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Nassim Nicholas Taleb on Rationality, Risk, and Skin in the Game

EconTalk podcast.

March 25

Nassim Nicholas Taleb, author of Skin in the Game, talks with EconTalk host Russ Roberts about the ideas in the book. This is the third episode of EconTalk with Taleb related to the general topic of skin in the game and how it affects decision-making and policy in an uncertain world. This episode focuses on rationality, religion, and the challenge of thinking about probability and risk correctly in a dynamic world.

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Welcome to E Con Talk, part of the Library of Economics and Liberty. I'm your host, Russ Roberts at Stanford University's Hoover Institution. Our website is he contact dot org's or you can subscribe comment on this podcast and find links and other information related to today's conversation. You'll also find our archives where you can listen to every episode we've ever done. Going back to 2006. Our email addresses melody contact dot org's We'd Love to Hear from You. Today is February 13th 2018 and my guest is not see him. Nicholas Taleb. His latest book is Skin in the Game. Hidden a Symmetries in Everyday Life. This is his eighth e contact episode. Sam, Welcome


back. Thank you. Thanks for inviting me again


on both. Excited, Slightly embarrassed. Ah, say that our topic for day for today is getting the game seven way. Our third episode on the topic. We did one episode on the paper he wrote with Constantine Sandis that had the title the skin in the game juristic for protection against tail events. Then, last August of 2017 we didn't have any contact episode on the book that were that you're having this coming out shortly. Some aspects of the some aspects of the book when it was in draft form. And today we're gonna talk about a number of topics from the book that we didn't get to,


which in fact are central,


which are, in fact Central. I mean, I don't know how we had that other episode, but we managed somehow, and I'm sure we're gonna get into some other things as well. But our topics for today are rationality, broadly defined, decision making under uncertainty. And I think we're gonna get to religion as well


as the notion


of survival and the notion of survival, which is, actually the more I think about it, the more I read your work. The more I think of it is being central to, ah, the lessons that you have to teach in terms of decision making, under uncertainty and and skin in the game. Gonna start with two kinds of probability. That you talk about One is ensemble probability, and the 2nd 1 is Time Probability. Set this up with an example from the casino that used in the book.

What can Nassim Taleb teach us about probabilities?

Most people don't understand probabilities. They think that if a probability of success is high, that means they can benefit from it indefinitely. A stock trader, for example, might look at the probably of making a large return, and risk everything on it, over and over again.

In reality, however, if there is a smallest chance of an absorbing barrier, an event in which your lose everything, then it is just a matter of time until that even happens, and you will lose everything.

So the most people have the illusion that you can compute probabilities what we call state space and financed by looking, say, at returns of the market what people are making returns of businesses on DDE that it would apply to you. In fact, if you have the smallest probability of an absorbing barrier, then you're never gonna be able to capture that market return or that also humble return explain.


Let me explain Web, but explain what an absorbent barrier is


first. Yeah, it zombie very, is a point that you reach at, you know, beyond Beyond. Wish you can continue you stopped. For example, if you die, that's an absorbing bag. So most people don't realize that as warm Muffin keeps saying, he says, In order to make money, you must first survive. It's not like a an option. It's, ah,

condition. So if you hit once you hit that point, let's you're done. You're finished. So let me on. That applies in the financial world, of course, toe the what we call ruin financial ruin, but it can be any form of ruin and can be ecological ruin. It could be personal ruin. It could be a death of a community whatever. So let let's isolate the point with the following thought experiments. Ah, you send 100 people to a casino and the casino. You don't know the return from casino. It's just,

like set up by some weird person. And you don't know what the person who set it up is giving you the edge or not. Okay, so you send them each A gun's the needs of each of the people, him or her the allowance and asked to gamble for, uh, for an entire day. So if the and then you would compute the return, the expected return of the casino per day by you know what comes back. So if number person number 27 goes bust, okay, loses everything, will it affect number 28? Not at all, not at all. Okay,

so you can you can still, so you probably will have a certain number of people bust in your sample. But you don't mind. You know that you can't that a zero and you compute the expected return and you can figure out if it's a lunatic or a very smart person running the casino. You get the exact return for they of a casino for the gambling strategy. Now, if, on the other hand, you said this one person for yourself, you got 100 days to the casino, we're the same strategy. And on day number 27 you are bust. Will there be number 28


and there will not.


Exactly. So that's Theodore Barrier. So eventually, if you have an absorbing value, the question is not, you know, whether you don't survive or not. The question is, when are you gonna go bust? Because eventually you're gonna go about So So your return you're expected to return if you have a strategy that entails were when is exactly expected. Return is I depending how you count it is. You can lose everything expected returns is you can count it that negative infinity if you're using log or negative 100% whatever it is. So any strategy that has ruined will eventually I have. If you extend times, Infinity will have a negative 100% returns. And that's not very well understood, because,

ah, lot of people engaging strategies that they'll ruin, not realizing that eventually we're gonna catch up with them. But one thing I learned when I was a trader, that's very first lesson from all traders was Listen, take all the risks you want, but make sure you're gonna be here tomorrow. The game is about being in the office tomorrow at 7 a.m. Because, you know, we start early. So that was that was that was a game. I mean, you take all the risk you want and effectively the every single surviving person say, take read the daily would take one. Busted. All these people all they worry about this one.

Don't worry about Rita. All these complicated stuff and finance emerge to paradise one Markowitz, which is entirely academic, not even used by Markowitz himself, which is like computing complicated probabilities of what may happen was returned to future returns Really complicated. And then the other one is a very simple one that focuses on two things. What you expect to make adjusted every day of survival. Make sure you you don't go bust. So most trade at almost all traded have survived use the ladder. Okay. And every single academic who went to trade and recounted, I think in 1998 how many academics went bust after the LTCM academics. You mean in finance? Not in mathematics, and we notice that explosive 100%. There's only one person who may have survived in the 1998 collapse when locked on,

you know, capital management was effectively, we're short term firm, uh, with, you know, went I went bust making bets on small probabilities.


So let me try toe restate this a little bit. I think, um, in thinking about the casino, there's a presumption that the casino that the odds were in favor of the casino. You start out by saying, we don't know what how the casino owners setting things up. But you have a long running casino like in Las Vegas today. Theon zehr slightly in favor of the of management. And so one way to say what you just said is you can't have a lifetime strategy of earning money by going to the casino


because no, that's not. That's not what I'm saying. Actually saying is even stronger. I am saying that even if you have the edge in the presence of a, uh, probably of ruin, you will be ruined even if you had


the edge. If you play long enough,


if you play long enough, unless you engage in strategies designed by traders and rediscovered by every single surviving trader. Very similar, very similar to what we call the something called the Kelly Criterion, which is to play with a house money. In other words, you start betting and casino the strategies that followed. You go with $100 whatever you want, and you met the dollar. If you lose, you met less than a dollar. You met like, say, 90 cents or whatever. And if you make money, you start betting with house money, and it's called, You know, playing with market money or playing with house money. And so increase your bet as you're making money and you reduce your bet as you're losing money. And that strategy is practically the only one that allows you to gamble or engage in risky strategy that ruin

What is mental accounting and why is it important?

Mental accounting is a behavioral economics term which states that treating money according to its source is irrational. Money you win and the money you have is all the same money.

However, if you treat the world as a series of bets on the condition of survival, then mental accounting is not just ration, but a necessity!

it challenges. The another way to think about is it isn't a symmetry there between wins and losses that one might think of as I don't but many people think of is irrational. It's not irrational and and more than that, often we as economists make fun of people who say, Well, I was way ahead and I took a big gamble because I wasn't using my own money as using the house money and economists. Look at that and we laugh and we say, But it's your money. You could have walked away, You could have kept it. And you're saying that it's actually rational to treat the money. You win differently for money. You lose.


Exactly. I mean, behavioral economists have something called mental accounting er, which states exactly what you said that you know, treating money according to the source, is irrational because these are the one period models. That's how they view the world as one shot experiment. They don't give the world as repetition the repetition of bets. So if you look at the world as repetition of bets on the condition of survival, then then mental accounting is not only is not irrational, but it's necessary. Any other formers, any other strategy would be effectively irrational.


I'm gonna read a long quote for the paper, which sums it separately. Well, and it's shockingly, um provocative, especially when we think about what is going through people's heads when they're sitting in an experiment that we're trying to generalize from is what you say. Quote the flaw in psychology papers is to believe that the subject doesn't take any other tail risks anywhere outside the experiment and, crucially, will never take any risk at all. They deal in the idea, and social science of loss aversion has not been thought through properly. It is not measurable the way it has been measured. If it is all measurable, say us the subject how much he would pay to ensure a 1% probability of losing $100. You're trying to figure out how much he's overpaying for risk aversion or something even more foolish. Loss aversion. But you cannot possibly ignore all the other financial risks he's taking.

There's a car parked outside that can be scratched. He has a financial portfolio that can lose money because a bakery, they may risk a fine. But as a child in college, you may cost unexpectedly more. If he could be laid off, he may be unexpectedly ill in the future. All these wrist set up in the attitude of the subject reflects them all. Ruin is indivisible and in variant of the source randomness that may cause it end quote. So that's a very, um think very deep insight into how careful we have to be interpreting what seems to be a very clean experiment, your willingness to pay for insurance, say of a particular events.


Okay, let me simplify my, my, my my methods, the way you approach a problem. So you taken economic theory and the wonder if it if it changes. If you make things dynamic, not static, you see like in other words, it's not one shot experiment, but many, many experiments and all many repetition of the same the same risk. And the 2nd 1 is what I call you perturb eight. In other words, it's just assumed that you may have the wrong model here. There s So these two tricks effectively cancel out much of the results of the Herald economics, not the psychology.

Psychology experiments are fine, but the whole economic to try and toe make something the arrivals from from simplified sets. And let me also add another dimension that people missed, say, asking economist story person who studied economics. But not well enough. What's the whiskey scenario? He or she would answer what my death and then, But I would say, Well, you have family. You can't something be worse than just your death and effectively saying, Well, yeah, right. That's plus the death of my,

uh, parents and Children cousins. And that's someone and said he would continue to tell him How about the ruin of your tribe? Is the only had No, that's worse. Definitely. Then that's a set that were seven previous one and then till you hit the environment on Earth. And then what? You notice that they effectively, intuitively when they don't, you know, repeat what they've learned at school. They will considered a risk based on both repetition and life, the expectancy that is reduced by think of that risk. So, for example,

if I cross the street, I'm not, You know, I'm just using my life expectancy. Maybe by a second or not. Even my Nana said


he expected value


exactly the life expectancy of reducing it. But if I am taking a risk for something higher than me, namely a tribe, the tribe, it's it is supposed to survive longer than me. And and of course, humanity is supposed to have an extra few 1,000,000 years. So you're reducing the from that, the value of that and of course, when you talk about ecosystem, you know would like to be permanent or whatever you can call permanent and billions of years, and you're reducing that by taking some actions. So the ranking off the risk based on lifetime the life expectancy that you've been using is something that is not in a literature. So So when we did our precautionary principle and I had a talk with you about that our appointment with that humanity to survive forever. So if you take these small, repeated risk that that that sweater okay, humanity or sweating,

that's something we call terminal extension or extinction risk. Then then you are gambling with something much more dangerous. And there was a pyramid of, of, of ruin risks. My ruin is not a big deal. I just my left Pec, missy. I think I'm, you know, listen to your podcasts extends my life. So maybe I lived another 50 years and 50 years is, ah, reduce my my life expectancy by little bit. It's not a big deal, but if I use a lot of pregnancy is something that's a surviving extra 1,000,000,000 years, that's a big, big, big past. Be an effectively you can phrase that in terms of cost benefit along these lies and obtain results that are fastly different from what is believed by the so called risk community


you criticize your critics of when you talk about the precautionary principle, they respond. But you do cross the street. So even though the expected loss is very small because the odds of being struck by a car or very small, you do cross the street. You do take some risk of ruin. You don't just stay home in your bed. And what's your response to that?

How can something safe also be incredibly risky?

If something is safe, but has a low probability of risk, then do it often enough and the risk factor rises.

For example, if you smoke one time, it's not a big deal. But if you do it one time and like it, then you are likely to do it over and over again, in which case the risk of various diseases goes up significantly.

Likewise, if you cross the street unlawfully or without regard for approaching traffic one time, you are probably safe. If you do your whole life, you are still relatively safe. But the whole world were to jaywalk all the time, we would be in a grave danger.

You know my responses when I, uh the way to treat these risk is how many times over my life well, across the street, Okay, several 1000 times, crossing the street reduces your life expectancy by one and 87,000 years. So it's not a big deal. S o er the er the crossing. The street basically is close to zero risk for me because my life expectancy is not infinite. But if you made the humanity across the street, that would be a problem, because it was a real sense. Relax, Benson. See, uh, commendably so the problem of these analysis that people throw around that they ignore the remained the value from life expectancy of whatever you are threatening.

So you give the repetition and the repetition. But let me give you one simple example of how they miss a repetition the way they treat Anna sated. And that chapter on the rational on on the rationality and unrest on rationality. Survival is what matters first. Okay, so So people have developed the instinct, paranoia, paranoia pays off. Basically, we survived as a species, you know, however you define it, that's whatever species we were. We have to have had some paranoia. Otherwise we wouldn't be here. Have been here after millions of years.

So the people develop good reason. So if you ask a grand if you ask a psychologist, if you narrow the experiment the way they do it and you say, OK, wife entice more considerate and one shot experiment, it makes a lot of sense. The risk is tiny and the pleasure is the script. Okay, so I should smoke a cigarette, but your grandmother would say, I've never seen someone smoking a cigarette, enjoy it and not smoke another one. So your grandmother was thinking dynamic terms because that's how we think we think in dynamic terms, you see. But I know you locally. For example,

if someone points out the risk of some, whatever the terrorism or something, we are that that apparently we are overestimated. But people don't understand that if you eliminate paranoia you've eliminated, eventually is even race. You have to have that paranoia for anything that entails. Ah, you know, massive tail risk. And that's the only way to do it. So and But I see it, you know, and reduced form and trading. You see, traders. They basically are paranoid about anything A bankrupt them.

But they don't care about variation. They bet, especially so long as they know they're not gonna be. Oh, you know, to put it this way, instinct, you went out. So So that's the idea of separating these these these risks in the risk of ah being wiped out. And what are you wiping out? Are you wiping out the community? Why, perhaps something, and in the process, and talking to my co author, send this who you know,

does philosophy of very slots, diversity of action. And he knows ethics, and we encounter resolved the paradox that were remained all solved and solved. That follows Aristotle in his nickel. The ethical question. Ethics has a, uh, very statements that courage is isis virtue and, as same time, prudence. The high search now and also there is a belief among the ancients that one you should have all virtues. We have not. So, in other words, if you have one,

virtue should have all the others. Okay. And also there's another belief that one virtual request all the others. There's a equivalents, so whatever. So it looks like How could you be both valuing courage, you know, us taking and prudence, which was the avoidance of some classes of risk? Well, it turns out courage is is prudence okay, if you wanna quit. Because if I saved a collection of Children from drowning effectively, I have reduced my life expectancy, increased there's which you know is longer and the more numerous Children. So we understand that if you take risk for the collective ur,

courage is but also for you about yourself, but prudent for the collective. So that is how we solve that paradox. Constantine and I and we're gonna probably cover something we get to it, but not verbally, Sort of like we're confident that with some of that paradox that wasn't seen that way. But if you start doing the things I'm talking about, dynamic. In other words, saints are repeated and layering. In other words, things have a higher life expectancy than others. Then you can solve a lot of paradoxes and a lot of the things that appear to be biases. And, uh, in the the literature and the economy of not economic,

be able economics. Literature are not really what devices. Maybe, but they're not bad buys that the necessary biases. You have to be necessarily careful about paranoid about the survival, particularly something much higher than you.


So one example used in the book, which which I think brings this home, is the smoking example that you just mentioned. I mean, it's just structure, a slightly different way. 100 people smoking one cigarette a day is Ralph might be relatively harmless. One person smoking 100 cigarettes a day is is not so good, and you can't. As you point out often in the book. Scaling is tricky. You can't just say well, 100 people smoking one cigarette is is not so bad than 1% of 100. It's the same thing, but they're not the same thing,


the other things and that the census in anti fragile that people are starting to get now five years, six years later and is that safe that 100 people jump one meter is not the same risk as one person jumping 100 meters. So I mean, because you have acceleration so and you have accumulation. And these things are, uh, in fact, well understood by all. Psychologically, we are excellent risk managers when were left on our own. And it's not some psychologists who just read a few books and nose baby mathematics who is gonna make us look irrational, and I try to not just into some different behavior. The point is, we have survived so much. We have a use track record and any status different. Let's say that something was such a track record has will have some evidence of skills and surviving.


I have to. I have to confess that when I worked in a race track in Mountain of New Jersey for a summer, my grandmother did tell me not to place any bets? She was a wise woman. I, of course, was a, um, I thought I was a wiser 18 year old, and I and since I had promised I would make any bets, I did keep that promise, Sort of. I would occasionally, actually, once a day, I would split a bet with the woman who worked in the kitchen. I was the ice man.

Uh, and it turned out we did okay, we didn't go on to that second bad, but I think I think that's what she was worried about and correctly so about me losing my summer money by summer's earnings addictive behavior. And I think it's a very interesting challenge to think about life as one shot deals versus longer term dynamics. You know, one more cookie is always harmless, but when it's 10 because you had nine before, it's not so harmless. So it's hard to It's hard to keep their mind. It's a good thing to think about,

Why doesn't Nassim Taleb like gambling?

Too many constraints, and besides, you are playing knowing the game is designed for you to lose.

uh, let me make a confession. Um, I'm gambling. I've been ah traders for so many years, and I have such an allergy for gambling. I've never gambled. Every year I grew Las Vegas Ah, for a seminar or conference where you drink, you're eating a lot of things, but the gambling table. I can't even concentrate on the table. I mean, I tried to wash it, Jack, And possibly there's something about it that's so contrived that you really have to have a certain mindset to gamble. That's not that.

As Trader Trader doesn't like constrain rules, she's C. I know very few traders who gambled. Some of them play bridge. Some play poker. Slightly difference. More dynamic. But gambling. It's not something that attracts Reiter. There's something. Plus, there's something horrifying about about some about entering a trade, knowing you're losing. You see


why I think I think there's an opportunity here. Someone out there listening should should fund or create the documentary, Um, a Sim Taleb at the Mirage they would probably use of the casino. We would allow you to expound on the things you've been talking about the first few minutes of this conversation. I think I see it. It's sort of a stop action claymation, kind of the only be awesome. Uh, I want to ask you a question about Well, first, I want to get let's talk about religion. Uh, now a lot of people. It's very fashionable. That's a That's a That's a disrespectful word. I'm gonna rephrase that.

A lot of smart people are very critical of religion these days, and one of the things that you hear is that religion is irrational. There's no evidence for it. Ah, it's Ah, it's a superstition that was comforting to people before we had the Enlightenment. You argue in the book that religion that's not the right way to think about the rationality of religion, and the fact that that certain religions have survived for a long time shows that they're quite rational. And your definition of rationality in that context is the same as you have been using in the scam bling context, which is it leads to survival. It promotes survival. Talk about religion.


Yeah, what? What? What comment I would make is that it's not the religion that survives. It's people who have it will survive. So whatever believes these people have that allow them to survive, you cannot be discounted. You know at that, you know, there may look another cosmetic, especially So let me, uh, religion. A few things we gotta talk about. Let's make sure that we don't equate all religions because some revisions our religion, some of others are not. Some are more literal,

others are more. Let's say it semi literal or definitely a metaphor. But one thing about relief. Okay. And that's a poor right now if you, uh and this came to me from meeting finally can been more who really probably did more from the middle of work foundational work on rush lt than anyone else. And again been more effectively says that all these attacks on the, you know, economics, economic. This is making based on, you know, by arguing about the rationality, Mr Fein, rationality, you see,

and for example, the conventional economics don't define you as a the economic gains as accounting, interesting book country than other things. If you for exactly give your money to the poor, there's nothing rational about it. If so, is there some restriction of tears? So So I thought of what he was saying and how people that find rationality and then went back to how people expressed what they call rational and noticed. It is usually an ex ante, hence non empirical definition of Russia. Lt exam T means, you know, I did find an action has been rational. You know, it means that you know everything that is going to go on around that, that that action,

in other words, that your model represents the world. And we've known since Simon by the rationality that effectively, you'll never be able to build a model that can understand the world. So when I say inaction is a rational externality beforehand, I'd better have a track record of that action because we need to see if if, if if other things that are not included that model. So, for example, if I say that is, ah, rational toe before, it'll be a big, juicy but not see to a on better have a good model than this holds in the real world. That's called the transitive ity condition. Andi,

I have argued in anti fragile that if you expand the model to saying that for an individual that may make sense to be coherent, but collectively we cannot operate was coherent and visual because you deplete resource is, for example, if you always before two now two steaks, you know and he will deplete the tuna supply and so therefore you need to cycle and nature makes you randomly change preferences. And that's a great way for things to survive. For example, these are the modifications to the narrowly defined what I call baby models that that you encounter in behavioral economics or on decision making, you know, and all these decisions that so called decision sciences where they called decisions with the sciences is reduce it, and then they find it the right way or, for example, that if inter temporal preferences, if someone offers you an apple to Davis system apples tomorrow, well, you know,

in an ecological famous you may say, Well, what if he's the first in its full of baloney? Okay, I'll take the apple now. Okay, I'm not taking it now because I prefer to eat an apple Now. I'm taking it now because, hey, maybe you not come back to me die tomorrow. If you include these models and a lot of these hyperbolic Scotty, all these models become much more. So let me let me say something now about village. So if I judge religion without its track record, I'm gonna get into Ah, a lot of,

uh, a lot of theoretical. I'm not just saying empirical theoretical mistakes, because if you think of what was what You know, what would have happened if you, you know, if we've been had these religions. But I think that ah, a lot of people would haven't had the right, uh, decisions. Eso religion allows you inter generationally tau convey some kind of behavior. Okay, Now, if you has toe gives the story with the religion to justify that behavior, Well,

that's that's That's it. I mean, who cares? So And the example I used in the beginning is even in science. We don't have a perception when I look at a Greek columns, you see, and there's a distortion for aesthetic reasons. Okay? The religion, maybe a distorted view, a way for us to view the world that has allowed us to survive. So I give a lot of example of how to judge religion. You should judge it exposed. Not exactly. And I take, for example,

something that seems that for no religious, Jules, Uh, not, you know, rational. Justo have five on some dietary laws on do things in your kitchen. Now, when you think about it, well, you know it's the wrong way to just judge that on, you know, on the basis of rationality you, the way you gotta see it is that follows. What if Justin has his dietary laws? What would have happened? Well, you know that those who eat together back together so there will be more dispersed that for much more vulnerable and and so the older survival Tow the dietary laws. But I think


if you take that view and a variant on that is that ah, eating pork is or shellfish is bad for your health in times when there's not good refrigeration and et cetera. If that's true, if you take that anthropological perspective, there certainly isn't a case rather than say, Ah, hopefully or divine one. There's no case for people to keep kosher today, if that's your view, right?


No, I really don't, uh, way don't quite have to start from basis that we don't fully understand the world and rule that has survived a lot. A lot of time may have logic that we have a detective. You see, the idea that could say Well, not eating shrimp is because the impure maybe because of impure, maybe because it's goingto have dietary laws, maybe disciplines you elsewhere. I don't buy quite the the idea pork being salubrious. Therefore, similar collisions except for Christianity, the sport. The idea to me is probably deeper because the Greeks also living on same violent discipline. Yachts of the Egyptians instantly didn't have these actually love the North Africa heavy factory lost and came later. So I don't believe that you can be.

We should give a lot of reasons for these. You know, they should go back and say over they detected the hillbilly thing as necessary. Reason. It's a possible one, but you can never test it. We know that these religion had helped survival, and what never is related to survival is essential because there's a past dependence to do science, you must first survive.


I want owe us anything else about religion. I'm not I'm not, but because I want to switch gears in a minute. But if you want to add anything else, yes, listen, Christians know that I that I keep Jewish law. There's certainly parts of Jewish law that are not easy to accept, um, or to ah, just to view is rational. But as you say? I Look, I take the whole picture, okay? I don't choose one by one. And and the outcome for me has been very good.

That doesn't mean I don't mean the sense that very good that I've I'm rich. Sure, I'm healthier. Whatever. I find the practice of my religion deeply satisfying. Ah, and I and I'm and I'm toe libyan enough to say I can't then take one plank out of the boat and say, Well, this one doesn't make sense. I accept the whole thing with all of its flaws and outcome exposed is good for May.


You noticed once that you'll notice one thing that religions come as a package and you cannot take on select other way. It's not like political parties. You could be on the left with this respect. Tow more Shin bet on the right with respect. Oh, doesn't come that way. Religion come a simple block. You taken all or


leave it? You're either in the club. You don't know they're different clubs with different rules. So you can choose to that extent


even then. But Okay. But one thing that's ah misunderstood a cz. I started looking at it for a long time. For about 20 some years you're looking at a religion mostly because I'm interested Semitic languages and so many beliefs. Not so much initially in theology. Andi, I've noticed that people called religion very confused about what he called religion. And the following will try to explain to us the main difference between a C is about secularist. Why we should, you know, focus on secularism. About 80 is so the when when religion in you notice for the truce was initially Law s Oh, it's a legal system so But it was tribal initially and then later on, of course, expanded for the Arabs, for the Muslims religion waas law And then actually the word the in Arabic is,

ah law with if you use that and make use normals for law not Dean religion but Dean and Arabic means law and media. Now its place where law prevails and actually the name of state of Israel has many not and heroic city. It's Medina. So s so you realize that deed means law. Dean is the courthouse and you're taking law. That's basically it. It's unified body of law that you prescribed. That's religion that was religion. Now came Christianity. Christianity is fundamentally secular religion because from the Christ himself, okay, was was you know, I didn't really wanna have writing. It's moments. It was, he said,

gives Caesar what belongs to Caesar. So it's not like take less takeover and a Caesar. OK, so the idea, of course, Christianity, of course, evolved here. They're in tow, theocracies. But that is not fundamentally accommodate the notion of being a law. Okay, be quiet. When recently developed and it was absorbed by the Roman Empire developed within a system in which law was a Roman law. And I know the subject quite well. As I was interested in School of Long Book of Beirut,

which effectively we're was was where law was made. And then you can see how the documents there some pig and scholars were begin when, when Theodosius will be admitted, scold the main cold for the business for the Roman Empire. Later on the docs code, all they took his pagan Roman law and added the blessing couple of patients of blessing in the beginning. So it was not Shiring Assyria, and you know this that so that so Christianity was separation between church and state. From the beginning, the separation is what a lot of the model we're world to develop. And and a second, the secular approach. And the second thing I mentioned in the book that when you look at the behavior of people who should not look at what people say about how they behave, you notice that Ondas trapped it is called is appropriate e ist. If you look at the behavior of anyone, any creative and anyone within you know these branches of Christianity,

of course, you can't exclude the French ones like Scientology and all of that you will notice that when facing big decision they act the same way as a in atheist someone like, for example, that Pope and Richard Dawkins would go to the same hospital to get the same treatment. The difference is they would wrap it up differently. And then you notice also how people atheists go to a concert with their silent and meditate and then the cushions, you know, Goto mess. They're also doing the same thing that effectively, sometimes it snakes the same music. So the idea is you get when skin in the game the entire concept that skin the game is. Look at what people do, what? Not what people say. So that's what I have to


say about religion. But I don't understand that parallel. Precisely least I didn't understand what your takeaway. I understand my takeaway. My takeaway comes from David Foster Wallace, who says Everyone worships. We all have an urge to be part of something bigger than ourselves. Some people express that through their religion, some people express it through a concert. Some people express it to a sports team. Some people express it to a political party of a political movement and those that sense of belonging, that tribal sensible on use a very powerful part of who we are. So when I think about your point about, I'm expand on what you said in the book right there what you said just now, when the pope goes to the hospital, there's a lot of well wishers and prayers and and and believers who who hope thio get some kind of divine response but also goes the hospital. He doesn't just rely on the prayer,

and similarly, when Richard Dawkins goes to the hospital, he also goes to the hospital first. He also has well wishers. They don't think they're bringing divine intervention, but they're hoping that he turns out all right. And there's some sort of a community response among people who like his work. Just like there were people who like the pope. What's the point of those parallels? And what's that have to do? A skin in the game?

What is the meaning of "skin in the game"?

What people do is more meaningful than what people say.

"The pope talks like a religious person, but he acts like an atheist because he doesn't just rely on prayer. He actually goes to a doctor."
~ @EconTalker (Russ Roberts)

Okay, it has to do with the following the whole idea of skin in the game as our client and the prologue is, I don't really care what people think I care. What about when they knew? See, it's a action, not, you know what what comes behind as ornaments thought. There's ornament, I consider thought as just pure my grand furniture, and that may lead you to some action, and that's gonna get skin game is too weak to establish a difference. And the problems a lot of the pathologies that we have in the modern world, come from the fax that we forget that most everything that was developed and came from skin in the game. Not from thinking. Sometimes you can find thinking as justification, like we didn't develop the steam engine by looking at,

uh, the previous work with the Greeks had one model of know it came from developing it with our hands. So, in other words, that we live in a world that is a very easily capture by doing, but not easy to capture by thinking and thinking to me is developed. I mean, I of course I put a bullet in its proper context.


What are you saying? What are you saying? That the pope talks like a religious person, but he acts like an atheist because he doesn't just rely on prayer. He actually goes to a doctor.


Exactly. People doing things, how they would act in said circumstances. Andi, I noticed that the difference between a second question and a sector question, though, is a someone who is, uh, the Catholic unorthodox person. And an 80 s would be the same facing some actual. So therefore, I don't see the point of the 80 of them, you know, because of that,


I don't see that explain.


Okay. In other words, well, let's not focus on what people think Focus on what they do If you judge people of Martian observed the behaviour of atheists and secular questions he would observe the same behavior when it comes to things that matter.


And so you're saying that Are you suggesting that the pope is a hypocrite for going to the hospital?


That we have? Uh, we, uh,


under the atheist hypocrites for going to the concert because they're also religious.


No different. The that the idea of eight years of excited 80 years of assume that religion is literal on delusion is about about the criticism of religion by eight years. And then the thing the promotion of atheism assumes that the behavior of it's the thought that matters, not the behaviour on behavior. Question this pretty much the one that easy would like people. You see, that was my point is that I'm gonna say is that religion historically was a much skin in the game. So the gods did not like to talk. So they like, uh, you know, they're, like, youto be able do something. So you had to offer sacrifice on dit was a great model than the past because I forced you into sacrifices and there's something that stayed with us. That talk's cheap from that and in behavior. Another thing I'm gonna say religion is.

I saw a thought for a long time. Why the question? Religion insisted on the Christ being Ah, both man and God. And the fact is, he has gonna gain by being man and people respect. Those was kind of the game. Has he been gone? Didn't have suffered. And and, uh and I noticed, for the lot of people who have scars effectively are exhibiting. There's gonna game. They're not empty bureaucrats or something. Like what I call an empty suit in the book and you live in an empty suit if you feel the arm by an ISI. And I observed how Trump goes most of this.

Ah, appeal. We're old during the Republican primary when I was standing next to people and he looked really because he lost money because his his adversaries were saying, Well, he lost so much money made him really is much better than someone who lives in cyberspace prescribing memos. You see, Andi, American public understood that something that the intellectual didn't get that America is not about talking is about doing and losing money is is a evidence that you are in a doing business on a document.


Look the claim is in Silicon Valley that I don't know if it's still true. But he used to be the claim that if you'd gone bankrupt, if you had a start up, that failed even better a couple that maybe it was easier to raise money because then you've really shown the it had scars carrying those around with you. You learn something, and then in theory, now you could go off and be successful. Course doesn't necessarily follow, but ah,


but But that's I mean warriors. Ah, trying to show off their scars and these currents, I mean visibly. Our sign of people don't think that these air sign of the confidence. So, look, you know he has carte is not good, isn't good warrior like the other person who escaped no scars means that you're in business and and that makes people that creates an appeal. So the suffering of the Christ of Christ are part of that. So I have these things on theology that are sort of counterintuitive and the but that that allowed me to engage in few discussions with people into these saints into theology.


Like the line I have in the in the book from the Spartan Mother, the mother of Sparta, who says to her son, Come back with your shield or on it. Uh, that That's an incredibly powerful way to think about skin in the game, right? Don't you said? You know, if you run away, you can run faster without your shield your mom doesn't want you see at home without your shield.

Who should we fail and who should we bail?

It depends on the probabilistic outcomes and the value of one's output to our society.

For example, on one hand, we should not fail doctors who have made a mistake because we need good doctors to keep doing their job, mostly well. On the other hand, if a doctor is making mistakes over and over again, we should stop them from hurting people.

At the same time, if a restaurant in the neighborhood is failing because of low quality, we should let them fail and let a better restaurant take its place. The downside of letting a restaurant fail is much less than that of a doctor.

Yeah, society's put a huge premium on individual courage, particularly when it came courage not to gamble in the casino or throw yourself off a cliff, but courage in orderto to help others in battle and protecting something larger than you. I


want to talk about the modern challenge that skin in the game faces. I don't think we've talked about before, which came up to me and says, Read the book down for the second time. You give the example of of Ah, Hammurabi's code, where a builder, if the house collapses that the builder built the house, the the builder is is put to death, I think. Is


that right? Yeah. Yes, it is another that prevents the builder from having given risks


in the foundation, right, because the building knows more than the buyer. There's this asymmetry of knowledge, and so to prevent the builder from taking advantage that cutting corners and making a flawed building. Uh, I I remember correctly. Maybe I'm wrong, but the building collapsing, killing somebody does.


Exactly. And and also there's a symmetry. If it kills the firstborn son of the owner, the first born son of the architect is put to


death. So in our modern world, I would argue, we've moved increasingly away from skin in the game. Uh, the welfare state is an example of it. Yeah, bailouts that we have are examples of it we don't like. A lot of us are uncomfortable with this idea of skin in the game. And when I given how appealing it is to you, and somewhat too, may I'm thinking also, why is that? And one answer is, of course, that it's not. Buildings don't just collapse because you cut corners.

They collapse because bad lock or hurricane, a lot of things happen outside the control of the of the architect of the builder. The idea of executing him for something that isn't his fault doesn't sit so well with us. So we love do overs. We love giving people a second chance. We love extra credit homework to get you bring your grade up and all these things and course. This encourages people to act imprudently. It has all kinds of costs, but the other side is also someone unpleasant to people.


No, but I mean the medicine on guy and a single second chapter course of second chapter. I discussed the case of medicine. If you gonna it's a medicine. It's a doctor amputating the wrong leg. You have to amputate the one of the doctors, like, you know, because we start looking at things. Statistically, Onda we have looked at medical performance by doctors or risk, you know, caused by doctors. Statistically, I mean even do it once. That's fine. If you do it twice,

maybe 1/3 time, where you're gonna be in trouble. You see, So the architect coming, one person maybe definitely needs to be penalized. But let's go back to a central idea that you have Detective. Very few economists have detected again in the history of literature and the pressure of economics, we could only find two or three papers on a subject that is as follows. Uh, the most of economics is perceived to be incentives and disincentives. So skin in the game would be centralized, People that say well and also disincentivize them. But that's not it. No skin in the game for me is about feel free. It's evolution. You cannot have evolution if you don't ask him in the game.

In other words, you're filtering people out of the system, and I gave the example of bad drivers. Now, why is it that on a highway when I drive on the highway and I rarely encounter people who are, you know, Noah up your car on dry, they crazily killed 30 people. Why doesn't attack? Well, it doesn't happen because bad drivers kills themselves partly because they could themselves and also partly because, okay, we catch him. We take away that we filter amount of system by taking away their, uh, the driver's license.

Uh, and we're gonna, uh, doing that for those who have survived. So the FBI, this is filtering filtering is necessary for the some training of nature said necessary for functioning of anything. And that's called evolution. Now restaurants. If you allow bad restaurants to survive soon, you know you'd be eating cafeteria food and immortal cafeterias because basically, university cafeterias are more cold, icy seas Malek state, you know, executions. So the wares we have the pressure in New York has great food. I get my squealing in places because they're total.

Okay, so that's all time now, that point of skin in the game, you pointed out of paper to me, and then I found another couple. And making that economics is about that. If you put evolutionary shelters, you get the same behavior as this. People were irrational. Uh, would you like to comment on that?


Yes. So I'm gonna back up a little bit, because when we did this interview last August on this related this topic came up and you said skin of the game's a disincentive and I said, Yeah, it's not just you get rewarded if you do well, but you get punished, you do badly on. I totally misunderstood your point. Your point is that you don't have to be quote rational as individual, the normal idea of skin in the game. So let me try to restate that What I think of it as an economist, the normal idea of skin in the game is what economists call incentives. So if I know I can get rich, I'm gonna try really hard. If I know I could lose my money, I'm gonna be cautious. And your point is that even if you're not aware of those incentives,

even if you ignore the incentives, people who are who are wise and make good investments are going to be around because they don't hit that absorbing barrier. And people who make bad investments are gonna be wiped out and be taken out of the pool. And that is a very different level of rationality. My called meta rationality or systemic elective collective selective rationality. Systemic rationality


here, one footnote on Russia for continue that. For that. The other problem that I have in my chapel on minority with our collective behavior. It's a visual behavior that you could easily have. You could easily have what you define us. A rational people,


okay, rational or irrational,


irrational people. You could find irrational t the way you want. And could there collect? The collective may behave in how you may define as rational, so so collective behavior doesn't flow from some A naive, you know, athletic some of visual behavior because of fundamentalist cemeteries built into


it. So has very let's burn in Smith's point, right? Vernon Smith, who got,


of course, of course, of course,


who got the Nobel Prize with at the same time, his condom and con was saying, People do well these irrational things and burn it. Smith's point was sure, they dio. But the market encourages, as through the partly this filter of what we might call profit and loss or survival on driving the market is going to be rational because it's going to punish people even if they're not paying attention. If they're not being a dick, sure, they're gonna be punished. It doesn't matter that they have to notice if eventually.


Actually, I have another argument, which is Ah, brought in a book that the market is not driven by the athletic summer participants. But the most motivated buyer says the minority rule, which we discussed last time. And if you look at it based on minority rule, that we realize that you can't really study the behavior original, got any inference about be able of the market? So that's one thing about rationality, and I've seen even beyond the market. When you say that humanity humans being having if the humans collectively each one has makes a mistake of say, for example, be having intransitive preferences. You prefer apple two oranges, oranges, two pairs.

But there's store apple, whether sequentially or medium stuff like that. Collectively, it doesn't mean that the whole world will be have this right. The thing watch out so beautifully in an aggregation on. But that's quite central beyond markets. Because when we look at society's what's individual, when we look at the self machine versus other form of more collective form of ah, you know, Uh ah, preference. I mean behavior. So you have you have a mathematically you can see that very clearly if you do the mathematics and that's what ah, what I regret. I regret the problem with all these constant. Only all these, uh, lunging consequences taken by economists make no sense. Ah, when you can't collective versus individual


and that the paper I sent you that you referenced his paper Gary Backer Road a long time ago, I think in the 1962 can remember the year, but Gerry's gone, alas, But he wrote a paper that I thought was kind of a silly paper. As a graduate student at that, I could take anything of your backers. A silly, but I've never understood it. Which was that even if people don't make rash, even if people aren't utility, maximize er's when prices change when prices go up, they're more likely to buy less of something simply because the domain, which they can choose from has gotten smaller and the example he gives it. Let's assume people choose randomly. There's no rationality. They're not maximizing anything.

Just choose randomly shows that people just just randomly, they're more likely to shoes less of something when this price goes up on more of something when it's price goes down. And he used that as a justification for demand curbs, despite the fact that you might not find utility maximization very palatable. And that's part of what you're saying. You're saying individuals could be erratic, but the system is going to purge people, make bad decisions and and enhance their survival. The people who make happen, perhaps by random choice,


she m. Sunday did something on your intelligence agents on Dhe when he called. It was it was, uh It was like a big population of time. A wonderful idea is as follows you have. You can have your intelligence players and very intelligent to the market.


Yeah, it's crazy. Let's talk for a minute about inequality. Ah, you make the point in the book. Which reminds me a little bit of the points we talked earlier about probability over time. Boris is at a point in time. You talk. You argue in the book that the way people are looking at inequality is wrong, that they should look at lifetime incomes. And if they do that, they'll see the people move in and out of different classes of income over the course of a lifetime and that therefore there's no such thing. Is the rich or the middle class? Is that accurate way to describe what you're


saying? Yes, exactly. I mean the problem of looking the measures of any quality. We have our furtively on probably inequality. Another one. You take the All Americans. Andi, look at the how much the winner controls on dso eso, he say the top 1% has 50% of wealth and things like that, let's have a revolution and missed axel. But when people don't get is an actual statistics that 10% of Americans will spend one year and 1% some like that about half of Americans will spend one year in the top 10% on the way to analyze inequality is not is exactly the same as the dynamic probability of ruin. You gotta look at it over time is you're like, over your lifetime. Of course, you're gonna spend years not making money. You're gonna be in the bottom and that you go spend years making,

have sometimes spend some time making a lot of money. So the way you look at the health of the country isn't in s o much in the opportunity toe rise, OK? Or the opportunity to o R. Number of people are middle class is in the probably losing your status of top dog, you see, and nobody. I mean very few people Look at it that way. For example, take the Forbes 500 of 1985 versus 2015. You'd be shocked 30 years later. Very small proportion like that. Something like then something percent of families were both see, So we have a you have an engine in America to destroy the very strong. Although it creates inequality and does also create opportunity, an opportunity is not.

I mean, the If someone rises, someone at the top has to fall, and it's easy to fall in America. Take France and you get shockingly distressing results that effectively, the the you know, some people stay in same class or the rights you know, the upper middle class of civil servants or friends of the state civil servants. Or has this company's really states? Once you did the you know you study at certain diversity is you're done for, like you have that effect in America. But those who rise are usually those who come from out of nowhere. And if you take Florence and you'll notice that the places you know the wealth in medieval times was in the same families as the wealth is filed today, okay, largely so so. People discuss mobility a nicely and I So I just proposed the measure of inequality based on transition probability.

It's completely different approach, and it will give you much throws your image of America. Now, another interesting thing that comes with America. The house of companies. The same applies to corporations in America today. The corporation tend to stay 12 years on average, uh, in the S and P 500. And that's very good news. It is very good news. Okay, look in Europe. What happens when companies becoming cozy with state managed toe stick around, See, So the it's the same thing.

We gotta look at the same thing from a standpoint of inequality, unless there are other metrics and inequality, very technical in measurements of genies and stuff said that are not right. In other words, people give you the illusion that these have been growing over time. When they be, it may be just around computation.


You know, I like to point out that if you go back to, say, 1985 some of the people in the top 1% weren't even born today in the top 1% today weren't even born in 1970 or 1975. But having said that,


you know what they're talking about. Families, families


and their families were we're not.


60% is dominated by families,


so I'm sympathetic to your point. His listeners will know. I'm very I think It's very important. Remember that people could move in and out of different levels of income. But I do think, uh, being financially well off myself. Ah, I think my Children, I have a lot of advantages that other Children don't have. And it's not just Jeanette some of its genetic, you know, my kids have pretty good genes, I think, but they also have certain opportunities, connections. I've made things I've been able to teach them that we're gonna make it more likely that they do not fall into the same bottom half of the income distribution and people in the bottom half.

We're going to struggle to get into the top half because they don't have some of the advantages that my Children happen. And people have gone so far with this to say it's it's immoral. Just go to an extreme here. It's a moral to read to your kids before they go to bed because it gives him an edge of leg up on the competition. I that pulse okay, that Repulses me, but But I do accept the point that there is some Ah ah, it's a much smaller chance for my Children to get into subsist to fall into subsistence poverty, say something in the bottom half of the income distribution. They they start far from it, and they have certain advantages that keep them from it. So I think there are some issues there. I do think the most important thing to keep in mind is I think that people want to get ahead. They don't necessarily want to get ahead of others. And I think we should always discourage the natural human urge to get ahead of others rather than just ahead. But,

ah, that there is some. There are some challenges, I think, in the American system today, that make it harder for people to be to be upwardly mobile, that that I think are bad.


You will encounter a problem that I didn't put in a book. But But I may in the future remain some other uh, look all right, is it? Which is that what you consider is a unit? So the remedy for that is, if much. If if I cannot transmit my wealth to my Children, what's my motivation? Why do I have to work? I'm working to give them a better future. So it is the efforts. Now, what is the unit If you consider a less modern modernity, that individual is a unit. Then, of course,

it's unfair because my Children are going to get more money than others. But if I consider that the unit is my family and my bloodline, everything as I do all right and therefore, you know, depriving me of the possibilities transmitting my wealth because your Children are part of you. You see if they're hurt, it's worse than if you're hurt. You see how come? How can't you give him your money? So you got to think along these lines. And I've been doing a lot of thinking. I didn't put it fully in a book. About one of the definition of a unit is a unit. You unit. You tried his unit. You're in.

Your descendant is unit. You, when you're tells, is in it. You When members of the Stanford we're club, you know, for economic inside full economic discussions, what is what is your unit and and your inability to transmit toe? Transmit some of what you have for your unit because you feel that that's you All right is a limitation that no government should be allowed to make without, you know that without further, you know, investigation or more deeper, thinking about the problem.


Well, the other point I want to make is that we shouldn't just care about how much stuff we have. Obviously stuffs important. But what we really clear about, I think is a supporter shrink and your skills.


Yeah, plus another thing. I've noticed all these discussions about inequality don't come from people who are the bottom of the the pyramid. They come from people professors of common. Not you, of course, but left wing professors of economics who feel they're making a lot of money. But the they're envious of the richer and and And I sided law of papers from going all the way from from the ancients tow the modern or less model that we have. People are jealous of people around them. So the envious. So if you ask someone bottom of you know what would you like that? Like a better fridge? Ah NIU Ah, no car on gets it. But if you ask someone professor of professor at Harvard. You know, when something sociology at Harvard.

But they'd like they would like their neighbor could be poor, you see. So this is because it's sort of the little It's the gold medal. Exactly. Zia Silver Model Metal who is hates a gold medal PC When that


charitable view of our some of her of my fellow academics although they're not in the Stanford Club for insightful economic discussions, that's a club I'm definitely going to start. We're gonna have t shirts I love that s C I e d. Before we finish, I just want to add one challenge. Tunis The sandwich is not Ah just came to me, which is you were talking about the filtering power of of skin in the game. And yet we do want that restaurant restauranteur to come back and make the second restaurant better. We do want Bill Belichick after city, Cleveland not to be wiped out. We're going to come back and try again. And then entrepreneur in Silicon Valley, you as the three failures, we don't say up, you're out of the club, so it is a lot more complicated.


It is. It is, and it's not. In other words, the fact is, ah, and the beauty of the idea of skin in the game is that you should have the same, like when you drive, you have the same risk as you inflict on others. And that was the symmetry of the architect and Hammurabi's code. Is that the year the you inflict on others you also afflicted


to yourself. You see your own sulking, exile you so


it's so exactly social. So for Taylor risks, this works effectively and for medium risk. Of course you survived. Your everybody survives, so it's not. You're not afflicting any big danger on others. You see, in the previous discussion that's gonna game. As I spoke about people being morally calibrated, the most people matures. Everybody's morning calibrated. You see this removing the tail risk, preventing me from coming back if they inflict a lot of risk on others. Like, for example, more years everyone traditionally society has.

We are where we are today because warriors are in battle, you see. So if you're a complete ah ah, uncontrollable warmongers, like many people in Washington today, or some journalists, and many think that people you would end up dying in battle and these people don't die in battle. So that's what I meant. The restaurant owner, of course, is gonna be filtered or the theme is gonna be filtered. Okay, He won't have a bad restaurant and kept up the house, but he's not inflicting undue risk on others. He's only afflicting risks on his investors and himself. And eventually, you know, if she's really bad had run out of money,


which is sufficient punishment. He's not executed. Yeah, unless he kills people to food poisoning.


It's a sport he would be,


Um well, let's close with the following that. We, um I can't remember. I didn't check what year we did our first interview, but it's some while back in 2007 and it was about the Black Swan, which is a book I liked. As I said, the last time we talked actually like food by randomness. Better it's it's built by randomness, is remains one of my all time favorite books. He wrote that book a long time ago, I think, he said almost 20 years ago, and a set of other books just sort of emerged. Um, without planning,

the The Black Swan came next, and then you had, um, I think he had the better perk. Rusty's is the seven aphorisms from your Twitter experience than you had anti fragile. Uh, and now you've got skin in the game and you call this entire project near 30 in Certo. I want to pronounce it correctly. Uh, and I don't know what in Sarto means. By the way. What is it, sir to


mean? Flirt with the intellect? Um,


okay, So you have explored through a set of books and papers an hour for me, Our conversations, a topic that is inherently unknowable, which is uncertainty, but one can get better. Understandings of it is you think about it more more. And my question is, Are you done? Is this the last book? This is the last book of Insert Toe. Is there another book in the works? Are you gonna count? Sure. Are you gonna You gonna go? Uh, not your counter royalties, which are quite quite nice.


It is answered. Let me is so. The subtitle for the uncertainty is an investigation of luck, uncertainty, probability, opacity, human error, risk disorder, and especially decision making in a world we don't understand. Okay, so it's about eso. If it's about things we don't understand and how to make decisions Well, visibly, the set is going to expand overtime, and I mean, write another book. I think I have an idea what I'm gonna be right next.

But I'd like to take a break. The writing doesn't bother. What really bothers me is the book doors. When you become a marketer other than being a producer and I'm not, you know, there's something about marketing that makes me feel like I'm doing something. I'm betraying my because you're spending time away from you're really work. So I don't like book tours or not too much. But I like conversation with you because, as I told you, every time I have a conversation on the Comstock and also skin in the game of work from Beacon talk, there's a symmetry I need to get back. So, uh, the so So this is what what really scares me about writing the book is the packaging of it. Not so much the composition,

but I've been writing papers in the meanwhile and papers are booked or free. There's no paper tour. We'll see. I mean, I could have paper tours, but, uh, but I don't have to do it. I just posted that


have a great idea for you. I think for your next book. If there is one, you tell your publisher I'm not going to do any touring. All I'm going to do the Onley promotion will be to make my ninth appearance on E Contact.


But I believe it or not, that's what I told him for this book.


And then that way your publisher has an enormous incentive to help promote E contact because your publisher will have skin in the game with me, which I think this is phenomenal.


You don't know, publisher. This is what I told actually almost what I told them. I thought I'm gonna do a few appearances with friends and I said, Well, book, tour. And guess what We put the book on Embargo. Now it's an embargoed. But then they came up with a list of things. They want me. Oh, uh, you know, I don't know. They want to send me here. They're pumped with journalists. No eso. So I'm not really? Yeah, I told him no book tour and they still gave me a book tour.


It's just a diminutive one. Now it's a short book tour. Hopefully keep keep up the good work. My guest, my guest today has been a same Nicholas Taleb Nassim is always a pleasure.


Great, thank you very much, But


this is E con talk, part of the Library of Economics and Liberty for Maury. Contact body contact dot org's where you can also comment on today's podcast and find links and readings related to today's conversation. Sound engineer. Free contact is rich guy, yet I'm your host, Russ Roberts. Thanks for listening. Talk to you on Monday.

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