Skin in the Game: Hidden Asymmetries in Daily Life

I found it very odd that a man who describes himself as a “flaneur, meditating in cafes across the planet, [who] is currently Distinguished Professor at New York University” would spill so much ink heaping snide derision upon the “educated “idiots” of academia. People living in glass houses should not throw stones.Taleb attempts to side-step his obvious hypocrisy by reminding the reader ad nauseam that he is a former options trader. If Taleb were opining about matters related to his real-world financial trading experiences, that would be a fair point. But most of Taleb’s observations have nothing t do with either his real-world observations or his academic training. At least the economists whom Taleb excoriates have the good sense to stick to economics.For example, Taleb argues that the EPA is unnecessary because (according to Taleb) the mere threat of civil litigation is sufficient to prevent corporations from polluting our water and air. Unlike Talab, who was a 10 YO boy living in Lebanon when the EPA was enacted, I grew up in a pre-EPA American steel mill town during the 1950s and 1960s. I know from my own experience that after the EPA was passed in 1970, the sky over my town turned from brown to blue and my bronchitis went away. Moreover, I know from my 30+ years of experience as a lawyer, that the threat of civil litigation has little, if any, deterrent effect on polluters. So, based on my own “skin in the game” in the form of scared lung tissue and actual litigation experience, I know Taleb is both wrong and guilty of spouting the very sort of BS that he derides throughout his book.I do not mean to suggest that I disagree with everything (or even most) of that the author has to say. Taleb does have a lot of interesting and thoughtful observations. He’s obviously very smart.However, he apparently unable (or too lazy) to organize his thoughts into a coherent body of work. This 223 book has 7 parts and 19 chapters, each of which has numerous sub-parts, many of which are less than a single page. The author's ideas appear to be unrelated and presented in a random fashion. It was interesting, but not very worthwhile.

I loved Fooled by Randomness and Black Swan and seriously disliked the Antifragility. I am very glad to say that with the Skin in the Game Taleb is back. Opinionated, at times rude and angry, but someone you feel you should listen to.When I buy books I usually read one star reviews. Some of them are crap (my book arrived with six missing pages!), but some give you a pretty good idea of what you are going to find. There is one star review that gets close to 5000 words limit, followed by the long thread of comments exchange where the replies by the original author get, again, to the said limit. If someone gets that fired up by the book that he regurgitates thousands of words - it's well worth a few bucks and I simply must read it.Anyway, as always with Taleb, I now have a new reading list based on his footnotes. Yes, he comes across as an angry man. Yes, he has irrational dislike of academics (as do I) and policy makers. Yes, some of his statements are contradictory and yes, sometimes he goes too far in his arguments. But this is exactly what makes books worthwhile the time spent reading them. Contradictions have to be sorted, but to do so you have to think about the subject and come to your own conclusions, and this involves effort, and this is what makes books stimulating.I highly recommend this book.

Skin in the Game is at the same time thought-provoking and original but also contradictory and sometimes absurd.Let’s start with the cons:1. I certainly won’t be the first to notice that Taleb can be mean-spirited. But why does he insist on presenting his views in this way? The communication of his ideas, often profound, does not require a mean-spirited or condescending tone. For however brilliant Taleb thinks he is, his skills in persuasion are severely lacking; he’s alienating a significant readership that may have otherwise been more receptive to his ideas.Not very far into the book we see Taleb take cheap shots at Steven Pinker, out of nowhere, discussing a topic that has nothing to do with any of Pinker’s actual ideas or positions. One wonders why Taleb cannot just present his ideas without the incessant personal attacks and condescension.2. His overall philosophy appears to be self-refuting. He reviles “intellectuals,” professors, and thinkers while praising “doers” and men of practice. He’s particularly distrustful of those who give advice for a living. Here’s Taleb:“Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.”So should we then ignore THIS advice? As far as I can tell, Skin in the Game is a work of philosophy, an intellectual exercise that argues against the value of intellectual exercise. This is the same self-refuting logic of relativism—in that the statement “everything is relative” is self-refuting because the statement itself needs to be absolute.If Taleb is wrong in any part of his philosophy it doesn’t appear that he would incur any penalty (no skin in the game). The upside for him is book sales with little to no downside risk, so by using his own logic we should conclude to not trust him.Also, to the extent that you believe ideas have power you might find yourself disagreeing with Taleb’s extreme position that no good ideas could possibly come from someone in an academic position (particularly from the reviled economists).Except that Taleb uses economic theories to frame his thinking. The Tragedy of the Commons, something Taleb discusses in his book, was developed by the economist William Forster Lloyd in his armchair. Even Taleb’s Black Swan concept is a reformulation of the Peso problem developed by...economists.I’m sure anyone can think up examples, rather easily, of useful ideas that were discovered by intellectuals or from university research.3. Taleb obsesses about the superiority of practice over academics and theory. This is a questionable proposition.As just one example, a recent study in the American Journal of Medicine concluded that “patients whose doctors had practiced for at least 20 years stayed longer in the hospital and were more likely to die compared to those whose doctors got their medical license in the past five years.”My own personal experience corroborates this, as a medical student was able to correctly diagnose what the attending physician had missed on a trip to the ER. Very experienced, practical individuals sometimes perpetuate bad habits and fail to keep informed of the theories and academics that lead to better practice. This point is completely lost on Taleb.4. Taleb’s definition of rationality as any action that promotes survival is patently false, as a simple thought experiment can show. Imagine a hypothetical survival machine is available for your use. By plugging yourself in, it will guarantee and maximize your life span and, on a social scale, maximizes reproduction. The price is that the machine also inflicts a high degree of pain and cuts you off from contact with other people.According to the logic of Taleb, the rational thing to do would be to plug into this machine. Of course, no one would volunteer to do this because survival is not what motivates rational behavior. Any rational agent would choose one year of pleasant life over 100 years in the survival machine, because actions have value according to how they promote or are perceived to promote well-being or pleasure.Taleb, using this more believable definition of rationality, could have used it to argue the same points, namely how religious belief cannot be called irrational if it promotes well-being, which includes psychological well-being and survival but not survival alone.The pros:That Taleb is antagonistic and holds some questionable views does not mean that he’s wrong about everything. When not being demeaning or taking extreme positions, Taleb writes about some of the most original, thought-provoking, and profound ideas. And even when you find yourself disagreeing with him, he makes you think. For this reason alone, the book is worth checking out.The idea that the extent of people’s stakes in particular outcomes is a critical yet underrated determinant of events is a profound idea with several implications, which Taleb skillfully explores throughout the book. And his idea that you should have to pay some kind of penalty for decisions that negatively impact others—risk sharing vs. risk transfer—is a solid framework for thinking about a host of issues. Of course, these ideas would be easier to swallow if presented with a little more humility, but I suppose we should know what to expect from Taleb by now.

The first 20% of this book is interesting and insightful. Justice comes from symmetrical encounters, not imbalances of power. And ensuring equality of any encounter means that both parties must have 'skin in the game', i.e. a personal investment in it. Bureaucratic structures undermine ethics therefore. But very quickly you suspect that the author has been put up to this by a greedy publisher anxious for a quick cash grab. The remaining 80% adds little to the thesis sketched out at the start and, to some extent distracts from it. There are quite a few unsupported and prejudiced irrational rants against tenured academics, clinical psychologists and Saudi Arabia. The book is pompously divided into 'Books' even though some of the chapters are very short. The book is also itself quite asymmetrical (and therefore undermines the author's argument) in two ways. First, the author takes every opportunity to reference his own previous works, as though this one is part of some Grand Theory. If you haven't read these you think you're at a disadvantage. Second is the bizarre 'Technical Appendix' which seems to be included simply to show off the author's reputed mathematical acumen. No-one reading this book would need these arcane formulae, and specialists who do understand them ('Probabilistic Sustainability' etc) would find them in Taleb's technical academic papers. So this final section, like the last 80% of the book, seems to have been included just to make up the word count. Constantly trying to impress the reader with his learning, Taleb must be a very tiresome dinner party guest indeed. GCB

I was really looking forward to this as a fan of Fooled by Randomness but half-way through I'm beginning to think NNT is a pompous ass and a bore to boot. At the age of 70, I wonder if the time left to me is best served by ducking out of the rest of this waffle or to soldier on in search of nuggets of wisdom.UPDATE: I did carry on to the end of the book for old times' sake. I left it feeling that Taleb is like a friend who has some dodgy politics, likes to make a lot 0f "controversial" remarks, occasionally makes some insightful points, can be amusing and can also be a crashing bore. In other words, you're pleased to see your old friend but rather relieved when he finally leaves and glad to have a bit of time away from each other before meeting up again.

This book is a far easier read than the author's previous writings. Which is good because the "deep-seated intellectual insecurity" to which Mr Taleb confessed and committed himself to protecting and cultivating in the preface to Fooled by Randomness (2001) appears sadly to have got the better of him.Some 1,150 days of seclusion in the years following The Black Swan (2007) afforded time not only to devour the 550 or so books listed in the bibliography to the much lengthier Antifragile (2012) but also to develop what he himself previously detested - the random use of borrowed wisdom (though it was fascinating to read why use of the wheel initially disappeared from the Levant after the Arab invasion) - and to wield his keyboard repeatedly and unkindly to hammer perceived nails in the shape of some fine fellow professionals with whom he now finds himself increasingly and violently disagreeing.In Skin in the Game we see these aberrations taken even further with surprisingly gratuitous and sarcastic references ("Hillary Monsanto-Malmaison, sometimes known as Hillary Clinton" and Joseph Stiglitz as “Intellectual Yet Idiot") along with random Daily Mail-type stories about how increased halal lamb imports from New Zealand and the numbers of automatic shifting vehicles are instances of minority dictatorship and how Italians regard McDonalds in Milan Centrale as refuge from a risky meal. Mr Taleb has of course written that it’s only when you don’t care about your reputation that you tend to have a good one, but it seems to me that after accumulating a steady stream of positive returns he has given us his own unfortunate, highly unexpected event.

An entertaining read. Full of thoughtful observation and insight. Written in a style that comes with the freedom to say what one thinks.In many ways this is a deeply moral book with important messages for how we live. This realization becomes suddenly clear in the rather poetic epilogue, which I loved. Collective action (the game) generates many meaningful benefits, but, to be symmetrical and ethical, it always requires contribution of players, and contribution implies risk (the skin). Taleb has no time for people in authority who don't get this and consequently promote dangerous ideas which lead to ignorant policy or business decisions. For them he reserves his full scorn (for example, in his view, Monsanto and its dangerous development of GM crops). Through ignorance, they risk catastrophically ruining the systems we depend on for everyone for ever.On the downside, Taleb's style of relentlessly 'speaking truth to power' can feel a bit uncomfortable and negative. However we are compensated by his practical, ethical and logical reasoning - made more clear in an appendix devoted to the maths that underpins the conclusions, and further leavened with fascinating personal stories.By the way, like many books it's one worth starting at the back with the glossary, where you will be able to learn to speak 'Taleb'.

This book introduces an important filtering mechanism to get the real deal in life. "Skin in the game" is about getting the agents to not only enjoy the upside of their actions but also claim the downside of the consequences emanating from those actions.This is important in the longer run, because non perishable things such as ideas, lifestyle, dietary habits, religions that have survived for a long time, being sufficiently stressed by time, will survive for much longer (Lindy's Effect). But the critical piece here is that the agents espousing these non-perishables should have a skin in the game.The contrast is the rent seekers, or bureaucrats who only get the upside of their actions (bonuses), but pass on the downside to others citing uncertainty. Thus they get to be in decision making for a long time without being affected by the ill-effects of those decisions.The book applies the heuristic to multiple areas. Interesting concepts covered in the books include Minority Rule (How intransigent minorities determine the preference of majority), Intellectual Yet Idiots (People who confuse complex systems for simple systems, and prescribe appealing but harmful solutions), Rationality of Religions (The do's & dont's in Religions inspire actions from followers, and these actions have enabled the adherants to survive. Rationality can only be discussed in the context of survival, or rather the avoidance of systemic ruin).As usual Taleb is witty, names names (Bob Rubin, Thaler, Saudi Princes), acerbic but very insightful.One thing that Taleb misses out on is application of Lindy's Effect to the relatively longer survival of Lithuanians, Irish and the Hindus who did not have the warrior but the priestly class at the top. Societies which had a warrior class at the top caved in to the invasion by semetic religions in a very short duration. However the adherants of these religions resisted converting to the invading Semetic religions for the longest period. So Lindy does seem to have a role to play here.Final word: Excellent book. Will be revisiting this one many more times.