Skin in the Game is another addition to the Incerto, now volume 5; I avoided duplication by referring to where in the Incerto some points were developed such as via negativa or monoculture of forecasters or expert problems. You simply don’t repeat in chapter 23 what was said in chapter 5, but can make reference to it.
Now it so happens that I am in the BS busting category, which includes journalists (especially journalists). And the book is designed to be hated by BS operators who can be book reviewers. I instructed publishers to send the book to only doers, not people who make a verbagiastic living.
Let me say it again. I am intolerant of BS; I suffers no fools except when the BS is harmless.
The Judgment of Cambyses
So far three journalists have, while uninvited, attempted to do a (sort of) hack job: John Gapper (FT), Zoe Williams (Guardian), and Phil Coggan (Economist; yes I am outing him, SITG). The problem however is that they agree with the general message of the book (who doesn’t ?) except in what concerns them, so the best way is to perform some assassination on side points: 1) find what appears to be a “flaw”, 2) use the technique of Sam Harris, i.e. make the author look like a hateful spiteful person who hates everybody simply because he doesn’t like bullshitters. The problem of course is that it is hard to claim I am against all experts, not just the .1% faux experts so they disguize the claim as a he is a “hates everybody” type of fellow.
Also note that the book isn’t about SITG but the weird consequences (modern slavery, looks of surgeons, rationality of survival, religious practices, commercial ethics, Lindy effects, and, mostly, risk taking). You will also notice that given the homework done by journos, the “flaws” happen to be in the beginning, never at the end.
John Gapper (Financial Times)
John Gapper is a nice fellow with whom I sparred on Twitter for the usual reasons, his (justified) frustration over my open disrespect for the general members of hi profession. In all fairness, he finds the book entertaining (though hard to summarize journalistically, which explains the longevity of the Incerto but annoys reviewers) and important. As expected, he writes: “Taleb has again put his finger on a flaw in how society operates, one that has damaging moral and financial results.” But then he continues:
GAPPER: The book’s weakness is that it never satisfactorily addresses the counter-argument to the need for “skin in the game” — that having a stake in an outcome eliminates impartiality and causes conflicts of interest. Judges are not paid according to how many people they send to jail and, more trivially, it would be a bad idea if I were being paid a cut of Taleb’s sales.
On that, Mr Gapper misses twice. The book answers the point twice explicitly. Primo
ME in SITG: “We re- moved the skin in the game of journalists in order to prevent market manipulation, thinking that it would be a net gain to society. The arguments in this book are that the former (market manipulation) and conflicts of interest are more benign than impunity for bad advice. The main reason, we will see, is that in the absence of skin in the game, journalists will imitate, to be safe, the opinion of other journalists, thus creating monoculture and collective mirages.
(Background: in The Black Swan I show a statistical illustration of such monoculture with forecasters without skin-in-the-game cluster on a wrong answers, which is nonrandom: the variance within forecasters is smaller than that between forecasts and out of sample realizations. Too technical for Gapper).
Secundo, he missed the discussion of the corrupt Persian judge Sisamnes: a judge’s skin in the game is in the exquisite symmetry of justice. Skin in the game means consequences when you are wrong as much as when you are right. Being paid simply to jail people is asymmetric and has no penalties (I wonder how he can make such a blatant mistake and fail to realize SITG is about matching disincentives to incentives).
And John Gapper’s skin in the game as a reviewer is in the preservation of symmetry (again, not just incentives): my making him accountable in his review with a review of his review. Gabish?
Philip Coggan (The Economist)
It looks like Phil Coggan liked the book. He was just irritated by it. Fair:
The reader’s experience is rather like being trapped in a cab with a cantankerous and over-opinionated driver.
The point is I had the exact same tone in The Black Swan and in Fooled by Randomness (calling economists charlatans etc.), books he liked. Except that the message did not make him feel uncomfortable then (someone insulting lucky and rich fools give journos a feeling of revenge).
But one contention:
Yet even here Mr Taleb applies different standards to his own arguments and those of others. When he criticises Western politicians for intervening in Libya, he has no skin in the game.
I have extensively discussed the point in Antifragile, in the via negativa section. At length. Should one need intervention “to save the world” or something, one must the price for the failure. And it is a risk: to prevent the excuse of pushing a wrong button. Omission is not symmetric to commission under iatrogenics. The argument of “do something” is carefully plotted against the principle “first do no harm” and SITG is the solution: you own it if you break it. Under such symmetry, I am ready to act.
Zoe Williams (Guardian)
Now, she has a problem. A big problem. A very big problem. Reading comprehension at a high school or perhaps elementary school level.
(…)chief executives and shareholders who want values maximised — people whose skin is very much in the game of driving down wages.
What??? The book explains that skin in the game is not incentives, but disincentives. So I wonder about her own abilities …
You wouldn’t want homicide law to be written by the mother of a murdered child.
Of course, she doesn’t get the very notion of disincentives.
She also makes many, many such mistakes not worth discussing here: doesn’t get the minority rule, knows nothing about helicopters; she practically knows nothing.
* * *
We note that Mr. Taleb was not done with the industry's bullshitters and did not take kindly to Barry Ritholtz' comments...
"This book is 25% probability theory, 25% classical anecdotes, 25% stating the bleeding obvious, and 25% complete bullshit."https://t.co/Yis75j4CYH— Barry Ritholtz (@ritholtz) February 26, 2018
Didn't I tell you to fuck off?— Nassim Nicholas Taleb (@nntaleb) February 26, 2018
Seems like a pretty clear rebuttal.