Shared by JohnH

I wonder if NNT has seen Danny Khaneman’s new study: http://www.blackswanreport.com/blog/2010/09/woodrow-wilson-school-of-public-and-international-affairs-income%e2%80%99s-influence-on-happiness/
Basically, they’re measuring two kinds of happiness, the in-the-moment experience kind, on the one had, and the ‘thinking about your life as a life’ kind.
HatTip again to Dave Lull for reminding me to check NNT’s frequently updated Notebook.

135- Income, Happiness & the Less is More Effect

Iatrogenics of wealth: As a child I was certain that poor people were happier because they had less complicated but more social lives, huddled together in small quarters, and having no soccer mom (or the then-equivalent), they could just play in the streets etc. In addition, rich people use harmful technologies, go to the gym instead of playing in the streets, meet economists and other frauds, etc… So there were things money could not buy, in effect, money caused you to lose… Later on when I got a windfall check, in my twenties (before it became more common for people in finance to get big bucks), I discovered another harmful side of wealth: unless one hid the cash, it was hard to know who one’s friends were…

But for some people, money can be beneficial –some. I am not convinced of the utility theory approach & results showing the absence of effect of higher income (in excess of lower-middle class wages) on happiness (the noise I see in the research papers is MONSTROUS, even if the "average" seems to accord with the findings). Also, I am not quite certain that "happiness" is refined enough an expression. People don't quite understand what being human means. There is the unhappiness that’s natural to mankind, sadness from heartbreak or the loss of a family member (Why do so many people read sad love stories?) and the unhappiness of working in an office building, commuting, sitting in a structured classroom, captive in a technological nightmare… more later.

Taleb addresses climate change in the second edition of his book and answers those who want to use his theories to do nothing: “The skepticism about models I propose does not lead to the conclusion endorsed by anti-environmentalists and pro-market fundamentalists. Quite the contrary: we need to be hyper-conservationists ecologically, since we do not know what we are harming with now. That’s the sound policy under conditions of ignorance and epistemic opacity.” That’s his fancy way of saying that the Black Swan of climate change has so much downside, we need to be very careful. But to handle this challenge, we’ll need to do something we’ve never done and it thus seems impossible as well. That’s the second Black Swan here.

In that sense, though, Taleb’s work gives me hope — the unexpected not only can happen, he says, it’s really the only thing that ever changes history. Which Black Swan will hit first? Will it be climate devastation and resource shortages … or collective action to create more profitable, healthy, and sustainable companies, communities, and countries?

The first Swan has left the gate and we have some catching up to do, but I’m betting on the second.

I am not an entrepreneur, but I don’t think it’s that simple.  Entrepreneurship is all about overcoming the odds.  I believe that if all entrepreneurs decided to quit when the data were telling them to, there would be very few successful startups.  As Nicholas Nassim Taleb puts it in his insightful book “The Black Swan”, “some blindness to the odds or an obsession with their own positive Black Swan is necessary for entrepreneurs to function”.

My guess is that entrepreneurs decide to call it quits when they just don’t “feel” it anymore; when deep inside their gut feeling and their undaunted optimism are just not there anymore; when they don’t have the strength to dismiss another round of gloomy data as yet another obstacle to overcome; when they themselves lose faith in the ultimate success of what they are doing.

Shared by JohnH

This confused me as well.

I wrote that a technology, book, cultural practice, religion, drug, opera piece, fashion, that is, all nonperishable cultural goods, are likely (in expectation) to last as long as they have been in existence. So when you observe a technology, you can expect it to be in the middle of its life. This note explains the math behind the point.

Note: This is an average across all technologies, a distribution, something probabilistic not deterministic: some fool of randomness wrote to me to wonder whether telephone land lines should be expected to last another century, another idiot tried to use my idea to compare Microsoft to Apple.This is a statistical framework for the dynamics of cultural uses.

Taleb expanded his initial assertion to a more general point that non-perishable goods could be statistically expected to be in the middle of their lifespan. Notice the italicized part (emphasis his). I’m the “fool of randomness” to whom he is referring.

Yet Taleb’s theory fails nearly any empirical test I can think of. There are plenty of examples of technologies which are almost certainly in their twilight (e.g. landline phones) and others which are probably closer to the beginning than the end of their lifespans (e.g. the World Wide Web). Given Taleb’s previous response to my inquiry about landline phones, I don’t think he would dispute this. In fact, he says “This is an average across all technologies, a distribution, something probabilistic not deterministic.”

But if this is the case, what good is the theory? I am racking my brain trying to think of any situation where it might be useful to know the average lifespan of all technologies (or books or companies), as opposed to the lifespan of a particular technology, but I am coming up blank. When we attempt to plan for the future, would it do us any good to know that the average technology can be expected to be around for, say, another 100 years? Of course not. We are only interested in specific technologies (or books or companies), and on that point, Dr. Taleb’s theory is nearly useless.