The last time I read a book by Nassim Nicholas Taleb (it was Fooled by Randomness, if you were wondering), it was because a teacher recommended it. This time, I read Skin in the Game because it was on my MBA’s summer reading list. I don’t know about you, but I sense a pattern forming.
For me, Skin in the Game can be summarised in one sentence: don’t accept advice from people who have nothing to lose in the topic (and if their advice is related to their gain but not their loss, e.g. when insurance agents sell you plans, be especially cautious).
The central idea of this book is that advice from ‘experts’ who are not personally invested in the subject/have nothing to lose, is not worth that much. But of course, the book expands on this idea. After a one-part introduction, Taleb goes on to talk about these aspects of risk and information asymmetry in seven parts:
- Why is it important that risk is shared by both parties? What happens if one party is bearing all the risk and the other party is giving the advice? What are the ethical implications of this?
- A stubborn minority can force the general population to bend to its preferences
- Are employees slaves? When are you truly independent and not beholden to anyone?
- Taking risks may make you look superficially less attractive, but also more convincing (also: what is the difference between an inequality in risk and inequality in salary and what does this have to do with the pay scale?)
- What are the consequential assymetries? This section looked at (among other topics) why you should hire someone who doesn’t fit his job stereotype, why journalists have an agency problem, and why virtue requires risk taking.
- What all this has to do with religion and why the different definitions of the word ‘religion’ can be an issue
- Rationality is risk management (and the avoidance of systemic ruin).
The style of this book is extremely conversational and I came away feeling like I just listened to Taleb talk in person, without any filter (I found out a lot about the people he dislikes, and why). This style is probably not suited for everyone – especially if you admire the people Taleb doesn’t – but this wasn’t a huge issue for me and if anything, made the book easier to read than a stiff academic text.
Overall, I really enjoyed this book and found it to be very thought-provoking. I know I said at the start of my review that I’ve only read Taleb’s books when they were recommended to me, but I’ve since realised that Fooled by Randomness and Skin in the Game are part of a five book series (the first and last, apparently), and so I’m pretty tempted to read all the books in between as well.
This sounds like a really interesting read, I think you should read the series!
Yes! I’m probably going to haha
It does seem like a thought-provoking read. The bulleted list there really caught my interest. I’ll add it to my TBR.
It is very interesting! But beware if you’re a fan of Steven Pinker because Taleb doesn’t like him and he’s very vocal about it!
🤣 I’ll keep that in mind going in.
Sounds good! Maybe I will seek it out.
Thomas Sowell talks a lot about this. He does not have many kind words for systems where the people making decisions are not the ones who get “direct feedback” (i.e. negative consequences) resulting from their decisions. This is true of centrally planned economies, for example. If you get “direct feedback” and are the decision maker, you correct course pretty darn quickly! However, Sowell doesn’t have just one book about this topic, as far as I am aware. It’s a theme that comes up in many of his books. His style is more dry and academic as well, so this might be good book to read as a companion to one of Sowell’s.
I’ve not heard of Sowell! It’s interesting to see how other people are looking at the same idea (which I agree with – decision makes being too removed from the situation can lead to decisions that aren’t in the best interest of the people involved)
I started Sowell reading The Quest for Cosmic Justice. I still think it’s a pretty good one to start with. But a lot of it is about American politics. Still, given the way those get communicated to the world through headlines and stuff, it shouldn’t be too esoteric. In Discrimination and Disparities, he uses a lot of different international examples. He is very conversant with history.
Oooh, Discrimination and Disparities sounds like a good fit for me! Thank you!
“Don’t accept advice from people who have nothing to lose in the topic” is pretty darn good advice. Looks like an interesting read!
Yes! I agree with that thinking hahaha
This was definitely interesting, I’d recommend it!