The past month or so I’ve been reading Taleb’s Black Swan again, now for the second time. I’m very much impressed by his ideas, and the forceful in-your-face way that he writes. It’s certainly not a surprise that the book has captivated the minds of traders, businesspeople and other practitioners. The book is extremely good, even good enough to recommend it as a decision making resource. Taleb finds a cluster of biases (or more exactly, puts together research from other people to paint the picture), producing a sobering image of just how pervasive our neglect of Black Swans is in our society. And, he’s a hilariously funny writer to boot.
But.
Unfortunately, Taleb – like everyone else – succumbs in the same trap we all do. He’s very adept at poking other people about their biases, but he completely misses some blind spots of his own. Now, this is not evident in the Black Swan itself – the book is very well conceptualized and a rare gem in the clarity of what it is as a book and what it isn’t. The problem only becomes apparent in the following, monstrous volume Antifragile. When reading that one a few years ago, I remember being appalled – no, even outraged – by Taleb’s lack of critical thought towards his own framework. In the book, one gets the feeling that the barbell strategy is everywhere, and explains everything from financial stability to nutrition to child education. For example, he says:
But.
Unfortunately, Taleb – like everyone else – succumbs in the same trap we all do. He’s very adept at poking other people about their biases, but he completely misses some blind spots of his own. Now, this is not evident in the Black Swan itself – the book is very well conceptualized and a rare gem in the clarity of what it is as a book and what it isn’t. The problem only becomes apparent in the following, monstrous volume Antifragile. When reading that one a few years ago, I remember being appalled – no, even outraged – by Taleb’s lack of critical thought towards his own framework. In the book, one gets the feeling that the barbell strategy is everywhere, and explains everything from financial stability to nutrition to child education. For example, he says:
I am personally completely paranoid about certain risks, then very aggressive with others. The rules are: no smoking, no sugar (particularly fructose), no motorcycles, no bicycles in town [--]. Outside of these I can take all manner of professional and personal risks, particularly those in which there is no risk of terminal injury. (p. 278)
I don’t know about you, but I really find it hard to derive “no biking” from the barbell strategy.
Ok, back to seeking out irrationality. Taleb certainly does recognize that ideas can have positive and negative effects. Regarding maths, at a point Taleb says:
Ok, back to seeking out irrationality. Taleb certainly does recognize that ideas can have positive and negative effects. Regarding maths, at a point Taleb says:
[Michael Atiyah] enumerated applications in which mathematics turned out to be useful for society and modern life [--]. Fine. But what about areas where mathematics led us to disaster (as in, say, economics or finance, where it blew up the system)? (p.454)
My instant thought when reading the above paragraph was: “well, what about the areas where Taleb’s thinking totally blows us up?”
Now the point is not to pick on Taleb personally. I really love his earlier writing. I’m just following his example, and taking a good, personified example of a train of thought going off track. He did the same in the Black Swan, for example by picking on Merton as an example of designing models based on wrong assumptions, and in a wider perspective of models-where-mathematics-steps-outside-reality. In my case, I’m using Taleb as an example of the ever present danger of critiquing other people’s irrationality, while forgetting to look out for your own.
Now, the fact that we are better at criticizing others than ourselves is not exactly new. After all, even the Bible (I would’ve never guessed I’ll be referencing that on this blog!) said: “Why do you see the speck that is in your brother’s eye, but do not notice the log that is in your own eye?”
In fact, in an interview in 2011, Kahneman said something related:
Now the point is not to pick on Taleb personally. I really love his earlier writing. I’m just following his example, and taking a good, personified example of a train of thought going off track. He did the same in the Black Swan, for example by picking on Merton as an example of designing models based on wrong assumptions, and in a wider perspective of models-where-mathematics-steps-outside-reality. In my case, I’m using Taleb as an example of the ever present danger of critiquing other people’s irrationality, while forgetting to look out for your own.
Now, the fact that we are better at criticizing others than ourselves is not exactly new. After all, even the Bible (I would’ve never guessed I’ll be referencing that on this blog!) said: “Why do you see the speck that is in your brother’s eye, but do not notice the log that is in your own eye?”
In fact, in an interview in 2011, Kahneman said something related:
I have been studying this for years and my intuitions are no better than they were. But I'm fairly good at recognising situations in which I, or somebody else, is likely to make a mistake - though I'm better when I think about other people than when I think about myself. My suggestion is that organisations are more likely than individuals to find this kind of thinking useful.
If I interpret this loosely, it seems to be saying the same thing as the Bible quote – just in reverse! Kahneman seems to think – and I definitely concur – that seeing your own mistakes is damn difficult, but seeing others’ blunders is easier. Hence, it makes sense for organizations to try to form a culture, where it’s ok to say that someone has a flaw in their thinking. Have a culture that prevents you explaining absolutely everything with your pet theory.
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