Antifragile: Things that Gain from Disorder

by Nassim Nicholas Taleb

In the fragile case of negative asymmetries (turkey problems), the sample track record will tend to underestimate the long-term average; it will hide the defects and display the qualities.

Let me stop to issue rules based on the chapter so far. (i) Look for optionality; in fact, rank things according to optionality, (ii) preferably with open-ended, not closed-ended, payoffs; (iii) Do not invest in business plans but in people, so look for someone capable of changing six or seven times over his career, or more (an idea that is part of the modus operandi of the venture capitalist Marc Andreessen); one gets immunity from the backfit narratives of the business plan by investing in people. It is simply more robust

to do so; (iv) Make sure you are barbelled, whatever that means in your business.

There is such a thing as nonnerdy applied mathematics: find a problem first, and figure out the math that works for it (just as one acquires language), rather than study in a vacuum through theorems and artificial examples, then change reality to make it look like these examples.

One day in the 1980s I had dinner with a famous speculator, a hugely successful man. He muttered the hyperbole that hit home: “much of what other people know isn’t worth knowing.”

“What is not intelligible to me is not necessarily unintelligent” is perhaps the most potent sentence in all of Nietzsche’s century—and we used a version of it in the prologue, in the very definition of the fragilista who mistakes what he does not understand for nonsense.

The payoff, what happens to you (the benefits or harm from it), is always the most important thing, not the event itself.

Philosophers talk about truth and falsehood. People in life talk about payoff, exposure, and consequences (risks and rewards), hence fragility and antifragility. And sometimes philosophers and thinkers and those who study conflate Truth with risks and rewards.

To conclude this section, note that doing is wiser than you are prone to believe—and more rational. What I did here is just debunk the Lecturing-Birds-How-to-Fly epiphenomenon and the “linear model,” using among other things the simple mathematical properties of optionality, which does not

require knowledge or intelligence, merely rationality in choice. Remember that there is no empirical evidence to support the statement that organized research in the sense it is currently marketed leads to the great things promised by universities. And the promoters of the Soviet-Harvard idea do not use optionality, or second-order effects—this absence of optionality in their accounts invalidates their views about the role of teleological science. They need to rewrite the history of technology.

The Procrustean bed in life consists precisely in simplifying the non-linear and making it linear—the simplification that distorts.

what is fragile is something that is both unbroken and subjected to nonlinear effects—and extreme, rare events, since impacts of large size (or high speed) are rarer than ones of small size (and slow speed).

For the fragile, the cumulative effect of small shocks is smaller than the single effect of an equivalent single large shock.

For the antifragile, shocks bring more benefits (equivalently, less harm) as their intensity increases (up to a point).

As with the idea of having elephants as pets, squeezes are much, much more expensive (relative to size) for large

corporations. The gains from size are visible but the risks are hidden, and some concealed risks seem to bring frailties into the companies.

Bottlenecks are the mothers of all squeezes.

porcelain cup to an organism, to a political system, to the size of a firm, or to delays in airports, resides in the nonlinear. Further, discovery can be seen as an antideficit. Think of the exact opposite of airplane delays or project overruns—something that benefits from uncertainty. And discovery presents the mirror image of what we saw as fragile, randomness-hating situations.

What I can say for now is that much of what is taught in economics that has an equation, as well as econometrics, should be immediately ditched—which explains why economics is largely a charlatanic profession. Fragilistas, semper fragilisti!

Next I will explain the following effect of nonlinearity: conditions under which the average—the first order effect—does not matter. As a first step before getting into the workings of the philosopher’s stone. As the saying goes: Do not cross a river if it is on average four feet deep.

How to Transform Gold into Mud: The Inverse Philosopher’s Stone

Let me summarize the argument: if you have favorable 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. This property is very central to life.

Yet in practice it is the negative that’s used by the pros, those selected by evolution: chess grandmasters usually win by not losing; people become rich by not going bust (particularly when others do); religions are mostly about interdicts;

the learning of life is about what to avoid. You reduce most of your personal risks of accident thanks to a small number of measures.

So the central tenet of the epistemology I advocate is as follows: 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. If I spot a black swan (not capitalized), I can be quite certain that the statement “all swans are white” is wrong. But even if I have never seen a black swan, I can never hold such a statement to be true. Rephrasing it again: since one small observation can disprove a statement, while millions can hardly confirm it, disconfirmation is more rigorous than confirmation.

Jon Elster goes further; he recently wrote a book with the telling title Preventing Mischief in which he bases negative action on Bentham’s idea that “the art of the legislator is limited to the prevention of everything that might prevent the development of their [members of the assembly] liberty and their intelligence.”

For the Arab scholar and religious leader Ali Bin Abi-Taleb (no relation), keeping one’s distance from an ignorant person is equivalent to keeping company with a wise man.

Finally, consider this modernized version in a saying from Steve Jobs: “People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I’m actually as proud of the things

we haven’t done as the things I have done. Innovation is saying ...

Subtractive knowledge is a form of barbell. Critically, it is convex. What is wrong is quite robust, what you don’t know is fragile and speculative, but you do not take it seriously so you make sure it does not harm you in case it turns out to be false.

Few realize that we are moving into the far more uneven distribution of 99/1 across many things that used to be 80/20: 99 percent of Internet traffic is attributable to less than 1 percent of sites, 99 percent of book sales come from less than 1 percent of authors … and I need to stop because numbers are emotionally stirring. Almost everything contemporary has winner-take-all effects, which includes sources of harm and benefits. Accordingly, as I will show, 1 percent modification of systems can lower fragility (or increase antifragility) by about 99 percent—and all it takes is a few steps, very few steps, often at low cost, to make things better and safer.

As they say in the mafia, just work on removing the pebble in your shoe.

I discovered that I had been intuitively using the less-is-more idea as an aid in decision making (contrary to the method of putting a series of pros and cons side by side on a computer screen). For instance, if you have more than one reason to do something (choose a doctor or veterinarian, hire a gardener or an employee, marry a person, go on a trip), just don’t do it. It does not mean that one reason is better than two, just that by invoking more than one reason you are trying to convince yourself to do something. Obvious decisions (robust to error) require no more than a single reason. Likewise the French army had a heuristic to reject excuses for absenteeism for more than one reason, like death of grandmother, cold virus, and being bitten by a boar. If someone attacks a book or idea using more than one argument, you know it is not real: nobody says “he is a criminal, he killed many people, and he also has bad table manners and bad breath and is a very poor driver.”

the antifragile benefits from volatility and disorder, the fragile is harmed. Well, time is the same as disorder.

What is fragile will eventually break; and, luckily, we can easily tell what is fragile. Positive Black Swans are more unpredictable than negative ones.

“Time has sharp teeth that destroy everything,” declaimed the sixth-century (B.C.) poet Simonides of Ceos, perhaps starting a tradition in Western literature about the inexorable effect of time.

While they don’t usually wear ties, these types tend, of course, to exhibit all the textbook characteristics of nerdiness—mostly lack of charm, interest in objects instead of persons, causing them to neglect their looks. They love precision at the expense of applicability. And they typically share an absence of literary culture.

To understand the future, you do not need technoautistic jargon, obsession with “killer apps,” these sort of things. You just need the following: some respect for the past, some curiosity about the historical record, a hunger for the wisdom of the elders, and a grasp of the notion of “heuristics,” these often unwritten rules of thumb that are so determining of survival. In other words, you will be forced to give weight to things that have been around, things that have survived.

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.

If a book has been in print for forty years, I can expect it to be in print for another forty years. But, and that is the main difference, if it survives another decade, then it will be expected to be in print another fifty years. This, simply, as a rule, tells you why things that have been around for a long time are not “aging” like persons, but “aging” in reverse. Every year that passes without extinction doubles the additional life expectancy.† This is an indicator of some robustness. The robustness of an item is proportional to its life!

The proportionality of life expectancy does not need to be tested explicitly—it is the direct result of “winner-take-all” effects in longevity.

Two mistakes are commonly made when I present this idea—people have difficulties grasping probabilistic notions, particularly when they have spent too much time on the Internet (not that they need the Internet to be confused; we are naturally probability-challenged). The first mistake is usually in the form of the presentation of the counterexample of a technology that we currently see as inefficient and dying, like, say, telephone land lines, print newspapers, and cabinets containing paper receipts for tax purposes. These arguments come with anger as many neomaniacs get offended by my point. But my argument is not about every technology, but about life expectancy, which is simply a probabilistically derived average. If I know that a forty-year-old has terminal pancreatic cancer, I will no longer estimate his life expectancy using unconditional insurance tables; it would be a mistake to think that he has forty-four more years to live, like others in his age group who are cancer-free. Likewise someone (a technology guru) interpreted my idea as suggesting that the World Wide Web, being currently less than about twenty years old, will only have another twenty to go—this is a noisy estimator that should work on average, not in every case. But in general, the older the technology, not only the longer it is expected to last, but the more certainty I can attach to such a statement.* Remember the following principle: I am not saying that all technologies do not age, only that thos...

And, of course, someone who sells “futuristic” ideas will not make a lot of money selling the value of the past! New technology is easier to hype up.

I received an interesting letter from Paul Doolan from Zurich, who was wondering how we could teach children skills for the twenty-first century since we do not know which skills will be needed in the twenty-first century—he figured out an elegant application of the large problem that Karl Popper called the error of historicism. Effectively my answer would be to make them read the classics. The future is in the past. Actually there is an Arabic proverb to that effect: he who does not have a past has no future.*

Our brains have a predilection for shortcuts, and the variation is easier to notice (and store) than the entire record. It requires less memory storage. This psychological heuristic (often operating without our awareness), the error of variation in place of total, is quite pervasive, even with matters that are visual.

We notice what varies and changes more than what plays a large role but doesn’t change. We rely more on water than 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. Second, because the new generations are more aggressive with technology, we notice that they try more things, but we ignore that these implementations don’t usually stick. Most “innovations” are failures, just as most books are flops, which should not discourage anyone from trying.

People acquire a new item, feel more satisfied after an initial boost, then rapidly revert to their baseline of well-being. So, when you “upgrade,” you feel a boost of satisfaction with changes in technology. But then you get used to it and start hunting for the new new thing.

It also so happens that whatever is technological happens to be fragile. Articles made by an artisan cause fewer treadmill effects. And they tend to have some antifragility—recall how my artisanal shoes take months before becoming comfortable. Items with an on-off switch tend to have no such redeeming antifragility.

One of my students (who was majoring in, of all subjects, economics) asked me for a rule on what to read. “As little as feasible from the last twenty years, except history books that are not about the last fifty years,” I blurted out, with irritation as I hate such questions as “what’s the best book you’ve ever read,” or “what are the ten best books,”—my “ten best books ever” change at the end of every summer. Also,