Antifragile

Antifragile

Things That Gain From Disorder

Nassim Nicholas Taleb

Summary in 100 words or less

Anything with more upside than downside from random events is antifragile; the reverse is fragile. Fragility is the current property of an object that we can measure; risk is not. Some parts of a system may need to be fragile to make the system antifragile as a result. To become antifragile, create more barbells—be extremely conservative and aggressive simultaneously. Start by decreasing the downside rather than increasing the upside. Speed and growth don’t matter if one negative Black Swan wipes us out. With antifragility, it’s okay not to be smart because we don’t need to be right very often.

Commentary

My Highlights

Wind extinguishes a candle and energizes fire. Likewise with randomness, uncertainty, chaos: you want to use them, not hide from them. You want to be the fire and wish for the wind.

Anything that has more upside than downside from random events (or certain shocks) is antifragile; the reverse is fragile.

Complex systems are weakened, even killed, when deprived of stressors.

Fragility and antifragility are part of the current property of an object, a coffee table, a company, an industry, a country, a political system. We can detect fragility, see it, even in many cases measure it, or at least measure comparative fragility with a small error while comparisons of risk have been (so far) unreliable. You cannot say with any reliability that a certain remote event or shock is more likely than another (unless you enjoy deceiving yourself), but you can state with a lot more confidence that an object or a structure is more fragile than another should a certain event happen.

Less is more and usually more effective.

The Triad classifies items in three columns along the designation: Fragile, Robust, Antifragile. Recall that the fragile wants tranquility, the antifragile grows from disorder, and the robust doesn’t care too much.

Post-traumatic growth, the opposite of post-traumatic stress syndrome, by which people harmed by past events surpass themselves.

How do you innovate? First, try to get in trouble. I mean serious, but not terminal, trouble. I hold—it is beyond speculation, rather a conviction—that innovation and sophistication spark from initial situations of necessity, in ways that go far beyond the satisfaction of such necessity.

This mechanism of overcompensation hides in the most unlikely places. If tired after an intercontinental flight, go to the gym for some exertion instead of resting. Also, it is a well-known trick that if you need something urgently done, give the task to the busiest (or second busiest) person in the office. Most humans manage to squander their free time, as free time makes them dysfunctional, lazy, and unmotivated—the busier they get, the more active they are at other tasks. Overcompensation, here again.

Information is antifragile; it feeds more on attempts to harm it than it does on efforts to promote it. For instance, many wreck their reputations merely by trying to defend it.

When you don’t have debt you don’t care about your reputation in economics circles—and somehow it is only when you don’t care about your reputation that you tend to have a good one. Just as in matters of seduction, people lend the most to those who need them the least.

Humans tend to do better with acute than with chronic stressors, particularly when the former are followed by ample time for recovery, which allows the stressors to do their jobs as messengers.

Some parts on the inside of a system may be required to be fragile in order to make the system antifragile as a result. Or the organism itself might be fragile, but the information encoded in the genes reproducing it will be antifragile. The point is not trivial, as it is behind the logic of evolution.

When you are fragile, you depend on things following the exact planned course, with as little deviation as possible—for deviations are more harmful than helpful. This is why the fragile needs to be very predictive in its approach, and, conversely, predictive systems cause fragility. When you want deviations, and you don’t care about the possible dispersion of outcomes that the future can bring, since most will be helpful, you are antifragile.

The random element in trial and error is not quite random, if it is carried out rationally, using error as a source of information. If every trial provides you with information about what does not work, you start zooming in on a solution—so every attempt becomes more valuable, more like an expense than an error.

My characterization of a loser is someone who, after making a mistake, doesn’t introspect, doesn’t exploit it, feels embarrassed and defensive rather than enriched with a new piece of information, and tries to explain why he made the mistake rather than moving on. These types often consider themselves the “victims” of some large plot, a bad boss, or bad weather.

Heroism and the respect it commands is a form of compensation by society for those who take risks for others. And entrepreneurship is a risky and heroic activity, necessary for growth or even the mere survival of the economy.

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—so delaying crises is not a very good idea. Likewise, absence of fluctuations in the market causes hidden risks to accumulate with impunity. The longer one goes without a market trauma, the worse the damage when commotion occurs.

What should we control? As a rule, intervening to limit size (of companies, airports, or sources of pollution), concentration, and speed are beneficial in reducing Black Swan risks.

Since procrastination is a message from our natural willpower via low motivation, the cure is changing the environment, or one’s profession, by selecting one in which one does not have to fight one’s impulse. Few can grasp the logical consequence that, instead, one should lead a life in which procrastination is good, as a naturalistic-risk-based form of decision making.

Someone who procrastinates is not irrational; it is his environment that is irrational.

The more frequently you look at data, the more noise you are disproportionally likely to get (rather than the valuable part, called the signal); hence the higher the noise-to-signal ratio.

Let’s add the psychological to this: we are not made to understand the point, so we overreact emotionally to noise. The best solution is to only look at very large changes in data or conditions, never at small ones.

The first step toward antifragility consists in first decreasing downside, rather than increasing upside; that is, by lowering exposure to negative Black Swans and letting natural antifragility work by itself.

Notions such as speed and growth—anything related to movement—are empty and meaningless when presented without accounting for fragility. If something is fragile, its risk of breaking makes anything you do to improve it or make it “efficient” inconsequential unless you first reduce that risk of breaking.

Optionality will take us many places, but at the core, an option is what makes you antifragile and allows you to benefit from the positive side of uncertainty, without a corresponding serious harm from the negative side.

Financial independence, when used intelligently, can make you robust; it gives you options and allows you to make the right choices. Freedom is the ultimate option.

You will never get to know yourself—your real preferences—unless you face options and choices. Recall that the volatility of life helps provide information to us about others, but also about ourselves.

One property of the option: it does not care about the average outcome, only the favorable ones (since the downside doesn’t count beyond a certain point). Authors, artists, and even philosophers are much better off having a very small number of fanatics behind them than a large number of people who appreciate their work. The number of persons who dislike the work don’t count—there is no such thing as the opposite of buying your book, or the equivalent of losing points in a soccer game, and this absence of negative domain for book sales provides the author with a measure of optionality.

If you “have optionality,” you don’t have much need for what is commonly called intelligence, knowledge, insight, skills, and these complicated things that take place in our brain cells. For you don’t have to be right that often. All you need is the wisdom to not do unintelligent things to hurt yourself (some acts of omission) and recognize favorable outcomes when they occur.

Option= asymmetry + rationality. The rationality part lies in keeping what is good and ditching the bad, knowing to take the profits.

Entrepreneurs are selected to be just doers, nor thinkers, and doers do, they don’t talk, and it would be unfair, wrong, and downright insulting to measure them in the talk department.

This evolution is not a competition between ideas, but between humans and systems based on such ideas. An idea does not survive because it is better than the competition, but rather because the person who holds it has survived!

When you are fragile you need to know a lot more than when you are antifragile. Conversely, when you think you know more than you do, you are fragile (to error).

Avoidance of boredom is the only worthy mode of action. Life otherwise is not worth living.

Someone with a linear payoff needs to be right more than 50 percent of the time. Someone with a convex payoff, much less. The hidden benefit of antifragile is that you can guess worse than random and still end up outperforming. Here lies the power of optionality—your function of something is very convex, so you can be wrong and still do fine—the more uncertainty, the better.

The hidden harm of fragility is that you need to be much, much better than random in your prediction and knowing where you are going, just to offset the negative effect.

We know a lot more what is wrong than what is right, or, phrased according to the fragile/robust classification, negative knowledge (what is wrong, what does not work) is more robust to error than positive knowledge (what is right, what works). So knowledge grows by subtraction much more than by addition—given that what we know today might turn out to be wrong but what we know to be wrong cannot turn out to be right, at least not easily.

Antifragile implies—contrary to initial instinct—that the old is superior to the new, and much more than you think. No matter how something looks to your intellectual machinery, or how well or poorly it narrates, time will know more about its fragilities and break it when necessary.

What survives must be good at serving some (mostly hidden) purpose that time can see but our eyes and logical faculties can’t capture.

For the perishable, every additional day in its life translates into a shorter additional life expectancy. For the nonperishable, every additional day may imply a longer life expectancy. The longer a technology lives, the longer it can be expected to live.

Information has a nasty property: it hides failures. Many people have been drawn to, say, financial markets after hearing success stories of someone getting rich in the stock market and building a large mansion across the street—but since failures are buried and we don’t hear about them, investors are led to overestimate their chances of success.

We notice what varies and changes more than what plays a large role but doesn’t change. We rely more on water on cell phones but because water does not change and cell phones do, we are prone to thinking that cell phones play a larger role than they do.

If there is something in nature you don’t understand, odds are it makes sense in a deeper way that is beyond your understanding. So there is a logic to natural things that is much superior to our own.

What Mother Nature does is rigorous until proven otherwise; what humans and science do is flawed until proven otherwise.

Theories come and go; experience stays. Explanations change all the time, and have changed all time in history (because of causal opacity, the invisibility of causes) with people involved in the incremental development of ideas thinking they always had a definitive theory; experience remains constant.

I am not here to live forever, as a sick animal. Recall that the antifragility of a system comes from the mortality of its components—and I am part of that larger population called humans. I am here to die a heroic death for the sake of the collective, to produce offspring (and prepare them for life and provide for them), or eventually, books—my information, that is, my genes, the antifragile in me, should be the ones seeking immortality, not me.

The worst problem of modernity lies in the malignant transfer of fragility and antifragility from one party to the other, with one getting the benefits, the other one (unwittingly) getting the harm, with such transfer facilitated by the growing wedge between the ethical and the legal. This state of affairs has existed before, but is acute today—modernity hides it especially well.

If success is random, a conscious act of heroism is non-random.

A half-man (or, rather, half-person) is not someone who does not have an opinion, just someone who does not take risks for it.

If you take risks and face your fate with dignity, there is nothing you can do that makes you small; if you don’t take risks, there is nothing you can do that makes you grand, nothing. And when you take risks, insults by half-men (small men, those who don’t risk anything) are similar to barks by nonhuman animals: you can’t feel insulted by a dog.

We need to put entrepreneurs and risk takers, “failed” or not, on top of the pyramid, and, unless they take personal risks when they expose others, academics, talkers, and political politicians at the bottom. The problem is that society is currently doing the exact opposite, granting mere talkers a free option.

Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have—or don’t have—in their portfolio.

At the core of the problem with capitalism—again, please do not invoke Adam Smith—lies the problem of units that are different from individuals. A corporation does not have natural ethics; it just obeys the balance sheet. The problem is that its sole mission is the satisfaction of some metric imposed by security analysts, themselves (very) prone to charlatanism.

A (publicly listed) corporation does not feel shame. We humans are restrained by some physical, natural inhibition. A corporation does not feel pity. A corporation does not have a sense of honor—while, alas, marketing documents mention “pride.” A corporation does not have generosity. Only self-serving actions are acceptable.

There is a phenomenon called the treadmill effect, similar to what we saw with neomania: you need to make more and more to stay in the same place. Greed is antifragile—though not its victims.

Data can only truly deliver via negativa-style knowledge. It can be effectively used to debunk, not confirm.

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.

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.

More book notes

Four Thousand Weeks
Company of One
The 4-Hour Work Week
Essentialism
Outliers

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