Antifragile: Things That Gain from Disorder, by Nassim Nicholas Taleb

Publisher : Random House (2014)

ISBN-13 : 978-0812979688

Rating: ⭐⭐⭐⭐

Quick Thoughts

Two quotes stand out to me when I think about Antifragile. One is a common saying: 

• “When life gives you lemons, make lemonade.”

The other is from the author Dr. Maya Angelou: 

• “My mission in life is not merely to survive, but to thrive; and to do so with some passion, some compassion, some humor, and some style.”

To me, these two statements encapsulate Antifragile. 

Antifragile is an exasperating book with an important idea – that some things actually benefit from stress or volatility. 

But Taleb’s style of writing is arrogant and self-indulgent. There’s a lot of unnecessary and personal insults. That’s his right and his due, and in fact, many of the targets are deserving of his scorn. But it makes his message cluttered and semi-repetitive at certain points. 

Nonetheless, I recommend Antifragile to people interested in risk and decision making in the face of uncertainty, change, and  disruption, ie. everyone in the 21st century. 

For instance, it provided me with a useful framework for thinking about the coronavirus pandemic –  how to ensure fast and accurate decision-making, actions and options in the face of extreme uncertainty and volatility caused by a once-in-a-lifetime global pandemic.

3 Main Ideas

• Some things in life are fragile. Like a porcelain teacup, they break when subjected to stress. Other things in life actually improve or benefit as a result of exposure to stress, disorder, or randomness. These things not only gain from disorder but need it in order to survive and thrive. Those things are the opposite of fragile; they are antifragile. For instance, the process of evolution is antifragile. 
• We have built up modern life to be as safe and predictable and comfortable as possible, without considering that we might benefit from some level of stress, randomness, chaos and disorder. Chaos, need, and stress are often agents of innovation and success.
• One of the best ways to be antifragile is to have options. Having options means that you are protected against very large risks and large losses, and at the same time you have choices and flexibility to maneuver and change something, when the time is right.

Key Takeaways

• For the most part, things that are natural are antifragile, until proven otherwise. Evolution is an antifragile system. The strongest survive as a result of stress and disorder, while the weak go extinct. Evolution requires stress and disorder. 
• Modern society tries to reduce randomness and volatility and try to make life safer and more comfortable. However, some amount of stress (up to a certain point) is necessary for the antifragile. Comfort actually makes us more fragile. Innovation arises out of disorder, need, or discomfort. We will improve our lives if we introduce some measure of stress and randomness into our lives, and not get too comfortable.
• Having options is key to being antifragile. Optionality is a means of pursuing antifragility. Having freedom of choice enables one to take advantage of positive black swans, and be less affected by negative black swan events. The more choices one has, the less limited one is.
• Pursuing a barbell strategy is another way to be antifragile. Play it safe in one area, and be very risky in another small area. If the risk pays off, you have unlimited upside. And if it doesn’t, you capped your loss to only a small area. So you have a large upside, but a protected downside.
• We need to build redundancy, or a margin of safety, into our systems. It’s better to be safe than sorry in situations where volatility can cause a large downside. It’s better to be safe than sorry by taking precautions or hedges against potentially bad outcomes. A co-pilot on a plane incurs an extra cost (additional salary), but the upside of that co-pilot is significantly larger (first pilot has a heart attack mid-flight). We should not over-optimize for efficiency in all things. We need to allow for the existence of redundancy and backups in case of an unexpected Black Swan event. 
• Antifragility is a useful strategy for individual people, companies, governments and even the human species in general.

Takeaways for Individuals

• If you are reasonably healthy, don’t visit the doctor too often. Whenever possible, replace the doctor with human antifragility. But otherwise, don’t be shy with aggressive treatments if you are seriously or terminally ill.
• Don’t become too attached to material possessions or things [money has its own iatrogenics]
• Life needs some challenges. Intentionally introduce some stress into your life, from time to time. We would be better off by getting tougher, and not becoming too comfortable with our daily life. Eg. 
  • Take cold showers, 
  • Turn the heat down, 
  • Practice a competitive sport. 
  • Practice intermittent fasting; avoid steadiness in food consumption and eat a few meals at random. Food deprivation introduces stress, which can produce positive convexity effects to the human body especially in terms of longevity.
  • Work out. Exercise introduces stress into the body, and makes it stronger.
• Take walks as often as possible. Walking is natural and antifragile. 
• Take upside risks while protecting your downside.
• Watch what people do, and not what they say:
  • “Never ask anyone for their opinion, forecast, or recommendation. Just ask them what they have—or don’t have—in their portfolio.” (452)
  • “Never ask the doctor what you should do. Ask him what he would do if he were in your place.” (452)

Key Concepts

Antifragile

• Anything that has more to gain (upside) than to lose (downside) from random or extreme shocks can be considered antifragile. Some things actually benefit from random or extreme shocks. For instance, your body gains strength from lifting weights, while an egg will be crushed by extreme weight. Your body can be antifragile in certain conditions.
• Being antifragile is not the same thing as being strong, robust, or resilient. Antifragile is beyond mere resilience. It is the opposite of fragile, meaning that the more shocks or attacks something experiences, the stronger it gets. It requires that a system be flexible, adaptable, a quick study, and able to take advantage or benefit from chaos, volatility, and ever-changing circumstances.

The Foundational Asymmetry 

• “Fragility implies more to lose than to gain, equals more downside than upside, equals (unfavorable) asymmetry. Antifragility implies more to gain than to lose, equals more upside than downside, equals (favorable) asymmetry.” (195)

Damocles, Phoenix, and Hydra

• Taleb uses the ancient myths of the Hydra, the Phoenix, and the sword of Damocles to demonstrate the concepts of fragility, robustness, and antifragility, what he terms the “Triad”.
• Damocles enjoys his feasts at a table with a sword dangling from a horse’s hair hanging over his head. Should the horse hair break, the sword will fall and kill Damocles. Damocles is fragile.
• When a Phoenix dies, it is reborn from its ashes, restored to its exact same state.  The Phoenix demonstrates robustness or resilience.
• The Hydra was a mythical monster with multiple heads. When one head was cut off, two more would grow in its place. The Hydra is antifragile

Black Swan

• A consequential, rare, and often unexpected event. 

Optionality

• Having options and more freedom of choice makes a person or system more resistant to shocks. The more choices and options that one has, the more freedom a person has to react to unexpected situations, and the more antifragile one becomes to volatility or black swan events. Being financially independent is a major expression of optionality.
• Essentially, lack of debt and financial independence provides more options to a person than the opposite.

Rules for Optionality

1. Look for optionality (having many choices)
2. Have a preference for open ended pay offs (unlimited or high upsides)
3. Invest in people, not business plans
4. Apply the barbell principle (restrict your downside)

Domain Dependence

• People can understand something in one area, but fail to transfer the same concept outside of the context in which they learned it, ie. into other domains. 
• For instance, we might understand the benefits of working out, but will take the elevator to the gym to use the stairmaster. 

Lindy Effect

• The longer a nonperishable thing, idea, or technology has been around, the longer it can be expected to continue to persist. Things that have been around for a long time tend to stick around. They have withstood the test of time. The robustness of an item is proportional to its life span.
• If a book has been in print for 40 years, you can expect it to be in print for another forty years. 

Via Negativa (“By Removal”)

• Knowledge grows by subtraction much more than by addition. We know more about what is wrong or does not work than what is right and does work. 
• Negative knowledge (what is wrong or doesn’t work) is more robust than positive knowledge (what is right or does work). 
• Many of our problems can be solved by removing things, not adding things. For instance, eliminating consumption of cable news might actually make you more informed!
• We may not know how to become wealthy (positive knowledge), but we know how NOT to become wealthy: be in debt, spend a lot of money, never save, etc. We may not know exactly what will bring us happiness, but we know what makes us unhappy!

Green Lumber Fallacy

• One can succeed at an activity without fully understanding the fundamental principles of that activity. Knowledge of the fundamentals may not necessarily be a prerequisite for success in a given activity.
• One can be a competent car driver without understanding the principles of physics and mechanical engineering. You can be a competent cook without understanding molecular chemistry.
• It’s derived from a trader in green lumber who believed that green lumber was lumber painted green, as opposed to raw, fresh lumber. However, not knowing this fact didn’t prevent him from becoming a successful lumber trader.

Hormesis and Small Stresses

• In medicine, it is possible for small doses of poison, ingested in minute quantities over time, to provide the body with some immunity to the poison. This process is called Hormesis. It is similar to the way that traditional vaccines work. By introducing a weakened form of a virus into the body, the body is trained to recognize and resist the actual virus should it come across it. 
• Some amount of stress (up to a certain point) is actually good for the body. 
• Providing occasional stress to a body or system makes it tougher and stronger. Similarly, weightlifting, running, or fasting introduce occasional stress to the body that causes it to become stronger and better. 

Naive Intervention and Iatrogenics

• People have a bias for action, a desire to do something, in the face of a problem. Iatrogenics, in medicine, refers to harm caused by the healer. 
• A doctor might recommend certain drugs for a condition that actually causes more harm to the patient. 
• For instance, opiods used to treat severe pain might lead to drug addiction. Or the casual prescriptions for antidepressants.  Basic medical errors also account for a lot of death and damage.
• Iatrogenics is mainly a case for non-severe illness. If a patient is terminally ill, iatrogenics isn’t really a concern, and every treatment should be tried to save a life. It’s the non-life-threatening cases where inessential medical intervention becomes a concern.
• Similarly, modern society is a complex system, and our bias towards action in solving problems can lead to unanticipated consequences more damaging than the original problem. 
• For instance, the 2003 Iraq invasion led to a cascade of severe and unanticipated events, including the rise of Isis. 

Nature

• A useful heuristic is that what nature does is rigorous until proven otherwise. And what humans and science do is flawed until proven otherwise. To be antifragile is to remain as close to nature as possible. This is especially relevant in medicine.
• For instance, one can optimize for too much cleanliness. Beyond a certain point, excessive hygiene may make you fragile by denying hormesis—our own antifragility.
• Natural births are preferable to caesaran ones. 

Time

• Time is a form of disorder. Over time, what is fragile will break. Time produces the opportunity for more events (positive and negative) to occur. 
• Time produces volatility, which has positive convex effects for the antifragile, and negative convex effects for the fragile. 
• People tend to fight the last war. However, the past is a flawed predictor of the future. Because extreme and rare events (Black Swan events) are underrepresented in the past (otherwise, they wouldn’t be rare), predictions about the future may be distorted because of the inability to account for these events. 
• For instance, we may base a flood response on the most damaging floods in the past; it’s hard to imagine that the next flood might be of a magnitude even worse than the last one. We equip our military with weapons based on past military actions, and fail to imagine that future wars might be fought differently.
• Rather than trying to predict the future, a better strategy to pursue is antifragility; becoming antifragile ensures that your downside is limited should a Black Swan event occur.

Non-Linearity

• “Nonlinear” means that the response is not straightforward and not a straight line. If you double, say, the dose, you get a lot more or a lot less than double the effect.
  • Throwing a 10lb stone at someone’s head causes more than twice the damage of a 5lb stone.
• “For the fragile, shocks bring higher harm as their intensity increases (up to a certain level). (316) and “For the fragile, the cumulative effect of small shocks is smaller than the single effect of an equivalent single large shock.” (318)
  • Taking 10 painkillers will cause more than five times the damage of ingesting 2 painkillers.
• Asymmetry is nonlinearity. There is more harm than benefits: an increase in intensity brings more harm than a corresponding decrease offers benefits.
• For the antifragile, shocks bring more benefits (equivalently, less harm) as their intensity increases (up to a point). (318)
  • Eg: Lifting a 100lb weight brings more benefits than lifting a 1lb weight 100 times.
• Two Kinds of Nonlinearity:
  • concave (curves inward) [looks like a frown]
  • convex (curves outward) [looks like a smile]
• (Curves are viewed from the bottom)
• For simplification, Taleb uses the term “convexity effect” for both:
  • “positive convexity effects”  – convex
  • “negative convexity effects.” – concave
• Fragility has negative convexity effects. Antifragility has positive convexity effects.

Principal/Agent problem

• This problem occurs when one party in a transaction (the agent) has different interests from the other party to the transaction (the principal). 

Skin in the Game

• Skin in the game is a way to solve the principal/agent problem. People who talk or give opinions without anything at stake are exercising a free option; they have nothing to lose if they are wrong, and much to gain if they are correct.   
• If someone has an opinion or makes a recommendation, they should have something to lose in the event of harm caused by reliance on their information or opinion. 
• Lack of skin in the game is a big problem in modern society, where politicians, businessmen and CEOs,  economists, journalists, and other leaders can have massive upsides, but walk away unscathed in the event of disaster. This is a transfer of fragility from the powerful to innocent bystanders. 
• In the 2008 financial crisis, failing banks were bailed out using taxpayer funds, and yet the CEOs walked away with millions of dollars in bonuses. Bankers became antifragile at the expense of the taxpayers.
• Watch what people do or how they behave, and not simply what they say. Actions are the best way to determine whether someone believes what they are selling or saying. 
• For society to function more fairly, those who stand to gain the most in society should also lose out if the system fails. They should also be made to take part in the losses. “Pilots should be on the plane” (443). 

The Barbell & the Bimodal Strategy

• The barbell strategy involves protecting your downsides while leaving room for your upsides. It means that you play it safe on one side so you can take more risks on the other side, while avoiding being in the middle. (Being in the middle leaves you neither better or worse off, you remain unchanged). 
• You play it very safe on one side, and then take lots of small, risky bets in other areas (so you benefit from positive black swans). If your risky endeavors don’t work out, you’re still protected, because you didn’t risk everything. Meanwhile, if your risks do pay off, you stand to benefit disproportionately. 
• For instance, in finance, a barbell strategy would involve investing most of your net worth in safe investments, and then reserving a small amount, maybe 10%  in highly speculative, risky (but potentially lucrative) investments. You’ll never lose more than 10% of your net worth, but you stand to gain massively more if those risky investments actually do work out.
• It might also mean keeping a steady 9-5 day job, while starting a potentially lucrative side hustle on your evenings and weekends.
• In marriage, it might mean marrying the [steady, safe] accountant, but having an affair with the rockstar. {This is generally not advised for the robustness of the marriage.}

Top Quotes

• Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better. (27)
• Black Swans (capitalized) are large-scale unpredictable and irregular events of massive consequence—unpredicted by a certain observer, and such unpredictor is generally called the “turkey” when he is both surprised and harmed by these events. (30)
• To counter success, you need a high offsetting dose of robustness, even high doses of antifragility. You want to be Phoenix, or possibly Hydra. Otherwise the sword of Damocles will get you. (58)
• Moderns try today to create inventions from situations of comfort, safety, and predictability instead of accepting the notion that “necessity really is the mother of invention.”  (66)
• This is the central illusion in life: that randomness is risky, that it is a bad thing—and that eliminating randomness is done by eliminating randomness.  (114)
• Fragility implies more to lose than to gain, equals more downside than upside, equals (unfavorable) asymmetry. Antifragility implies more to gain than to lose, equals more upside than downside, equals (favorable) asymmetry. (195)
• Provided we have the right type of rigor, we need randomness, mess, adventures, uncertainty, self-discovery, near-traumatic episodes, all these things that make life worth living. (287)
• 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. (441)
• 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.  (491)

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