Antifragile: Things That Gain from Disorder

by Taleb, Nassim Nicholas

  Increasingly, data can only truly deliver via negativa–style knowledge—it can be effectively used to debunk, not confirm.

  The tragedy is that it is very hard to get funding to replicate—and reject—existing studies. And even if there were money for it, it would be hard to find takers: trying to replicate studies will not make anyone a hero. So we are crippled with a distrust of empirical results, except for those that are negative. To return to my romantic idea of the amateur and tea-drinking English clergyman: the professional researcher competes to “find” relationships. Science must not be a competition; it must not have rankings—we can see how such a system will end up blowing up. Knowledge must not have an agency problem.

  THE TYRANNY OF THE COLLECTIVE

  Mistakes made collectively, not individually, are the hallmark of organized knowledge—and the best argument against it. The argument “because everyone is doing it” or “that’s how others do it” abounds. It is not trivial: people who on their own would not do something because they find it silly now engage in the same thing but in groups. And this is where academia in its institutional structure tends to violate science.

  One doctoral student at the University of Massachusetts, Chris S., once came to tell me that he believed in my ideas of “fat tails” and my skepticism of current methods of risk management, but that it would not help him get an academic job. “It’s what everybody teaches and uses in papers,” he said. Another student explained that he wanted a job at a good university so he could make money testifying as an expert witness—they would not buy my ideas on robust risk management because “everyone uses these textbooks.” Likewise, I was asked by the administration of a university to teach standard risk methods that I believe are pure charlatanism (I refused). Is my duty as a professor to get students a job at the expense of society, or to fulfill my civic obligations? Well, if the former is the case, then economics and business schools have a severe ethical problem. For the point is generalized and that’s why economics hasn’t collapsed yet in spite of the obvious nonsense in it—and scientifically proven nonsense in it. (In my “fourth quadrant” paper—see discussion in the Appendix—I show how these methods are empirically invalid, in addition to being severely mathematically inconsistent, in other words, a scientific swindle). Recall that professors are not penalized when they teach you something that blows up the financial system, which perpetuates the fraud. Departments need to teach something so students get jobs, even if they are teaching snake oil—this got us trapped in a circular system in which everyone knows that the material is wrong but nobody is free enough or has enough courage to do anything about it.

  The problem is that the last place on the planet where the “other people think so” argument can be used is science: science is precisely about arguments standing on their own legs, and something proven to be wrong empirically or mathematically is plain wrong, whether a hundred “experts” or three trillion disagree with the statement. And the very use of “other people” to back up one’s claims is indicative that the person—or the entire collective that composes the “other”—is a wimp. The appendix shows what has been busted in economics, and what people keep using because they are not harmed by error, and that’s the optimal strategy for keeping a job or getting a promotion.

  But the good news is that I am convinced that a single person with courage can bring down a collective composed of wimps.

  And here, once again, we need to go back into history for the cure. The scriptures were quite aware of the problem of the diffusion of responsibility and made it a sin to follow the crowd in doing evil—as well as to give false testimony in order to conform to the multitude.

  I close Book VII with a thought. Whenever I hear the phrase “I am ethical” uttered, I get tense. When I hear about classes in ethics, I get even more tense. All I want is to remove the optionality, reduce the antifragility of some at the expense of others. It is simple via negativa. The rest will take care of itself.

  1 It is a property of sampling. In real life, if you are observing things in real time, then large deviations matter a lot. But when a researcher looks for them, then they are likely to be bogus—in real life there is no cherry-picking, but on the researcher’s computer, there is.

  CHAPTER 25

  Conclusion

  As usual at the end of the journey, while I was looking at the entire manuscript on a restaurant table, someone from a Semitic culture asked me to explain my book standing on one leg. This time it was Shaiy Pilpel, a probabilist with whom I’ve had a two-decades-long calm conversation without a single episode of small talk. It is hard to find people knowledgeable and confident enough to like to extract the essence of things, instead of nitpicking.

  With the previous book, one of his compatriots asked me the same question, but I had to think about it. This time I did not even have to make an effort.

  It was so obvious that Shaiy summed it up it himself in the same breath. He actually believes that all real ideas can be distilled down to a central issue that the great majority of people in a given field, by dint of specialization and empty-suitedness, completely miss. Everything in religious law comes down to the refinements, applications, and interpretations of the Golden Rule, “Don’t do unto others what you don’t want them to do to you.” This we saw was the logic behind Hammurabi’s rule. And the Golden Rule was a true distillation, not a Procrustean bed. A central argument is never a summary—it is more like a generator.

  Shaiy’s extraction was: Everything gains or loses from volatility. Fragility is what loses from volatility and uncertainty. The glass on the table is short volatility.

  In the novel The Plague by Albert Camus, a character spends part of his life searching for the perfect opening sentence for a novel. Once he had that sentence, he had the full book as a derivation of the opening. But the reader, to understand and appreciate the first sentence, will have to read the entire book.

  I glanced at the manuscript with a feeling of calm elation. Every sentence in the book was a derivation, an application, or an interpretation of the short maxim. Some details and extensions can be counterintuitive and elaborate, particularly when it comes to decision making under opacity, but at the end everything flows from it.

  The reader is invited to do the same. Look around you, at your life, at objects, at relationships, at entities. You may replace volatility with other members of the disorder cluster here and there for clarity, but it is not even necessary—when formally expressed, it is all the same symbol. Time is volatility. Education, in the sense of the formation of character, personality, and acquisition of true knowledge, likes disorder; label-driven education and educators abhor disorder. Some things break because of error, others don’t. Some theories fall apart, not others. Innovation is precisely something that gains from uncertainty: and some people sit around waiting for uncertainty and using it as raw material, just like our ancestral hunters.

  Prometheus is long disorder; Epimetheus is short disorder. We can separate people and the quality of their experiences based on exposure to disorder and appetite for it: Spartan hoplites contra bloggers, adventurers contra copy editors, Phoenician traders contra Latin grammarians, and pirates contra tango instructors.

  It so happens that everything nonlinear is convex or concave, or both, depending on the intensity of the stressor. We saw the link between convexity and liking volatility. So everything likes or hates volatility up to a point. Everything.

  We can detect what likes volatility thanks to convexity or acceleration and higher orders, since convexity is the response by a thing that likes disorder. We can build Black Swan–protected systems thanks to detection of concavity. We can take medical decisions by understanding the convexity of harm and the logic of Mother Nature’s tinkering, on which side we face opacity, which error we should risk. Ethics is largely about stolen convexities and optionality.

  More technically, we may never get to know x, but we can play with the exposure to x, barbell things to defang
them; we can control a function of x, f(x), even if x remains vastly beyond our understanding. We can keep changing f(x) until we are comfortable with it by a mechanism called convex transformation, the fancier name for the barbell.

  This short maxim also tells you where fragility supersedes truth, why we lie to children, and why we humans got a bit ahead of ourselves in this large enterprise called modernity.

  Distributed randomness (as opposed to the concentrated type) is a necessity, not an option: everything big is short volatility. So is everything fast. Big and fast are abominations. Modern times don’t like volatility.

  And the Triad gives us some indication of what should be done to live in a world that does not want us to understand it, a world whose charm comes from our inability to truly understand it.

  The glass is dead; living things are long volatility. The best way to verify that you are alive is by checking if you like variations. Remember that food would not have a taste if it weren’t for hunger; results are meaningless without effort, joy without sadness, convictions without uncertainty, and an ethical life isn’t so when stripped of personal risks.

  And once again, reader, thank you for reading my book.

  EPILOGUE

  From Resurrection to Resurrection

  It was an aortic aneurism.

  Nero was in the Levant for his annual celebration of the death and rebirth of Adonis. It was a period of mourning with wailing women, followed by a celebration of resurrection. He watched nature waking up from the mild Mediterranean winter, when the rivers are full of reddish water, the blood of the Phoenician god wounded by the boar, as the melted snow from the mountains swelled the rivers and rivulets.

  Things in nature move ahead from resurrection to resurrection.

  That was when Tony’s driver called. His name was also Tony, and while identified as Tony-the-driver he pretended he was a bodyguard (when in fact it looked like, given the comparative size, he was the one bodyguarded by Tony). Nero never liked him, always had that strange feeling of distrust, so the moment of sharing the news was odd. During his silence on the line, he felt sympathy for Tony-the-driver.

  Nero was designated as the executor of Tony’s will, which made him initially nervous. He had somehow a fear that Tony’s wisdom would have a gigantic Achilles’ heel somewhere. But, it turned out, there was nothing serious, a flawless estate, of course debt-free, conservative, fairly distributed. There were some funds to discreetly provide to a woman likely to be a prostitute, for whom Tony had some antifragile obsessive love, of course helped by the fact that she was both older and much less attractive than Tony’s wife, that sort of thing. So nothing serious.

  Except for the posthumous prank. Tony bequeathed to Nero a sum of twenty million dollars to spend at his discretion on … It was to be a secret mission; noble of course, but secret. And, of course, vague. And dangerous. It was the best compliment Nero ever got from Tony: trusting that Nero would be able to read his mind.

  Which he did.

  Glossary

  Triad: The triplet Antifragility, Robustness, Fragility.

  Fundamental Asymmetry (also Seneca’s Asymmetry): When someone has more upside than downside in a certain situation, he is antifragile and tends to gain from (a) volatility, (b) randomness, (c) errors, (d) uncertainty, (e) stressors, (f) time. And the reverse.

  Procrustean bed: Procrustes got people to fit perfectly into his bed by cutting or stretching their limbs. Corresponds to situations in which simplifications are not simplifications.

  Fragilista: Someone who causes fragility because he thinks he understands what’s going on. Also usually lacks sense of humor. See Iatrogenics. Often Fragilistas fragilize by depriving variability-loving systems of variability and error-loving systems of errors. They tend to mistake organisms for machines and engineering projects.

  Lecturing-Birds-How-to-Fly Effect: Inverting the arrow of knowledge to read academia → practice, or education → wealth, to make it look as though technology owes more to institutional science than it actually does.

  Touristification: The attempt to suck randomness out of life. Applies to soccer moms, Washington civil servants, strategic planners, social engineers, “nudge” manipulators, etc. Opposite: rational flâneur.

  Rational flâneur (or just flâneur): Someone who, unlike a tourist, makes a decision opportunistically at every step to revise his schedule (or his destination) so he can imbibe things based on new information obtained. In research and entrepreneurship, being a flâneur is called “looking for optionality.” A non-narrative approach to life.

  Barbell Strategy: A dual strategy, a combination of two extremes, one safe and one speculative, deemed more robust than a “monomodal” strategy; often a necessary condition for antifragility. For instance, in biological systems, the equivalent of marrying an accountant and having an occasional fling with a rock star; for a writer, getting a stable sinecure and writing without the pressures of the market during spare time. Even trial and error are a form of barbell.

  Iatrogenics: Harm done by the healer, as when the doctor’s interventions do more harm than good.

  Generalized Iatrogenics: By extension, applies to the harmful side effects of actions by policy makers and activities of academics.

  Tantalized Class: An economic condition of making more than minimum wage and wishing for more wealth. Workers, monks, hippies, some artists, and English aristocrats escape it. The middle class tends to fall into it; so do Russian billionaires, lobbyists, most bankers, and bureaucrats. Members are bribable provided they are given an adequate narrative, mostly with the use of casuistry.

  Black Swan Errors

  Nonpredictive Approach: Building stuff in a manner immune to perturbations—hence robust to changes in future outcomes.

  Thalesian versus Aristotelian: The Thalesian focuses on exposure, payoff from decision; the Aristotelian focuses on logic, the True-False distinction. For Fat Tony, the problem is all about sucker-nonsucker, or risks and rewards. (Also see nonlinearities, convexity effects.)

  Conflation of Event and Exposure: Mistaking a function of a variable for the variable itself.

  Naturalistic Risk Management: The belief that, when it comes to risk management, Mother Nature has a much, much more significant track record than rationalistic humans. It is imperfect, but much better.

  Burden of evidence: The burden of evidence falls on those who disrupt the natural, or those who propose via positiva policies.

  Ludic Fallacy: Mistaking the well-posed problems of mathematics and laboratory experiments for the ecologically complex real world. Includes mistaking the randomness in casinos for that in real life.

  Antifragile Tinkering, Bricolage: A certain class of trial and error, with small errors being “the right” kind of mistakes. All equivalent to rational flâneur.

  Hormesis: A bit of a harmful substance, or stressor, in the right dose or with the right intensity, stimulates the organism and makes it better, stronger, healthier, and prepared for a stronger dose the next exposure. (Think of bones and karate.)

  Naive Interventionism: Intervention with disregard to iatrogenics. The preference, even obligation, to “do something” over doing nothing. While this instinct can be beneficial in emergency rooms or ancestral environments, it hurts in others in which there is an “expert problem.”

  Naive Rationalism: Thinking that the reasons for things are, by default, accessible to university buildings. Also called the Soviet-Harvard illusion.

  Turkey and Inverse Turkey: The turkey is fed by the butcher for a thousand days, and every day the turkey pronounces with increased statistical confidence that the butcher “will never hurt it”—until Thanksgiving, which brings a Black Swan revision of belief for the turkey. The inverse turkey error is the mirror confusion, not seeing opportunities—pronouncing that one has evidence that someone digging for gold or searching for cures will “never find” anything.

  Doxastic Commitment, or “Soul in the Game”: You must only believe predicti
ons and opinions by those who committed themselves to a certain belief, and had something to lose, in a way to pay a cost in being wrong.

  Heuristics: Simple, practical, easy-to-apply rules of thumb that make life easy. These are necessary (we do not have the mental power to absorb all information and tend to be confused by details) but they can get us in trouble as we do not know we are using them when forming judgments.

  Opaque Heuristic: Routine performed by societies that does not seem to make sense yet has been done for a long time and sticks for unknown reasons.

  Dionysian: Opaque heuristic seemingly irrational, named after Dionysos (or Bacchus for Romans), the god of wine and revelling. Is contrasted to the Apollonian, which represents order.

  Agency Problem: Situation in which the manager of a business is not the true owner, so he follows a strategy that cosmetically seems to be sound, but in a hidden way benefits him and makes him antifragile at the expense (fragility) of the true owners or society. When he is right, he collects large benefits; when he is wrong, others pay the price. Typically this problem leads to fragility, as it is easy to hide risks. It also affects politicians and academics. A major source of fragility.

  Hammurabi Risk Management: The idea that a builder has more knowledge than the inspector and can hide risks in the foundations where they can be most invisible; the remedy is to remove the incentive in favor of delayed risk.