Antifragile
Antifragile: Things That Gain From Disorder by Nassim Nicholas Taleb
"Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love, adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better."
🚀 The Book in 3 Sentences
The definition of modernity is humans large-scale domination of the environment, the systematic smoothing of the worlds jaggedness and the stifling of volatility and stresses.
We tend to focus on the negative responses to randomness (fragility) rather than the positive ones (antifragility).
When we harness and benefit from randomness, volatility and uncertainty we are antifragile.
🎨 Impressions
This is the first book I have read from Taleb, I found it insightful, nuanced and his work portrayed very new and radical ideas compared to the usual societal spoken narrative. In places, the anecdotes and stories were hard to follow and worded too complicatedly. However, overall this book explained a revolutionary concept and idea in a detailed, thought-provoking way.
How I Discovered It
This had been on my 'to read' list for some time. Having heard lots about Taleb and listened to various podcasts about his work, I was keen to read a book of his and this seemed like a good starting point.
Who Should Read It?
Anyone who believes they can conquer uncertainty and randomness and hide away from it should read this as they will soon realise that before long it will impact them. If you want to try and learn to benefit from uncertainty and randomness instead of experiencing the downsides, antifragile is the word used to describe that.
✍️ My Top 5 Quotes
Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.
I want to live happily in a world I don’t understand.
The simpler, the better. Complications lead to multiplicative chains of unanticipated effects.
Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have—or don’t have—in their portfolio.
More data—such as paying attention to the eye colours of the people around when crossing the street—can make you miss the big truck.
📒 Summary + Notes
What does antifragile mean?
You send a package at a post office and as it can be damaged during transportation, you stamp it with “fragile”, “breakable” or “handle with care”. What is the exact opposite of such a situation, the opposite of fragile.
Some say “robust” or “resilient” or “solid”. But the resilient and robust are items that neither break nor improve so you wouldn’t need to add a label at all.
The exact opposite of fragile parcel would have “please mishandle” or “please handle carelessly”
Its contents would not just be unbreakable but benefits from shocks and a wide array of trauma.
The opposite of positive is negative, not neutral. Therefore, the opposite of positive fragility should be negativity fragility, or antifragile.
New way of thinking
We hear about post-traumatic disorder, not post-traumatic growth in the intellectual and so-called learned vocabulary. But popular culture has an awareness of its equivalent, revealed in the express “it builds character”
Intellectuals tend to focus on the negative responses to randomness (fragility) rather than the positive ones (antifragility).
Overcompensation
The record shows that for society, the richer we become, the harder it gets to live within our means, Abundance is harder for us to handle than scarcity.
Automatic pilot systems is under challenging pilots making flying too comfortable for them. This dulls the pilot’s attention.
It is said that best horses lose when they compete with slower ones and win against better rivals. The absence of challenge and stress degrades the best of the best.
A way to overcome tiredness from a long flight is to go to the gym, not rest.
If something is required urgently, it is well known that a tip is giving a task to the busiest person in the office.
When we speak slightly inaudibly and unclear, we pay more attention to listening. When we work hard to listen we switch to intellectual overdrive.
Nature likes redundancy. We have two kidneys, spare parts and capacity. While human designs tend to be spare and inversely redundant, We have a historical tendency to do the opposite – like engaging in debt. Redundancy is ambiguous as it seems like a waste if nothing happens. Except something unusual usually happens.
Some thoughts are so antifragile that you feed them by trying to get rid of them. The more energy you put into trying to control your ideas and what you think about, the more your ideas end up controlling you.
Information is antifragile in the sense it feeds more on attempts to harm it than it does on efforts to promote it. Many wreck their reputation merely trying to defend it.
Some jobs and professions are fragile to reputational harm, something that that in the age of the internet cannot possibly be controlled. You do not want to control your reputation as you won’t be able to do it by controlling information flow. Instead, focus on altering your exposure. By putting yourself in a position impervious to reputational damage.
With few exceptions, those who dress outrageously are robust or antifragile in reputation. Those who are clean-shaven and dress in suits are fragile to information about them.
Large corporations and governments do not seem to understand this the rebound of power of information. When you hear them trying to “reinstall confidence” you know they are fragile and hence doomed. When you don’t have debt you don’t care about your reputation in the economic circles – and when you don’t care about your reputation, you tend to have a good one.
A thought: those from whom we have benefited the most aren’t those who have tried to help us nit rather those who have actively tried – but eventually failed – to harm us.
Typically the natural – the biological – is both fragile and antifragile, depending on the source and range of variation. A human body can benefit from stressors to get stronger, but up to a point. The secret of life seems to be antifragility.
We have a tendency to try to reduce the normal swings of life. He says there’s a tendency to overmedicate and overdose with drugs such as Prozac to smoothen out the normal mood swings we experience.
Errors
The antifragility of some comes at the necessary expense of the fragility of others. In a system that sacrifices some fragile units for the benefit of the whole. The fragility of every start-up is necessary for the economy to be antifragile. Restaurants are fragile, as they compete with each other, but the collective of local restaurants is antifragile for that reason. Had restaurants been individually robust, hence immortal, the overall business would be either stagnant or weak and would deliver poor quality food.
When you are fragile, you depend on things following the exact planned course, with as little deviation as possible as they are more harmful than helpful. Fragile needs a predictive approach and predictive systems cause fragility. When you want some deviations, and don’t care about the outcomes that the future will bring, you are antifragile.
The random element in trial and error is not quite random, if carried out rationally using error as a source of information. If every trial, you see what doesn’t work, you start zooming in on the solution so every attempt becomes more valuable, more like an expense than an error.
Every plane crash brings us closer to safety, as the system overall improves as the next flight will be safer. These systems learn because they are antifragile, they exploit small errors. Whereas economic crashes is not antifragile. This is because there are thousands of plane flights every year, one does not involve others so errors remain confined and highly epistemic. Whereas globalised economies operate as one: errors spread and compound. Therefore good systems are set to have small errors, independent from one another or negatively correlated, since mistakes lower the odds of future mistakes. Every plane crash makes the next one less likely, but every bank crash makes the next one more likely.
The greater collective of the economy wants entrepreneurs to overestimate the chances of success and underestimate the risk – so they take imprudent risks and are blinded by the odds. They want local, not global overconfidence. This risk-taking is crucial for the economy – under the condition that not all people take the same risks and these risks remain small and localised. Physiologists label overconfidence as a disease. But it is important to function overall. But there can be negative overconfidence.
Variations
Taxi-drivers, plumbers, carpenters have some volatility in their income but they are robust compared to a more standard, full-time employment role, who’s risks are invisible. These small variations make them adapt and change continuously by learning from the environment. Manmade smoothing of randomness provides income that is steady and smooth but fragile. Such income is vulnerable to large shocks that can make it go to zero (Black Swan events). Natural randomness presents itself like a taxi-drivers income, there are less likely large shocks, but daily variability eg in fares. If income in a week is declining, you have to find a new area to pick up from. Therefore the avoidance of small mistakes results in large ones that are more severe. There is an illusion of security and stability. The more variability you observe in a system, the less prone to Black Swan events it is.
Noise
Confusing people, a little, is beneficial. Imagine someone extremely punctual and predictable arriving at home at 6 every day. If he is just a few minutes late there is panic. Someone with a little more volatility, hence unpredictable, will not. Because, if you are not used to volatility then the slightest change, or price variation will cause panic.
Stability is not good for the economy. Firms become very weak during long periods of steady prosperity devoid of setbacks and hidden vulnerabilities accumulate silently under the surface, hence delaying crisis. Likewise, the absence of fluctuations of a market, causes hidden risks to accumulate with impunity. The linger ones goes without market trauma the worse the damage when commotion occurs.
Data
In business and economics decision making, reliance on data causes severe side effects. Data is now plentiful but it is toxic in large or moderate quantities. The more frequently you look at data the more noise you are disproportionally getting, rather than the valuable part of the signal. Eg stock prices on a yearly basis have less noise than on a daily basis, or hourly basis.
Take newspapers that need to fill pages. But, they should keep silent in the absence of significant news and therefore be 2 lines some days and 200 pages others – in proportion to the intensity of the signal. There is often a lot of noise included.
Risk management systems fail to predict economic crises. But political and economic tail events are unpredictable and their probabilities are not scientifically measurable. No matter how much money is spent on research and predictions. No amount of data will be able to predict it.
You can’t predict in general, but you can predict that those who rely on predictions are taking more risks, will have some trouble. Someone who predicts will be fragile to prediction errors. An overconfident pilot will eventually crash the plan. And numerical prediction leads people to take more risks.
Asymmetry
Success brings asymmetry, you now have a lot more to lose than to gain. When you become rich, the pain of losing your fortune exceeds the emotional gain of additional wealth, so you live under continuous emotional threat. A rich person becomes trapped by belongings that take control of him.
Seneca fathomed that possessions make us worry about downside thus acting as punishment as we depend on them.
Antifragile implies more to gain than to lose, equals more upside than downside, equals favourable asymmetry. A good mindset: if I have "nothing to lose" then it is all gain and I am antifragile.
Barbell Technique
The first step towards antifragility consists of first decreasing downside, rather than increasing upside. Therefore lowering exposure to negative Black Swans and letting natural antifragility work by itself.
The barbell (a bar with weights on both ends that weight lifters use) is meant to illustrate the idea of a combination of extremes kept separate, with avoidance of the middle. In our context it is not necessarily symmetric: it is just composed of two extremes, with nothing in the centre.
The barbell strategy means covering your downsides while increasing your upsides. You play it very safe on one side so that you can take more risks on another side. If the risky part plays out badly, you’re still ok. If a Black Swan event will make the risks pay off big, you profit handsomely.
We want to reduce the risk of ruin to zero.
Options
Options can make the system more resistant to shocks. The more options you have, the more ways you have to respond to black swans and unforeseen events.
People with too much smoke and complicated tricks and methods in their brains start missing elementary things. People in the real world cannot afford to miss such things, otherwise they crash the plane. The difference between narrative and practice – the important things that cannot be easily narrated – lies mainly in optionality, the missed optionality of things.
Expert problems (where the expert knows a lot, but less than he thinks he does) often brings fragilities, and acceptance of ignorance to the reserve, When you are fragile you need to know a lot more than when antifragile. When you think you know more than you do, you are fragile.
We are fooled into overestimating the role of good-sounding ideas.
The academics role is overly hyped-up and seems to be able to exploit some of our gullibility in establishing wrong causal links, mostly on superficial impressions.
More Asymmetry
A car is fragile. If you drive it into the wall at 50mph it would cause more damage than if you drove it into the same wall 10 times at 5mph. The harm at 50mph is more than 10 times the harm at 5mph.
Jumping from a height of thirty feet brings more than ten times the harm of jumping from a height of three feet.
Therefore, we are immune to the cumulative effect of the small deviations or shocks of small magnitude. These affect us disproportionality less than larger ones.
For the antifragile, shocks bring more benefits (and less harm) as their intensity increases (up to a point).
Because travel time cannot be negative, uncertainty tends to cause delays, making arrival time increase, almost never decrease. Or it makes arrival time decrease by just minutes, but increase by hours, an obvious asymmetry. Anything unexpected, any shock, any volatility, is much more likely to extend the total flying time.
Summary of Philosophers stone idea: if you have favourable asymmetries, or positive convexity, options being a special case, then in the long run you will do reasonably well, outperforming the average in the presence of uncertainty. The more uncertainty, the more role for optionality to kick in, and the more you will outperform.
Squeezes
A squeeze occurs when you have no choice but to do something and do it right away, regardless of costs. Eg: You take a connecting flight but one is delayed, so you pay ten times the price for a new flight.
These squeezes get worst with size. The squeezed become nonlinearly costlier as size increases. The gains from size are often visible but the risks are hidden and some concealed risks being frailties into companies.
An example of the costs of a squeeze: if you exit a cinema and someone shouts “fire”, you have everyone desperate to get out the door. The fragility of cinemas as every additional person exiting brings more and more trauma. A thousand people exiting in one minute is not the same as the same number exiting in half an hour. The idea that smooth functioning at regular times is different from rough functioning at times of stress may be missed.
Invisible Downside
Traders were replaced by computers for small visible benefits and massively large risks. While errors made by traders are confined and distributed, those made by computers go wild. It was released that additional security and other measures were needed. And at times when cost-benefit analysis is done, they are forced to invest in these improvements regardless of price. The costs are very large, delayed and hidden – and potential costs are much worse than cumulative gains.
Wealth can mean more headaches; we may need to work harder at mitigating the complications arising from wealth than we do at acquiring it. Projects costing 100mil are more unpredictable and likely to overrun than 5mil projects.
Not Doing
Acts of omission, not doing something are not considered acts and do not appear to be part of one’s mission. Yet, it is the negative that is used by pros. You win at chess by not losing, you become rich by not going bust. The learning of life is about what to avoid.
In life, antifragility is reached by not being a sucker.
Telling people not to smoke seems to be the greatest medical contribution of the last sixty years.
If true wealth consists in worriless sleeping, a clear conscience, reciprocal gratitude, absence of envy, good appetite, muscle strength, physical energy, frequent laughs, no meals alone, no gym class, some physical labour (or hobby), good bowel movements, no meeting rooms, and periodic surprises, then it is largely subtractive (elimination is therefore the answer)
Uneven Distribution
We are moving towards 99/1 across many things that used to be 80/20. 99% of book sales come from 1% of authors, 1% of system modifications can lower fragility by 99%. Therefore very few steps, often at a low cost make things much better and safer.
What Changes
We notice what varies and changes more than what plays a larger role but doesn’t change. We rely more on water than cell phones. But because water does not change and cell phones do, we believe they play a larger role than they do.
Age in Reverse
A single car is perishable, but the automobile as technology has survived about a century (and we will speculate should survive another one). Humans die, but their genes—a code—do not necessarily.
So the longer a technology lives, the longer it can be expected to live.
If a book has been in print for forty years, I can expect it to be in print for another forty years.
If something that makes no sense to you (say, religion—if you are an atheist—or some age-old habit or practice called irrational); if that something has been around for a very, very long time, then, irrational or not, you can expect it to stick around much longer, and outlive those who call for its demise.
The Future
The past properly handled, is much better about predicting the future than the present. We should give weight to things that have been around a long time and have survived.
People compare e-readers to books, but every time someone compares something ancient to new technology, opinions pop up. Reality does not care about opinions and narratives. There are secrets to our world that only practice can reveal, no opinion or analysis will ever capture in full.
Information
Random variability is often mistaken for information, hence leading to intervention. People’s blood pressure moves a lot, if it is measured at one time and appears slightly too high, predication is prescribed. However, the blood pressure if measured at another time would be more normal or lower than normal. Hence it is just variability.
Skin in the Game
A builder knows more than a safety inspector, particularly about what lies hidden in the foundations. These asymmetries are severe when it comes to small probability events, Black Swans, that are the most misunderstood and their exposure is easiest to hide.
Every opinion maker should have skin in the game. They need something to lose if others rely on their opinions.
We should also build a redundancy, margin of safety avoiding optimisation, mitigating asymmetry’s in our sensitivity to risk.
Execs and bankers only get one side to volatility. They gain from volatility, the more variations the more value to this asymmetry. Hence, they are antifragile. Society pays for the losses of bankers but gets no bonuses from them. There is a transfer of antifragility.
Individuals compared to institutions have a sense of honour. Their word is a great asset. Therefore, be careful of representatives.
Summary Sentence:
Everything gains or loses from volatility. Fragility is what loses from volatility and uncertainty.
