Nassim Taleb, author of Fooled By Randomness and The Black Swan, talks with EconTalk host Russ Roberts about antifragility, the concept behind Taleb’s next book, a work in progress. Taleb talks about how we can cope with our ignorance and uncertainty in a complex world. Topics covered include health, finance, political systems, the Fed, your career, Seneca, shame, heroism, and a few more.
“A Stoic sage is someone who transforms fear into prudence, pain into information, mistakes into initiation, and desire into undertaking.”
Nature is the master statistician and probabilist. It follows a certain logic based on layers of redundancies, as a central risk-management approach. Nature builds with extra spare parts (two kidneys), and extra capacity in many, many things (say lungs, neural system, arterial apparatus, etc.), while design by humans tend to be spare, overoptimized, and have the opposite attribute of redundancy, that is, leverage—we have a historical track record of engaging in debt, which is the reverse of redundancy (fifty thousand in extra cash in the bank or, better, under the mattress, is redundancy; owing the bank an equivalent amount is debt).
Nero followed Fat Tony’s rule of systematically making donations, but never to anyone who directly asked for gifts (and never, never, to any charitable organization with the possible exception of those in which not a single person earns a salary).
Nassim Nicholas Taleb The author of the best-selling 2007 book “The Black Swan,” Nassim Nicholas Taleb said last June that the U.S.’s debt situation was worse than that of Greece. “The difference between Europe and the U.S. is the consciousness of the problem,” Taleb said in September. He warned the world’s predicament is more dire than in 2008. “And, we will pay a higher price,” he said in October. “We haven’t done anything constructive in three and a half years. Nobody wants to do anything drastic now.” Asked about these statements, Taleb wrote in an Jan. 12 email: “These are not predictions but statements of riskiness.”
CONFLATION OF EVENT AND EXPOSURE. This conflation of event and exposure is what I call the confusion between X and F(X), also expressed in Chapter x as the Aristotelian v/s the Thalesian. The error consists on focusing on knowledge about a variable, say X when we should be dealing with a function of that variable F(X) (here, the effect of X on you, the exposure to X). We may never understand X, or be marred with perceptual errors, but we can control F(X). The fool thinks the Black Swan problem resides in better prediction of X, rather than the much simpler problem of mitigation by controlling F(X). Sometimes scholars make the distinction then go on conflating the two. Focusing on F(X) is not predictive, focusing on X is necessarily so. And the connection to antifragility is as follows: F(X) can be antifragile.
more technically explained in the Section II of this document:
INVERSE DESIGNATOR: term used often with genuine intentions which should be interpreted as the exact opposite. Examples: “I don’t care about money” or “I will be brief” in life; “Real world solution” or “practical” in academic writings, means overly theoretical; “honestly”, “I am trying to help you” or “I am ethical” business; “empirical evidence” economics;