Skin in the Game: Hidden Asymmetries in Daily Life (Incerto, #5)

by Nassim Nicholas Taleb

Let me explain ergodicity—something that we said is foreign to the intelligentsia. Chapter 19 at the back of the book goes into the details; it cancels most crucial psychological experiments related to probability and rationality. The intuition for now is as follows. Take a cross-sectional picture of the U.S. population. You have, say, a minority of millionaires in the one percent, some overweight, some tall, some humorous. You also have a high majority of people in the lower middle class, yoga instructors, baking experts, gardening consultants, spreadsheet theoreticians, dancing advisors, and piano repairpersons—plus of course the Spanish grammar specialist. Take the percentages of each income or wealth bracket (note that the inequality of income is typically flatter than that of wealth). Perfect ergodicity means that each one of us, should he live forever, would spend a proportion of time in the economic conditions of the entire cross-section: out of, say, a century, an average of sixty years in the lower middle class, ten years in the upper middle class, twenty years in the blue-collar class, and perhaps one single year in the one percent.*5, *6 The exact opposite of perfect ergodicity is an absorbing state. The term absorption is derived from particles that, when they hit an obstacle, get absorbed or stick to it. An absorbing barrier is like a trap, once in, you can’t get out, good or bad. A person gets rich by some process, then, having arrived, he stays rich. And if ...