Nicholas Nassim Taleb
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Nassim Nicholas Taleb (; alternatively ''Nessim ''or'' Nissim''; born 12 September 1960) is a Lebanese-American essayist, mathematical statistician, former option trader, risk analyst, and
aphorist An aphorism (from Greek ἀφορισμός: ''aphorismos'', denoting 'delimitation', 'distinction', and 'definition') is a concise, terse, laconic, or memorable expression of a general truth or principle. Aphorisms are often handed down by trad ...
whose work concerns problems of
randomness In common usage, randomness is the apparent or actual lack of pattern or predictability in events. A random sequence of events, symbols or steps often has no order and does not follow an intelligible pattern or combination. Individual rand ...
,
probability Probability is the branch of mathematics concerning numerical descriptions of how likely an Event (probability theory), event is to occur, or how likely it is that a proposition is true. The probability of an event is a number between 0 and ...
, and
uncertainty Uncertainty refers to epistemic situations involving imperfect or unknown information. It applies to predictions of future events, to physical measurements that are already made, or to the unknown. Uncertainty arises in partially observable or ...
. ''
The Sunday Times ''The Sunday Times'' is a British newspaper whose circulation makes it the largest in Britain's quality press market category. It was founded in 1821 as ''The New Observer''. It is published by Times Newspapers Ltd, a subsidiary of News UK, whi ...
'' called his 2007 book '' The Black Swan'' one of the 12 most influential books since World War II. Taleb is the author of the ''Incerto'', a five-volume philosophical essay on uncertainty published between 2001 and 2018 (of which the best-known books are ''The Black Swan'' and ''Antifragile''). He has been a professor at several universities, serving as a Distinguished Professor of Risk Engineering at the
New York University Tandon School of Engineering The New York University Tandon School of Engineering (commonly referred to as Tandon) is the engineering and applied sciences school of New York University. Tandon is the second oldest private engineering and technology school in the United Sta ...
since September 2008. He has been co-editor-in-chief of the academic journal ''Risk and Decision Analysis'' since September 2014. He has also been a practitioner of
mathematical finance Mathematical finance, also known as quantitative finance and financial mathematics, is a field of applied mathematics, concerned with mathematical modeling of financial markets. In general, there exist two separate branches of finance that require ...
, a
hedge fund A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as sho ...
manager, and a
derivatives The derivative of a function is the rate of change of the function's output relative to its input value. Derivative may also refer to: In mathematics and economics * Brzozowski derivative in the theory of formal languages * Formal derivative, an ...
trader, and is currently listed as a scientific adviser at
Universa Investments Universa Investments ("Universa") is an American investment management firm headquartered in Miami, Florida. It is known as a Black Swan fund that focuses on risk mitigation to protect investors from sharp market downturns. Background Univ ...
. Taleb criticized the risk management methods used by the finance industry and warned about financial crises, subsequently profiting from the late-2000s financial crisis. He advocates what he calls a "black swan robust" society, meaning a society that can withstand difficult-to-predict events. He proposes what he has termed "
antifragility Antifragility is a property of systems in which they increase in capability to thrive as a result of stressors, shocks, volatility, noise, mistakes, faults, attacks, or failures. The concept was developed by Nassim Nicholas Taleb in his book, '' ...
" in systems; that is, an ability to benefit and grow from a certain class of random events, errors, and volatility as well as "convex tinkering" as a method of scientific discovery, by which he means that decentralized experimentation outperforms directed research.


Early life and family background

Taleb was born in
Amioun Amioun ( ar, أميون, translit=Amyūn, gr, Αμιούν) is the capital of the predominantly Greek Orthodox Koura District (i.e. χώρα, "country" in Greek) in the north of Lebanon. Etymology The town of Amioun derives its name from the Ar ...
,
Lebanon Lebanon ( , ar, لُبْنَان, translit=lubnān, ), officially the Republic of Lebanon () or the Lebanese Republic, is a country in Western Asia. It is located between Syria to the north and east and Israel to the south, while Cyprus li ...
, to Minerva Ghosn and Nagib Taleb, a
physician A physician (American English), medical practitioner (Commonwealth English), medical doctor, or simply doctor, is a health professional who practices medicine, which is concerned with promoting, maintaining or restoring health through th ...
/
oncologist Oncology is a branch of medicine that deals with the study, treatment, diagnosis and prevention of cancer. A medical professional who practices oncology is an ''oncologist''. The name's etymological origin is the Greek word ὄγκος (''ó ...
and a researcher in
anthropology Anthropology is the scientific study of humanity, concerned with human behavior, human biology, cultures, societies, and linguistics, in both the present and past, including past human species. Social anthropology studies patterns of behavi ...
. His parents were of Antiochian Greek descent, holding
French citizenship French nationality law is historically based on the principles of ''jus soli'' (Latin for "right of soil") and ''jus sanguinis'', according to Ernest Renan's definition, in opposition to the German definition of nationality, ''jus sanguinis'' ( ...
. His grandfather, , and his great-grandfather, , were both deputy prime ministers in the 1940s through the 1970s. His paternal grandfather Nassim Taleb was a supreme court judge and his great-great-great-great-grandfather, Ibrahim Taleb (Nabbout), was a governor of Mount Lebanon in 1866. Taleb attended a French school there, the
Grand Lycée Franco-Libanais The Grand Lycée Franco-Libanais (GLFL) is a prestigious French lycée in the Achrafieh district of Beirut, founded in 1909 by the Mission laïque française. The institution leads as the flagship of the French lycées operating in Lebanon. It is ...
in Beirut. His family saw its political prominence and wealth reduced by the
Lebanese Civil War The Lebanese Civil War ( ar, الحرب الأهلية اللبنانية, translit=Al-Ḥarb al-Ahliyyah al-Libnāniyyah) was a multifaceted armed conflict that took place from 1975 to 1990. It resulted in an estimated 120,000 fatalities a ...
, which began in 1975. He is a
Greek Orthodox Christian The term Greek Orthodox Church (Greek: Ἑλληνορθόδοξη Ἐκκλησία, ''Ellinorthódoxi Ekklisía'', ) has two meanings. The broader meaning designates "the entire body of Orthodox (Chalcedonian) Christianity, sometimes also call ...
.


Education

Taleb received his bachelor and Master of Science degrees from the
University of Paris , image_name = Coat of arms of the University of Paris.svg , image_size = 150px , caption = Coat of Arms , latin_name = Universitas magistrorum et scholarium Parisiensis , motto = ''Hic et ubique terrarum'' (Latin) , mottoeng = Here and a ...
. He holds an
MBA A Master of Business Administration (MBA; also Master's in Business Administration) is a postgraduate degree focused on business administration. The core courses in an MBA program cover various areas of business administration such as accounti ...
from the
Wharton School The Wharton School of the University of Pennsylvania ( ; also known as Wharton Business School, the Wharton School, Penn Wharton, and Wharton) is the business school of the University of Pennsylvania, a private Ivy League research university in P ...
at the
University of Pennsylvania The University of Pennsylvania (also known as Penn or UPenn) is a private research university in Philadelphia. It is the fourth-oldest institution of higher education in the United States and is ranked among the highest-regarded universitie ...
(1983), and a PhD in
management science Management science (or managerial science) is a wide and interdisciplinary study of solving complex problems and making strategic decisions as it pertains to institutions, corporations, governments and other types of organizational entities. It is ...
from the University of Paris (Dauphine) (1998),BBK, 2015, "Our staff: Helyette Geman, PhD Students, Past Students," at
Birkbeck, University of London , mottoeng = Advice comes over nightTranslation used by Birkbeck. , established = , type = Public research university , endowment = £4.3 m (2014) , budget = £10 ...
, Dept of Economics, Mathematics and Statistics, se

an

accessed 7 May 2015.
under the direction of Hélyette Geman. His dissertation focused on the mathematics of derivatives pricing. According to a profile in ''
Le Monde ''Le Monde'' (; ) is a French daily afternoon newspaper. It is the main publication of Le Monde Group and reported an average circulation of 323,039 copies per issue in 2009, about 40,000 of which were sold abroad. It has had its own website si ...
'', Taleb claims to read in ten languages.


Finance view

Taleb has been a practitioner of
mathematical finance Mathematical finance, also known as quantitative finance and financial mathematics, is a field of applied mathematics, concerned with mathematical modeling of financial markets. In general, there exist two separate branches of finance that require ...
, a
hedge fund A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as sho ...
manager, and a
derivatives The derivative of a function is the rate of change of the function's output relative to its input value. Derivative may also refer to: In mathematics and economics * Brzozowski derivative in the theory of formal languages * Formal derivative, an ...
trader. He is a scientific adviser at
Universa Investments Universa Investments ("Universa") is an American investment management firm headquartered in Miami, Florida. It is known as a Black Swan fund that focuses on risk mitigation to protect investors from sharp market downturns. Background Univ ...
. Taleb considers himself less a businessman than an
epistemologist Epistemology (; ), or the theory of knowledge, is the branch of philosophy concerned with knowledge. Epistemology is considered a major subfield of philosophy, along with other major subfields such as ethics, logic, and metaphysics. Episte ...
of
randomness In common usage, randomness is the apparent or actual lack of pattern or predictability in events. A random sequence of events, symbols or steps often has no order and does not follow an intelligible pattern or combination. Individual rand ...
, and says that he used trading to attain independence and freedom from authority. He was a pioneer of tail risk hedging (now sometimes called "black swan protection"), which is intended to mitigate investors' exposure to extreme market moves. His business model has been to safeguard investors against crises while reaping rewards from rare events, and thus his investment management career has included several jackpots followed by lengthy dry spells. He has also held the following positions:Nassim Nicholas Taleb's Home Page
"Official Academic Biography"
at ''fooledbyrandomness.com'' (online), accessed 9 May 2015.
managing director and proprietary trader at Credit Suisse
UBS UBS Group AG is a multinational Investment banking, investment bank and financial services company founded and based in Switzerland. Co-headquartered in the cities of Zürich and Basel, it maintains a presence in all major financial centres ...
, worldwide chief proprietary arbitrage derivatives trader for
currencies A currency, "in circulation", from la, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general def ...
,
commodities In economics, a commodity is an economic good, usually a resource, that has full or substantial fungibility: that is, the market treats instances of the good as equivalent or nearly so with no regard to who produced them. The price of a comm ...
and non-dollar fixed income at
First Boston : ''For the company after its acquisition by Credit Suisse, see Credit Suisse First Boston (known as CSFB and CS First Boston)'' The First Boston Corporation was a New York-based bulge bracket investment bank, founded in 1932 and acquired by Cr ...
, chief currency derivatives trader for
Banque Indosuez Banque Indosuez was a French bank, the product of the 1975 merger of Banque de l'Indochine and Banque de Suez et de l'Union des mines. It was purchased by Crédit Agricole in 1996, and formed the core of what is now Crédit Agricole Corporate an ...
, managing director and worldwide head of financial option
arbitrage In economics and finance, arbitrage (, ) is the practice of taking advantage of a difference in prices in two or more markets; striking a combination of matching deals to capitalise on the difference, the profit being the difference between the ...
at
CIBC Wood Gundy CIBC Wood Gundy is the Canadian full-service retail brokerage division of CIBC World Markets Inc., a subsidiary of the Canadian Imperial Bank of Commerce (CIBC). Through its network of over 1,000 investment advisors working in 80 locations acros ...
, derivatives arbitrage trader at
Bankers Trust Bankers Trust was a historic American banking organization. The bank merged with Alex. Brown & Sons in 1997 before being acquired by Deutsche Bank in 1999. Deutsche Bank sold the Trust and Custody division of Bankers Trust to State Street Corpor ...
(now
Deutsche Bank Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Sto ...
), proprietary trader at
BNP Paribas BNP Paribas is a French international banking group, founded in 2000 from the merger between Banque Nationale de Paris (BNP, "National Bank of Paris") and Paribas, formerly known as the Banque de Paris et des Pays-Bas. The full name of the grou ...
, independent option market maker on the
Chicago Mercantile Exchange The Chicago Mercantile Exchange (CME) (often called "the Chicago Merc", or "the Merc") is a global derivatives marketplace based in Chicago and located at 20 S. Wacker Drive. The CME was founded in 1898 as the Chicago Butter and Egg Board, an a ...
and founder of
Empirica Capital Empirica Capital LLC was a hedge fund founded in 1999 by Nassim Nicholas Taleb in partnership with Mark Spitznagel, that used Taleb's black swan strategy. The firm closed in 2005 as Taleb took time off for health reasons. The investment strategy ...
. Taleb reportedly became financially independent after the crash of 1987 and was successful during the
Nasdaq The Nasdaq Stock Market () (National Association of Securities Dealers Automated Quotations Stock Market) is an American stock exchange based in New York City. It is the most active stock trading venue in the US by volume, and ranked second ...
dive in 2000 as well as the financial crisis that began in 2007, a development he attributed to the mismatch between reality and statistical distributions used in finance. After that crisis, Taleb became an activist for what he called a "black swan robust society". an
Additional archive
accessed 7 May 2015.
Since 2007 he has been a Principal/Senior Scientific Adviser at
Universa Investments Universa Investments ("Universa") is an American investment management firm headquartered in Miami, Florida. It is known as a Black Swan fund that focuses on risk mitigation to protect investors from sharp market downturns. Background Univ ...
in
Miami, Florida Miami ( ), officially the City of Miami, known as "the 305", "The Magic City", and "Gateway to the Americas", is a East Coast of the United States, coastal metropolis and the County seat, county seat of Miami-Dade County, Florida, Miami-Dade C ...
, a fund based on the "black swan" idea, owned and managed by former Empirica partner
Mark Spitznagel Mark Spitznagel (; born March 5, 1971) is an American investor and hedge fund manager. He is the founder, owner, and chief investment officer of Universa Investments, a hedge fund management firm based in Miami, Florida. In a 2007 ''
Wall Street Journal ''The Wall Street Journal'' is an American business-focused, international daily newspaper based in New York City, with international editions also available in Chinese and Japanese. The ''Journal'', along with its Asian editions, is published ...
'' article, Taleb claimed he retired from trading in 2004 and became a full-time author. He describes the nature of his involvement as "totally passive" from 2010 on.Nassim Nicholas Taleb's Home Page
Business Positions
at ''fooledbyrandomness.com'', accessed 24 May 2015.


Academic career

Taleb changed careers and became a mathematical researcher, scholar and philosophical essayist in 2006, and has held positions at NYU's
Courant Institute of Mathematical Sciences The Courant Institute of Mathematical Sciences (commonly known as Courant or CIMS) is the mathematics research school of New York University (NYU), and is among the most prestigious mathematics schools and mathematical sciences research cente ...
, at
University of Massachusetts Amherst The University of Massachusetts Amherst (UMass Amherst, UMass) is a public research university in Amherst, Massachusetts and the sole public land-grant university in Commonwealth of Massachusetts. Founded in 1863 as an agricultural college, it ...
, at
London Business School London Business School (LBS) is a business school and a constituent college of the federal University of London. LBS was founded in 1964 and awards post-graduate degrees (Master's degrees in management and finance, MBA and PhD). Its motto is " ...
, and at
Oxford University Oxford () is a city in England. It is the county town and only city of Oxfordshire. In 2020, its population was estimated at 151,584. It is north-west of London, south-east of Birmingham and north-east of Bristol. The city is home to the ...
. He has been Distinguished Professor of Risk Engineering at
New York University Tandon School of Engineering The New York University Tandon School of Engineering (commonly referred to as Tandon) is the engineering and applied sciences school of New York University. Tandon is the second oldest private engineering and technology school in the United Sta ...
since 2008. He was Distinguished Research Scholar at the Said Business School BT Center,
University of Oxford , mottoeng = The Lord is my light , established = , endowment = £6.1 billion (including colleges) (2019) , budget = £2.145 billion (2019–20) , chancellor ...
from 2009 to 2013. Taleb is co-Editor in Chief of the academic journal ''Risk and Decision Analysis'' (since September 2014), jointly teaches regular courses with
Paul Wilmott Paul Wilmott (born 8 November 1959) is an English researcher, consultant and lecturer in quantitative finance.Lecture Page
at ''fooledbyrandomness.com'' (online), accessed 9 May 2015.
and occasionally participates in teaching courses toward the
Certificate in Quantitative Finance Following is a partial list of professional certifications in financial services, with an overview of the educational and continuing requirements for each; see and :Professional certification in finance for all articles. As the field of finan ...
. He is also co-faculty at the
New England Complex Systems Institute The New England Complex Systems Institute (NECSI) is an independent American research institution and think tank dedicated to advancing analytics and its application to the challenges of society, and the interaction of complex systems with the envi ...
. In late 2015, Taleb, Robert J. Frey and
Raphael Douady Raphael Douady (born 15 November 1959) is a French mathematician and economist. He holds the Robert Frey Endowed Chair for Quantitative Finance at Stony Brook, New York. He is a fellow of the Centre d’Economie de la Sorbonne (Economic Centre ...
formed the Real World Risk Institute "to build the principles and methodology for what we call real-world rigor, in decision making and codify a clear-cut way to approach ... to provide executive education courses and issue two certificates."


Writing career

Taleb's five volume philosophical essay on uncertainty, titled ''Incerto'', covers the following books: ''Fooled by Randomness'' (2001), ''The Black Swan'' (2007–2010), ''The Bed of Procrustes'' (2010), ''Antifragile'' (2012), and ''Skin in the Game'' (2018). It was originally published in November 2016 including only the first four books. The fifth book was added in August 2019. His first non-technical book, ''
Fooled by Randomness ''Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets'' is a book by Nassim Nicholas Taleb that deals with the fallibility of human knowledge. It was first published in 2001. Updated editions were released a few years later. ...
'', about the underestimation of the role of randomness in life, published in 2001, was selected by ''Fortune'' as one of the smartest 75 books known. His second non-technical book, '' The Black Swan'', about unpredictable events, was published in 2007, selling close to three million copies (as of February 2011). It spent 36 weeks on the
New York Times Bestseller list ''The New York Times'' Best Seller list is widely considered the preeminent list of best-selling books in the United States. John Bear, ''The #1 New York Times Best Seller: intriguing facts about the 484 books that have been #1 New York Times ...
, 17 as hardcover and 19 weeks as paperback, and was translated into 31 languages. The book has been credited with predicting the banking and economic crisis of 2008. A book of
aphorism An aphorism (from Greek ἀφορισμός: ''aphorismos'', denoting 'delimitation', 'distinction', and 'definition') is a concise, terse, laconic, or memorable expression of a general truth or principle. Aphorisms are often handed down by tra ...
s, '' The Bed of Procrustes: Philosophical and Practical Aphorisms'', was released in December 2010. The fourth book of his ''Incerto'' series—'' Antifragile: Things That Gain from Disorder''—was published in November 2012. The fifth book of his ''Incerto'' series—'' Skin in the Game: Hidden Asymmetries in Daily Life''—was published in February 2018. Taleb's non-technical writing style has been described as mixing a narrative, often semi-autobiographical style with short philosophical tales and historical and scientific commentary. The sales of Taleb's first two books garnered an advance of $4 million, for a follow-up book on anti-fragility.


Ideas and theories

Taleb's book ''
The Bed of Procrustes ''The Bed of Procrustes: Philosophical and Practical Aphorisms'' is a philosophy book by Nassim Nicholas Taleb written in the aphoristic style. It was first released on November 30, 2010 by Random House. An updated edition was released on Octo ...
'' summarizes the central problem: "we humans, facing limits of knowledge, and things we do not observe, the unseen and the unknown, resolve the tension by squeezing life and the world into crisp commoditized ideas". Taleb disagrees with
Plato Plato ( ; grc-gre, Πλάτων ; 428/427 or 424/423 – 348/347 BC) was a Greek philosopher born in Athens during the Classical period in Ancient Greece. He founded the Platonist school of thought and the Academy, the first institution ...
nic (i.e., theoretical) approaches to reality to the extent that they lead people to have the wrong
map A map is a symbolic depiction emphasizing relationships between elements of some space, such as objects, regions, or themes. Many maps are static, fixed to paper or some other durable medium, while others are dynamic or interactive. Although ...
of reality, rather than no map at all. He opposes most economic and grand social science theorizing, which in his view, suffers acutely from the problem of overuse of Plato's
theory of forms The theory of Forms or theory of Ideas is a philosophical theory, fuzzy concept, or world-view, attributed to Plato, that the physical world is not as real or true as timeless, absolute, unchangeable ideas. According to this theory, ideas in th ...
. Based on these and other constructions, he advocates for what he calls a "black swan robust" society, meaning a society that can withstand difficult-to-predict events. He has also proposed that biological, economic, and other systems exhibit an ability to benefit and grow from volatility—including particular types of random errors and events—a characteristic of these systems that he terms ''
antifragility Antifragility is a property of systems in which they increase in capability to thrive as a result of stressors, shocks, volatility, noise, mistakes, faults, attacks, or failures. The concept was developed by Nassim Nicholas Taleb in his book, '' ...
.'' Relatedly, he also believes that universities are better at public relations and claiming credit than generating knowledge. He argues that knowledge and technology are usually generated by what he calls "
stochastic Stochastic (, ) refers to the property of being well described by a random probability distribution. Although stochasticity and randomness are distinct in that the former refers to a modeling approach and the latter refers to phenomena themselv ...
tinkering" rather than by top-down directed research, and has proposed option-like experimentation as a way to outperform directed research as a method of scientific discovery, an approach he terms ''convex tinkering.''Nassim Nicholas Taleb, 2012, '' Antifragile: Things That Gain from Disorder,''
Random House Random House is an American book publisher and the largest general-interest paperback publisher in the world. The company has several independently managed subsidiaries around the world. It is part of Penguin Random House, which is owned by Germ ...
() and
Penguin Books Penguin Books is a British publishing, publishing house. It was co-founded in 1935 by Allen Lane with his brothers Richard and John, as a line of the publishers The Bodley Head, only becoming a separate company the following year.Nobel Prize in Economics The Nobel Memorial Prize in Economic Sciences, officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel ( sv, Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), is an economics award administered ...
, saying that the damage from economic theories can be devastating. He opposes top-down knowledge as an academic illusion. Together with Espen Gaarder Haug, Taleb asserts that option pricing is determined in a "heuristic way" by operators, not by a model, and that models are "lecturing birds on how to fly". Teacher and author Pablo Triana has explored this topic with reference to Haug and Taleb, and says that perhaps Taleb is correct to urge that banks be treated as
utilities A public utility company (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and r ...
forbidden to take potentially lethal risks, while hedge funds and other unregulated entities should be able to do what they want. In his writings, Taleb has identified and discussed the error of comparing real-world randomness with the "structured randomness" in
quantum physics Quantum mechanics is a fundamental theory in physics that provides a description of the physical properties of nature at the scale of atoms and subatomic particles. It is the foundation of all quantum physics including quantum chemistry, qua ...
where probabilities are computable or games of chance such as casino gambling in which the probabilities are purposefully constructed by the proprietors. Taleb calls this the "
ludic fallacy The ludic fallacy, proposed by Nassim Nicholas Taleb in his book '' The Black Swan'' ( 2007), is "the misuse of games to model real-life situations". Taleb explains the fallacy as "basing studies of chance on the narrow world of games and dice". ...
". He argues that predictive models suffer from
Platonism Platonism is the philosophy of Plato and philosophical systems closely derived from it, though contemporary platonists do not necessarily accept all of the doctrines of Plato. Platonism had a profound effect on Western thought. Platonism at le ...
, gravitating towards mathematical purity and failing to take some key ideas into account, such as: the impossibility of possessing all relevant information, that small unknown variations in the data can have a huge impact, and flawed theories/models that are based on empirical data and that fail to consider events that have not taken place, but could have taken place. Discussing the ludic fallacy in ''The Black Swan'', he writes, "The dark side of the moon is harder to see; beaming light on it costs energy. In the same way, beaming light on the unseen is costly, in both computational and mental effort." In the second edition of ''The Black Swan'', he posited that the foundations of
quantitative economics ''Quantitative Economics'' is a peer-reviewed open access academic journal covering econometrics. It is sponsored by the Econometric Society, was established in 2010, and is published by Wiley-Blackwell. The editor-in-chief is Christopher Taber (U ...
are faulty and highly self-referential. He states that statistics is fundamentally incomplete as a field, as it cannot predict the risk of rare events, a problem that is acute in proportion to the rarity of these events. With the mathematician
Raphael Douady Raphael Douady (born 15 November 1959) is a French mathematician and economist. He holds the Robert Frey Endowed Chair for Quantitative Finance at Stony Brook, New York. He is a fellow of the Centre d’Economie de la Sorbonne (Economic Centre ...
, he called the problem ''statistical undecidability'' (Douady and Taleb, 2010). Taleb has described his main challenge as mapping his ideas of "robustification" and "
antifragility Antifragility is a property of systems in which they increase in capability to thrive as a result of stressors, shocks, volatility, noise, mistakes, faults, attacks, or failures. The concept was developed by Nassim Nicholas Taleb in his book, '' ...
", that is, how to live and act in a world we do not understand and build robustness to black swan events. Taleb introduced the idea of the "fourth quadrant" in the exposure domain. One of its applications is in his definition of the most effective (that is, least fragile) risk management approach: what he calls the "
barbell strategy In finance, a barbell strategy is formed when a trader invests in long- and short-duration bonds, but does not invest in intermediate-duration bonds. This strategy is useful when interest rates are rising; as the short term maturities are rolled o ...
" which is based on avoiding the middle in favor of linear combination of extremes, across all domains from politics to economics to one's personal life. These are deemed by Taleb to be more robust to estimation errors. For instance, he suggests that investing money in 'medium risk' investments is pointless, because risk is difficult, if not impossible to compute. His preferred strategy is to be both hyper-conservative and hyper-aggressive at the same time. For example, an investor might put 80 to 90% of their money in extremely safe instruments, such as treasury bills, with the remainder going into highly risky and diversified speculative bets. An alternative suggestion is to engage in highly speculative bets with a limited downside. Taleb asserts that by adopting these strategies a portfolio can be "robust", that is, gain a positive exposure to black swan events while limiting losses suffered by such random events. Together with
Donald Geman Donald Jay Geman (born September 20, 1943) is an American applied mathematician and a leading researcher in the field of machine learning and pattern recognition. He and his brother, Stuart Geman, are very well known for proposing the Gibbs sampl ...
and Hélyette Geman, he modeled the " maximum entropy barbell" which consists in "to constrain only what can be constrained (in a robust manner) and to maximize entropy elsewhere", based on an insight by E. T. Jaynes that economic life increases in entropy under regulatory and other constraints. Taleb also applies a similar barbell-style approach to health and exercise. Instead of doing steady and moderate exercise daily, he suggests that it is better to do a low-effort exercise such as walking slowly most of the time, while occasionally expending extreme effort. He claims that the human body evolved to live in a random environment, with various unexpected but intense efforts and much rest. He appeared as a special guest on '' The Ron Paul Liberty Report'' on May 19, 2017, and stated his support for a
non-interventionist Non-interventionism or non-intervention is a political philosophy or national foreign policy doctrine that opposes interference in the domestic politics and affairs of other countries but, in contrast to isolationism, is not necessarily opposed t ...
foreign policy. Taleb subsequently appeared with
Ron Paul Ronald Ernest Paul (born August 20, 1935) is an American author, activist, physician and retired politician who served as the U.S. representative for Texas's 22nd congressional district from 1976 to 1977 and again from 1979 to 1985, as well ...
and
Ralph Nader Ralph Nader (; born February 27, 1934) is an American political activist, author, lecturer, and attorney noted for his involvement in consumer protection, environmentalism, and government reform causes. The son of Lebanese immigrants to the Un ...
on their respective shows in support of ''Skin in the Game'', which was dedicated to both men. Taleb wrote in Antifragile and in scientific papers that if the statistical structure of habits in modern society differ too greatly from the ancestral environment of humanity, the analysis of consumption should focus less on composition and more on frequency. In other words, studies that ignore the random nature of supply of nutrients are invalid. Taleb co-authored a paper with
Yaneer Bar-Yam Yaneer Bar-Yam (born 1959) is an American scientist and activist specializing in complex systems. An expert in the quantitative analysis of pandemics, he advised policy makers on the Western African Ebola virus epidemic and founded EndCoronavir ...
and Joseph Norman called ''Systemic risk of pandemic via novel pathogens – Coronavirus: A note''. The paper published on January 26, 2020, took the position that the
SARS-CoV-2 Severe acute respiratory syndrome coronavirus 2 (SARS‑CoV‑2) is a strain of coronavirus that causes COVID-19 (coronavirus disease 2019), the respiratory illness responsible for the ongoing COVID-19 pandemic. The virus previously had a ...
was not being taken seriously enough by policy makers and medical professionals.


Praise and criticism

In a 2008 article in ''
The Times ''The Times'' is a British daily national newspaper based in London. It began in 1785 under the title ''The Daily Universal Register'', adopting its current name on 1 January 1788. ''The Times'' and its sister paper ''The Sunday Times'' (fou ...
'', the journalist
Bryan Appleyard Bryan Appleyard (born 24 August 1951, Manchester) is a British journalist and author. Life and work Appleyard was educated at Bolton School and King's College, Cambridge. He worked at ''The Times'' and as a freelance journalist and has writte ...
described Taleb as "now the hottest thinker in the world". The Nobel Laureate
Daniel Kahneman Daniel Kahneman (; he, דניאל כהנמן; born March 5, 1934) is an Israeli-American psychologist and economist notable for his work on the psychology of judgment and decision-making, as well as behavioral economics, for which he was award ...
proposed the inclusion of Taleb's name among the world's top intellectuals, saying "Taleb has changed the way many people think about uncertainty, particularly in the financial markets. His book, ''The Black Swan'', is an original and audacious analysis of the ways in which humans try to make sense of unexpected events." Taleb was treated as a "rock star" at the
World Economic Forum The World Economic Forum (WEF) is an international non-governmental and lobbying organisation based in Cologny, canton of Geneva, Switzerland. It was founded on 24 January 1971 by German engineer and economist Klaus Schwab. The foundation, ...
annual meeting in
Davos , neighboring_municipalities= Arosa, Bergün/Bravuogn, Klosters-Serneus, Langwies, S-chanf, Susch , twintowns = } Davos (, ; or ; rm, ; archaic it, Tavate) is an Alpine resort town and a municipality in the Prättigau/Davos R ...
in 2009; at that event he had harsh words for bankers, suggesting that bankers' recklessness will not be repeated "if you have punishment". Taleb contends that statisticians can be
pseudoscientists Pseudoscience consists of statements, beliefs, or practices that claim to be both scientific and factual but are incompatible with the scientific method. Pseudoscience is often characterized by contradictory, exaggerated or unfalsifiable claim ...
when it comes to risks of rare events and risks of blowups, and mask their incompetence with complicated equations. This stance has attracted criticism: the
American Statistical Association The American Statistical Association (ASA) is the main professional organization for statisticians and related professionals in the United States. It was founded in Boston, Massachusetts on November 27, 1839, and is the second oldest continuousl ...
devoted the August 2007 issue of ''The American Statistician'' to ''The Black Swan''. The magazine offered a mixture of praise and criticism for Taleb's main points, with a focus on Taleb's writing style and his representation of the statistical literature. Robert Lund, a mathematics professor at Clemson University, writes that in ''Black Swan'', Taleb is "reckless at times and subject to grandiose overstatements; the professional statistician will find the book ubiquitously naive." However, Lund acknowledges that "there are many points where I agree with Taleb," and writes that "the book is a must" for anyone "remotely interested in finance and/or philosophical probability." Aaron Brown (financial author), Aaron Brown, an author, quantitative analysis (finance), quantitative analyst, and adjunct professor in finance at Yeshiva University, Yeshiva and Fordham University, Fordham Universities, said regarding ''The Black Swan'' that "the book reads as if Taleb has never heard of non-parametric statistics, nonparametric methods, data analysis, visualization tools or robust statistics, robust estimation." Nonetheless, he calls the book "essential reading" and urges statisticians to overlook the insults to get the "important philosophic and mathematical truths." Taleb replied in the second edition of ''The Black Swan'' that "One of the most common (but useless) comments I hear is that some solutions can come from 'robust statistics.' I wonder how using these techniques can create information where there is none". While praising the book, Westfall and Joseph Hilbe, Hilbe in 2007 complained that Taleb's criticism is "often unfounded and sometimes outrageous." Taleb, writes John Kay (economist), John Kay, "describes writers and professionals as knaves or fools, mostly fools. His writing is full of irrelevances, asides and colloquialisms, reading like the conversation of a raconteur rather than a tightly argued thesis. But it is hugely enjoyable – compelling but easy to dip into. Yet beneath his rage and mockery are serious issues. The risk management models in use today exclude the very events against which they claim to protect the businesses that employ them. These models import a veneer of technical sophistication ... Quantitative analysts have lulled corporate executives and regulators into an illusory sense of security." Berkeley statistician David Freedman (statistician), David Freedman said that efforts by statisticians to refute Taleb's stance have been unconvincing. Taleb and Nobel laureate Myron Scholes have traded personal attacks, particularly after Taleb's paper with Espen Haug on why nobody used the Black–Scholes model, Black–Scholes–Merton formula. Taleb said that Scholes was responsible for the financial crises of 2008, and suggested that "this guy should be in a retirement home doing Sudoku. His funds have blown up twice. He shouldn't be allowed in Washington to lecture anyone on risk." Scholes retorted that Taleb simply "popularises ideas and is making money selling books". Scholes claimed that Taleb does not cite previous literature, and for this reason Taleb is not taken seriously in academia. Haug and Taleb (2011) listed hundreds of research documents showing the Black–Scholes formula was not Scholes' at all, and argued that the economics establishment ignored literature by practitioners and mathematicians (such as Ed Thorp), who had developed a more sophisticated version of the formula. In an interview on ''Charlie Rose (talk show), Charlie Rose'', Taleb said that he saw that none of the criticism he received for ''The Black Swan'' refuted his central point, which convinced him to protect his assets and those of his clients. Taleb's aggressive and clearly directed commentary against parts of the finance industry—e.g., stating at Davos in 2009 that he was "happy" that Lehman Brothers collapsed—has led to reports of personal attacks and possible threats.


Honors

* 2009: Included on the ''Forbes'' magazine list of "Most Influential Management Gurus" * 2011: Included on the 50 Most Influential (Bloomberg Markets ranking), Bloomberg 50 most influential people in global finance * 2013, 2014, 2015: Included among most influential 100 thought leaders in the world by the Gottlieb Duttweiler Institute * 2016: Taleb received an Honorary degree, honorary doctorate from the American University of Beirut. * 2018: Wolfram Research, Wolfram Innovator Award for contributions to decision making under complicated and less-idealized probabilistic structures using Mathematica.


Major works


Books


''Incerto''

''Incerto'' is a group of works by Taleb as philosophical essays on uncertainty. It was bundled into a group of four works in November 2016 . A fifth book, ''Skin in the Game'', was published in February 2018. This fifth book is bundled with the other four works in July 2019 as ''Incerto'' (Deluxe Edition) . * Second ed., 2005. . * Expanded 2nd ed, 2010 . * Expanded 2nd ed, 2016 . * * (This book was not published with the original bundling of the ''Incerto'' series.)


''Technical Incerto''

*


Other

* *


Selection of papers

* * Taleb, N.N.; Norman, J.; Bar-Yam, Y; (Jan 26, 2020) "Systemic Risk of Pandemic via Novel Pathogens – Coronavirus: A Note". ''Academia.edu.'
Systemic Risk of Pandemic via Novel Pathogens – Coronavirus: A Note
* * * * * * *


See also

* Applications of randomness * List of American philosophers * Taleb distribution * Dragon King Theory


Notes


References


External links


Nassim Taleb's home page
* * * {{DEFAULTSORT:Taleb, Nassim Nicholas 1960 births Living people 20th-century Eastern Orthodox Christians 21st-century American essayists 21st-century American male writers 21st-century American non-fiction writers 21st-century American philosophers 21st-century Eastern Orthodox Christians American male non-fiction writers Aphorists Courant Institute of Mathematical Sciences faculty Epistemologists Greek Orthodox Christians from Lebanon Greek Orthodox Christians from the United States Lebanese Christians Lebanese emigrants to the United States Lebanese philosophers Monte Carlo methodologists New England Complex Systems Institute Non-interventionism Paris Dauphine University alumni People from Koura District Polytechnic Institute of New York University faculty University of Massachusetts Amherst faculty University of Paris alumni Wharton School of the University of Pennsylvania alumni Critics of political economy