Despite the title, this post is not referring to the recent passing of my feline friend. Fat and thin tails are related to probabilistic expectations that anchors Nassim Taleb's work. I just finished his book, and want to unpack some of his core ideas. Besides, we know most actions have risks, so better sometimes to know what we don't know.
I particularly enjoy Taleb's polemical discourse on IYI's (Intellectual, Yet Idiot) or folks who don't know what they don't know. Living in Boston and having access to many academic and intellectual circles, I've always intuited a stink among certain fairly smart individuals. It seemingly manifests itself in a sort of compartimentalization, where the brain is firing on all cylinders in a couple areas and taking a nap in all the others (including the heart at times). It seems there are some who are a little too wet behind their closed ears.
I've seen people talk about think tanks or firms collectively with many years of experience. But let's say someone says their firm has 40 years of experience; that could mean they have 20 post-grads each with a couple years to their resume verses a couple seasoned professionals with at least 20 years of work-life. Who would you rather trust? Taleb notes, and it would seem to me also, that “adding people without fundamental insights does not sum up to insight.”
Taleb believes good, long times are on the side of rationality: “fragility is the expert, hence time and survival.” But IYI's like to stay close to home. They are usually good at first-order thinking, but not second-order thinking. They can reason to some extent, but because they compartimentalize so many of their ideas they can't see the complex whole. In other words, “the higher the number of possible interactions, ... the more disproportionally difficult it is to understand the macro from the micro, the general from the simple units.” Although they arrogantly try, usually through some reductive foibles.
That does not mean time always brings in wisdom to IYI's, but wisdom is rare without the ebbs and flows of life. Or as David Bentley Hart says: “Wisdom is the recovery of innocence at the far end of experience.” Many young people lack both epistemic humility and life exposure. Many older people can also lack both if they never got their boots on the ground and their hearts out in the open.
And then there's the issue of too much time for one life. Taleb says, “If humans were immortals, they would go extinct from an accident, or from a gradual buildup of misfitness.” It seems we have an optimal shelf-life where our genetic changes can benefit future generations for adaptability. Beyond that, we would be crusty curmudgeons afraid to cross the street.
Life is always about risk, but hopefully not ruin. Taking risks allows for wisdom to ensue, but the question remains what risks are too much:
Never compare a multiplicative, systemic, and fat-tailed risk to a non-multiplicative idiosyncratic, and thin-tailed one. (Taleb)
Taleb explains that thin-tailed risks are ergodic: meaning, the statistical expectation for a collection of players is similar to a single player over time. Yet, there are many risks that can look good collectively, but may create havoc on the individual if he/she is at the game long enough. (Yes, flying is less risky compared to many other forms of transportation, but overtime if you're flying a lot, it just takes that one hungover pilot to ruin your life.)Let's say you're in a position in power, and making a bet on something you're doing where the odds of something catastrophic is low, but should it happen it can create mass ruin (listen up wall street, AI developers, politicians). Maybe you should have skin in the game yourself. Maybe you should be following the Silver Rule: do not do to others what you would not like them to do to you. Maybe you should resign and move to a tropical island.
Yet, most IYI's have an entitled sense to act on their "expertise" and usually make a mess of things for the sake of perception. In their view, adding something new (e.g. policies, technologies, etc) is always going to look sexier than removing something. But we can never know all the interactions that will result in an action, so sometimes we can do better with subtraction (via negativa) than addition (via positiva).
All in all, the world is far too complex for IYI's on top to be making decisions that will inconsequentially impact those of us on the ground. Fine for thin-tailed risks, but not if you're going to ruin my (and everyone else's) party. So if you're in a position of influence, better the outcomes will be if you're not externalizing the risks to others and have skin in that game yourself.
When the beard (or hair) is black, heed the reasoning, but ignore the conclusion. When the beard is gray, consider both reasoning and conclusion. When the beard is white, skip the reasoning, but mind the conclusion. — Nassim Taleb