindset I come from when I talk about ERE, "antifragility" is it. After reading this I think I have a lot more in common with Taleb than I used to think.
Antifragile
Yes, it is most excellent. Understanding the teleogical fallacy (that we can assume that humans know in fact where they are going and what they will desire in the future) I think is critical. Schumpeter recognized this issue, but only at the end of his life. (See his History of Economics, discussion of Aristotle). Oddly enough, Nate Silver also identifies it in his latest book by taking the Bayesian approach to life. You'll also find strands of this in Kahneman and Mandelbrot. I highly recommend Mandelbrot's newly published memoir.
It finally arrived at the library and I'm about a third of the way through it now. His anti-fragile fitness routine (Cake) is nuts, but otherwise I am enjoying it. His ADD writing style, jumping from biology to psychology to economy to philosophy in the same paragraph - and sometimes in the same sentence - has caused me to stop reading on several occasions and disappear into mind wandering cross-discipline connect-the-dots in my own life. A good book should make you think. This one is doing that for me.
The 21st Century trend is to bring the sciences -- at least the social sciences -- back together, much of it led by psychological and evolutionary approaches to markets and choices. Here's a new article, although the referenced paper linked therein is way more instructive than the article: http://www.theatlantic.com/business/arc ... es/267255/
In my view, they should never have been separated. The social sciences in particular become schizoidal and counterproductive on their own, leading to bad theories and ideologies that have become modern quasi-religions.
The piece missing from the puzzle is the introduction of Robert Hare's observations and research about the prevalence of 1-4% psychopaths in any given population (most of whom are not serial killers or in prison, but may be in your workplace). I think we will find a power-law distribution of disproportional (and largely negative) impact of these people on society. But the only discussion of this I am aware of on a broad scale is in "Political Ponerology", an incomplete work written by a Polish psychologist who worked largely under communist regimes, had his data destroyed and barely made it out. Unfortunately, that work has been co-opted largely by internet conspiracy theorists. Yet its still worth reading if you ignore the editors and the other window dressing.
Oddly enough, the "rational economic actor" of economic theory is essentially a psychopath under Hare's definition, albeit one with omniscience about his future (the teleological fallacy again) and impulse control.
In my view, they should never have been separated. The social sciences in particular become schizoidal and counterproductive on their own, leading to bad theories and ideologies that have become modern quasi-religions.
The piece missing from the puzzle is the introduction of Robert Hare's observations and research about the prevalence of 1-4% psychopaths in any given population (most of whom are not serial killers or in prison, but may be in your workplace). I think we will find a power-law distribution of disproportional (and largely negative) impact of these people on society. But the only discussion of this I am aware of on a broad scale is in "Political Ponerology", an incomplete work written by a Polish psychologist who worked largely under communist regimes, had his data destroyed and barely made it out. Unfortunately, that work has been co-opted largely by internet conspiracy theorists. Yet its still worth reading if you ignore the editors and the other window dressing.
Oddly enough, the "rational economic actor" of economic theory is essentially a psychopath under Hare's definition, albeit one with omniscience about his future (the teleological fallacy again) and impulse control.
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jennypenny
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Most of you probably saw this...
article on Antifragile on Zero Hedge
http://www.zerohedge.com/news/2013-01-2 ... ellectuals
hour-long interview with Taleb about the book (not that there's any shortage of Taleb interviews
http://www.youtube.com/watch?v=ehXxoUH1 ... r_embedded
I guess I'll have to read this one. Does anyone else struggle getting through his books? He's usually all over the place and I find it distracting.
article on Antifragile on Zero Hedge
http://www.zerohedge.com/news/2013-01-2 ... ellectuals
hour-long interview with Taleb about the book (not that there's any shortage of Taleb interviews
http://www.youtube.com/watch?v=ehXxoUH1 ... r_embedded
I guess I'll have to read this one. Does anyone else struggle getting through his books? He's usually all over the place and I find it distracting.
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jacob
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@jennypenny - I like technical books (more technical than the usual nonfiction), exhibit A: the ERE book. Antifragile leans a lot more in that direction that the Black Swan book.
It's interesting that Taleb himself doesn't like writing technical papers. Perhaps, it's because the concept lacks the vocabulary to express it as well as he wants. He uses convex functions and skewed probability distributions (fundamental options theory, really) to illustrate the point ... add "Normal Accident Theory" and the NNT/NNH part of this 2009 post http://earlyretirementextreme.com/my-hd ... -care.html and I feel like this summarizes the major points(*). Maybe I'm missing all his other points?
(*) Of course these points are not part of the general zeitgeist/epistemology. You won't see these issues mentioned on the NYT I bet.
It's interesting that Taleb himself doesn't like writing technical papers. Perhaps, it's because the concept lacks the vocabulary to express it as well as he wants. He uses convex functions and skewed probability distributions (fundamental options theory, really) to illustrate the point ... add "Normal Accident Theory" and the NNT/NNH part of this 2009 post http://earlyretirementextreme.com/my-hd ... -care.html and I feel like this summarizes the major points(*). Maybe I'm missing all his other points?
(*) Of course these points are not part of the general zeitgeist/epistemology. You won't see these issues mentioned on the NYT I bet.
I think it was about 7 months ago that I bought and read Black Swan, and it came with a generous section about Anti-Fragility. Kind of two for the price of one 
For me the core of Black Swan is that we humans so easily forget that shit happens instead of always repeating “normal” day to day life. Jennypenny made me aware of preparing for disruptions in daily life. So I started to have reserves of food, water, cash money, more than one place for shelter etc for such black swans. It made me think of the structure of my investments, flexibility of places to go to etc.
And then the Anti-Fragility part which name says it all. A human body is the best example of “a machine” that is anti-fragile: it is able to repair itself. But please maintain it otherwise it becomes fragile!
Jacob’s book (ere) is of full of things which, if applied, make ones life much more anti-fragile and robust. But you must apply, do it, practice it. Otherwise your fragility remains!
TL;DR:
Taleb is a joy to read because of his broad scope of view and talent to tell, but if you sit down and reflect about Black Swans in life or becoming less fragile, you find same idea’s and help from Jacob’s blog and book and from the posts in this forum.
For me the core of Black Swan is that we humans so easily forget that shit happens instead of always repeating “normal” day to day life. Jennypenny made me aware of preparing for disruptions in daily life. So I started to have reserves of food, water, cash money, more than one place for shelter etc for such black swans. It made me think of the structure of my investments, flexibility of places to go to etc.
And then the Anti-Fragility part which name says it all. A human body is the best example of “a machine” that is anti-fragile: it is able to repair itself. But please maintain it otherwise it becomes fragile!
Jacob’s book (ere) is of full of things which, if applied, make ones life much more anti-fragile and robust. But you must apply, do it, practice it. Otherwise your fragility remains!
TL;DR:
Taleb is a joy to read because of his broad scope of view and talent to tell, but if you sit down and reflect about Black Swans in life or becoming less fragile, you find same idea’s and help from Jacob’s blog and book and from the posts in this forum.
Ah, Taleb! I devoured Antifragility. The more I read, the more I felt Jacob and he are kindred souls. I'd love to host a lunch meeting with the two of them and just listen to the back & forth.
While I still feel challenged to determine what would be concrete antifragile tactics in my daily life, I am now much more conscious of my exposure to negative Black Swans. So, I reckon that I am at least more robust.
While I still feel challenged to determine what would be concrete antifragile tactics in my daily life, I am now much more conscious of my exposure to negative Black Swans. So, I reckon that I am at least more robust.
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jennypenny
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A discussion between Taleb and Kahneman in NYC 2/5/13
http://www.nypl.org/audiovideo/live-nyp ... l-kahneman
http://www.nypl.org/audiovideo/live-nyp ... l-kahneman
Thanks for that -- Kahneman is one of the few people that can put Taleb in his proper place, and he does it so elegantly and non-confrontationally.
What I thought was so interesting was K's observation that most people cannot or would not choose to live the way that Taleb suggests, because it's uncomfortable psychologically to acknowledge unpredictability. Under K's mind model, "System 1" -- the dominant but impulsive decision-making apparatus for almost everyone -- just doesn't work that way. I think it may reveal an inherent limitation or difficulty of implementing Taleb's ideas with large groups of people.
What I thought was so interesting was K's observation that most people cannot or would not choose to live the way that Taleb suggests, because it's uncomfortable psychologically to acknowledge unpredictability. Under K's mind model, "System 1" -- the dominant but impulsive decision-making apparatus for almost everyone -- just doesn't work that way. I think it may reveal an inherent limitation or difficulty of implementing Taleb's ideas with large groups of people.
I couldn't understand why Taleb didn't give any real response to Kahneman's point about how we naturally avoid those things that would make us antifragile - and therefore make antifragility a not-very-useful theory.
Awareness would have been my first response. Just knowing that we evolved to improve with stress could encourage us to avoid the temptation toward comfort, safety, security, etc.
Taleb gives a laundry-list of ways this comes into our lives as individuals and as organized groups. By reading through the list I might see them more clearly when I encounter the choices of safe vs. risky or easy vs hard, then choose more difficult or more risky.
When there is no word for a thing, it is hard to talk about that thing. Now we've got a word and someone prompting the conversation.
Awareness would have been my first response. Just knowing that we evolved to improve with stress could encourage us to avoid the temptation toward comfort, safety, security, etc.
Taleb gives a laundry-list of ways this comes into our lives as individuals and as organized groups. By reading through the list I might see them more clearly when I encounter the choices of safe vs. risky or easy vs hard, then choose more difficult or more risky.
When there is no word for a thing, it is hard to talk about that thing. Now we've got a word and someone prompting the conversation.
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My_Brain_Gets_Itchy
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I think the presentation of his thesis (i.e. in the Book) was really undermined by his name calling and divisiveness.
Labelling every one of his opponents in academia 'Soviet-Harvard' and everyone within any sort of system as as a 'fragilista' over and over again through the book, to make no other point but be derogatory, was to me, well, unnecessary.
Taleb is obviously extremely well read and very bright, but his thin skin name calling undermined a lot of his credibility.
It's almost like he had to put others down to strengthen his point, which again, I don't think is necessary, since I think the concept of antifragility can stand on its own.
I think he could have easily presented his case without the mocking tone.
To me, his theory can be summarized simply as : step outside your comfort zone and avoid complacency. The longer a system or person becomes too complacent, the more atrophy occurs. This is pretty much a staple in a lot of self help books.
Despite that I still really liked and recommend his book. I liked especially his endorsement of FI as being probably the most antifragile thing you can do.
Also, I found many of the things he would say would trigger deep thought, and that was a testament to his ability to fuse cross-disciplinary knowledge.
Labelling every one of his opponents in academia 'Soviet-Harvard' and everyone within any sort of system as as a 'fragilista' over and over again through the book, to make no other point but be derogatory, was to me, well, unnecessary.
Taleb is obviously extremely well read and very bright, but his thin skin name calling undermined a lot of his credibility.
It's almost like he had to put others down to strengthen his point, which again, I don't think is necessary, since I think the concept of antifragility can stand on its own.
I think he could have easily presented his case without the mocking tone.
To me, his theory can be summarized simply as : step outside your comfort zone and avoid complacency. The longer a system or person becomes too complacent, the more atrophy occurs. This is pretty much a staple in a lot of self help books.
Despite that I still really liked and recommend his book. I liked especially his endorsement of FI as being probably the most antifragile thing you can do.
Also, I found many of the things he would say would trigger deep thought, and that was a testament to his ability to fuse cross-disciplinary knowledge.
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secretwealth
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"Labelling every one of his opponents in academia 'Soviet-Harvard' and everyone within any sort of system as as a 'fragilista' over and over again through the book, to make no other point but be derogatory, was to me, well, unnecessary.
Taleb is obviously extremely well read and very bright, but his thin skin name calling undermined a lot of his credibility."
Sounds like Soros. Funny how these hedge fund guys make a bucketload of money because they find a market inefficiency and have deep pockets (and enough friends with deep pockets) to make billions. Suddenly, they think they're their generation's Aristotle or Bertrand Russell.
Taleb is obviously extremely well read and very bright, but his thin skin name calling undermined a lot of his credibility."
Sounds like Soros. Funny how these hedge fund guys make a bucketload of money because they find a market inefficiency and have deep pockets (and enough friends with deep pockets) to make billions. Suddenly, they think they're their generation's Aristotle or Bertrand Russell.
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RealPerson
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Agreed S_W: speaking with a strong accent and using words like "metaphysical" and "quantum" gets you halfway to Aristotle's level, especially if you also have a lot of money. Still, if you get past the arrogance he does make you think. As I think back all the way to my childhood, there have been so many crises and major disruptions, it does seem like that is more the norm than "normal" is.
Given the frequency of major disruptions, it makes lots of sense to prepare for the predictable chaos and disruption. What is unpredictable is the timing, severity and nature of the disruptive force. Wars, major natural disasters, the OPEC energy crisis of 1973, depletion of oil and natural resources, the internet, the economic rise of Asia, 9/11 and the rise of militant fundamental islam, are just a few examples. Not to mention countless booms and busts in the economy. All have changed the way we live, the way we think and the way society functions. They have affected the financial stability of many families. Adaptability is not an option. It is essential for thriving, if not survival. A reason to become a Renaissance person. A reason to plasticize your mind and your thinking. This forum is a great place to do just that.
Given the frequency of major disruptions, it makes lots of sense to prepare for the predictable chaos and disruption. What is unpredictable is the timing, severity and nature of the disruptive force. Wars, major natural disasters, the OPEC energy crisis of 1973, depletion of oil and natural resources, the internet, the economic rise of Asia, 9/11 and the rise of militant fundamental islam, are just a few examples. Not to mention countless booms and busts in the economy. All have changed the way we live, the way we think and the way society functions. They have affected the financial stability of many families. Adaptability is not an option. It is essential for thriving, if not survival. A reason to become a Renaissance person. A reason to plasticize your mind and your thinking. This forum is a great place to do just that.
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jacob
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One thing to understand is that in finance there's a tension between practitioners and academics. The phrase "those who can't do, teach" can be read between the lines of almost every statement from traders.
This tension does not exist in science where the best doers are also very often the best teachers. Conversely, in economics and finance, academics have a miserable track record. In particular, what is taught is a very simplified version of reality.
I don't really see a difference whether the war is fought with name-calling(*) or by surreptitiously ascribing hard work to luck(**) or heuristics to "opinions". That's just a matter of style. The tension is there. There's an intellectual battle going on.
(*) Personally I think "Soviet" as in "this theory has been approved by the party" is quite descriptive of academia. Just try questioning the efficient market theory gospel and wait for the Spanish Inquisition to show up. Basically, if you do anything to question the current paradigm (EMH, rational agents), you'll be shut down academically. All that remains is to put your money where your mouth is and make millions ... which these guys then proceed to do. I can see where the arrogance/frustration comes from.
(**) Like the hard work that eliminates market inefficiencies in order to render it efficient ... and THEN assuming the work as a given proceeds to conclude that hard work is pointless.
The problem is that we have paradigm that's demonstrably wrong but because it's a paradigm, the establishment is incapable of surrendering it. This causes a lot of pain (e.g. recessions) whenever reality breaks away from theory---note that the market mostly trades according to theory as a self-fulfilling prophecy. The very existence of a widely used theory makes the market as a whole fragile. Like dominoes. So ... are widely taught academic market theories a good idea? No! They're dangerous as hell.
Now, what is one to do about that? This depends on ethics. The Fat Tony approach is that "people are dumb and the only way they can learn is by successive doses of pain...in short, make money of their stupidity until they wisen up". The Nero Tulip approach is that "people are dumb but perhaps they can be educated...made to listen by namecalling.. or whatever it takes, even if it has to be papers written in an academic style".
If this sounds familiar ... Well, been there, done that.
In Kahneman's words, Fat Tony appeals to System 1. Nero Tulip (Taleb's alter ego) appeals to System 2.
Methinks few people naturally gravitate to System 2, so ultimately the majority is doomed. This leaves a minority to ultimately profit over and over again, while another minority gets crucified for questioning dogma. <-- I believe this describes the history of humankind. Yes?
This tension does not exist in science where the best doers are also very often the best teachers. Conversely, in economics and finance, academics have a miserable track record. In particular, what is taught is a very simplified version of reality.
I don't really see a difference whether the war is fought with name-calling(*) or by surreptitiously ascribing hard work to luck(**) or heuristics to "opinions". That's just a matter of style. The tension is there. There's an intellectual battle going on.
(*) Personally I think "Soviet" as in "this theory has been approved by the party" is quite descriptive of academia. Just try questioning the efficient market theory gospel and wait for the Spanish Inquisition to show up. Basically, if you do anything to question the current paradigm (EMH, rational agents), you'll be shut down academically. All that remains is to put your money where your mouth is and make millions ... which these guys then proceed to do. I can see where the arrogance/frustration comes from.
(**) Like the hard work that eliminates market inefficiencies in order to render it efficient ... and THEN assuming the work as a given proceeds to conclude that hard work is pointless.
The problem is that we have paradigm that's demonstrably wrong but because it's a paradigm, the establishment is incapable of surrendering it. This causes a lot of pain (e.g. recessions) whenever reality breaks away from theory---note that the market mostly trades according to theory as a self-fulfilling prophecy. The very existence of a widely used theory makes the market as a whole fragile. Like dominoes. So ... are widely taught academic market theories a good idea? No! They're dangerous as hell.
Now, what is one to do about that? This depends on ethics. The Fat Tony approach is that "people are dumb and the only way they can learn is by successive doses of pain...in short, make money of their stupidity until they wisen up". The Nero Tulip approach is that "people are dumb but perhaps they can be educated...made to listen by namecalling.. or whatever it takes, even if it has to be papers written in an academic style".
If this sounds familiar ...
Well, been there, done that. In Kahneman's words, Fat Tony appeals to System 1. Nero Tulip (Taleb's alter ego) appeals to System 2.
Methinks few people naturally gravitate to System 2, so ultimately the majority is doomed. This leaves a minority to ultimately profit over and over again, while another minority gets crucified for questioning dogma. <-- I believe this describes the history of humankind. Yes?
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secretwealth
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"Wars, major natural disasters, the OPEC energy crisis of 1973, depletion of oil and natural resources, the internet, the economic rise of Asia, 9/11 and the rise of militant fundamental islam, are just a few examples."
Much, much, much stabler than almost any other comparable period in human history. Consider the early 20th century: 50 million people died of the flu DURING the first World War. Then bread-lines spawned by economic crisis while millions were killed by genocidal maniacs in Russia as a preamble to World War II, then the Holocaust and the subsequent genocide of millions more across Asia.
IMO long lines at the pump, cat pictures, cheap teddy bears made in China, and a couple of toppled skyscrapers are nothing in comparison. The world is getting better all the time. We're the luckiest generation yet--and our kids will probably be luckier still.
Much, much, much stabler than almost any other comparable period in human history. Consider the early 20th century: 50 million people died of the flu DURING the first World War. Then bread-lines spawned by economic crisis while millions were killed by genocidal maniacs in Russia as a preamble to World War II, then the Holocaust and the subsequent genocide of millions more across Asia.
IMO long lines at the pump, cat pictures, cheap teddy bears made in China, and a couple of toppled skyscrapers are nothing in comparison. The world is getting better all the time. We're the luckiest generation yet--and our kids will probably be luckier still.
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RealPerson
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"50 million people died of the flu DURING the first World War. Then bread-lines spawned by economic crisis while millions were killed by genocidal maniacs in Russia as a preamble to World War II, then the Holocaust and the subsequent genocide of millions more across Asia"
Mao Zedong, through the Cultural Revolution killed an est. 47-78 million people, making this the largest mass murder in recorded history. The Cultural Revolution ended a mere 43 years ago. Adolf Hitler came in as a distant second with 12 million. King Leopold II of Belgium (in 3rd place) beat Stalin by killing 8 million Congolese vs. 6 million Soviets for Stalin. Saddam Hussein was insignificant with 600,000 dead. Confirms the persistent nature of upheavals.
Just a few possibilities in the near future:
1) long range North Korean nuclear missile capable of reaching the western US
2) more failed states in the middle East and Africa, creating safe havens for terrorists
3) Iranian Ayatollahs with an arsenal of nuclear weapons
4) dirty nuclear bombs in US cities courtesy of Al Qaeda (not very lethal but highly disruptive)
5) rapidly progressing depletion of the world's natural resources causing huge disruptions
6) climate change causing severe droughts, famine, coastal flooding and storms
Those are just a few I can think of right now.
I can't predict the future but I have the feeling neither the frequency nor the severity of disruptive events will be lessened down the road. Challenges will continue to be with us. Let's be antifragile to avoid being that Thanksgiving turkey.
Mao Zedong, through the Cultural Revolution killed an est. 47-78 million people, making this the largest mass murder in recorded history. The Cultural Revolution ended a mere 43 years ago. Adolf Hitler came in as a distant second with 12 million. King Leopold II of Belgium (in 3rd place) beat Stalin by killing 8 million Congolese vs. 6 million Soviets for Stalin. Saddam Hussein was insignificant with 600,000 dead. Confirms the persistent nature of upheavals.
Just a few possibilities in the near future:
1) long range North Korean nuclear missile capable of reaching the western US
2) more failed states in the middle East and Africa, creating safe havens for terrorists
3) Iranian Ayatollahs with an arsenal of nuclear weapons
4) dirty nuclear bombs in US cities courtesy of Al Qaeda (not very lethal but highly disruptive)
5) rapidly progressing depletion of the world's natural resources causing huge disruptions
6) climate change causing severe droughts, famine, coastal flooding and storms
Those are just a few I can think of right now.
I can't predict the future but I have the feeling neither the frequency nor the severity of disruptive events will be lessened down the road. Challenges will continue to be with us. Let's be antifragile to avoid being that Thanksgiving turkey.