Fooled By Randomness: The Hidden Role Of Chance In Life And In The Markets, by Nassim Nicholas Taleb
Some books feel like treatises where the author seeks to present himself as being the first and/or last word on a given subject, and some books feel like extended essays in the way that the author seeks to view his writing as an attempt to push back the darkness without being the only source of light in a given area. This book clearly feels more like an essay than a treatise, and that is helped by the author’s tone, his unconventional chapter headings, and his open endorsement of sketpicism and the approach of those like Karl Popper and Montaigne. As these figures happen to be inspirational figures for me as well in my own approach as a writer, this book has a congenial feel to it, as if it was taken from an extended series of serious but friendly conversations in a moderately priced Mediterranean restaurant. This is a good setup for the author’s discussion of how human beings were created and formed for a simpler world than the complex world we now inhabit and how many of us suppress our lack of knowledge about the disconnect between the way we think and behave, full of attempts to create post-hoc rationalizations for random events and mild superstitions and the subtle risks and dangers of the cultural milieu that we inhabit.
After beginning with a preface, acknowledgements for the second edition, chapter summaries, and a prologue, this particular book is divided mostly into three parts. The first part looks at Solon’s apocryphal warning (I), with chapters on the disconnect between wealth and competence in luck-based endeavors like market trading (1), bizarre accounting methods and counterintuitive truths (2), a mathematical mediation on history (3), randomness, nonsense, and the scientific intellectual (4), on ways that microevolution can easily be fooled by randomness (5), skewness and asymmetry (6), and the problem of induction (7). After that, the author talks about survivor bias (II) with chapters on the biased view of the millionaires next door (8), the way that traders are fooled by numbers into thinking that they are competent (9), and the nonlinearities of life (10), as well as the probability blindness of humanity (11). After that comes the third part of the book on how we live with randomness (III) with chapters on gambler’s ticks (12), the relationship between probability and skepticism (13), and some notes on randomness and personal elegance (14), followed by an epilogue on London traffic jams and their consequences for one of the book’s subjects and a postscript with some afterthoughts, followed by acknowledgements for the first edition and some notes and references that are well worth reading.
How much you appreciate this book, or any book by the author, will depend in large part on whether you are able to appreciate the author’s approach to not taking himself (or elite fields of thought and business in our contemporary world) too seriously. Speaking personally, I dislike the fulsome and continual praise that the author gives to the distinctly shady George Soros, but when the author is talking about notable sketpics throughout history like Popper and Montaigne, I am definitely more on board with the author’s approach about recognizing his shortcomings and blind spots and refusing to believe that human planning itself can make for safe life in a world as chaotic and random as our own. To the extent that we are aware of our own follies, our own irrationality, our own superstition, and the importance of emotions and quick and dirty heuristics for our brain to get anything done in a timely fashion, we can at least recognize our own fallibility and therefore be wiser than those who are wise in their own eyes and unaware of the dangers that they are blithely disregarding in their illusion of knowledge and control. And knowing the extent of our ignorance is a noble goal, and one well worth reading this book for.