Skin in the Game

Notes from Skin in the Game1

Book 1: Introduction

Don't tell me what you "think," just tell me what's in your portfolio.

You will never fully convince someone that he is wrong; only reality can.

For those familiar with the idea of nonlinear effects from Antifragile, learning is rooted in repetition and convexity2, meaning that the reading of a single text twice is more profitable than reading two different things once, provided of course that said text has some depth of content.

Rent-seeking is trying to use protective regulations or "rights" to derive income without adding anything to economic activity, not increasing the wealth of others.

Avoid taking advice from someone who gives advice for a living, unless there is a penalty for their advice.

If you do not take risks for your opinion, you are nothing.

Anything you do to optimize your work, cut some corners, or squeeze more "efficiency" out of it (and out of your life) will eventually make you dislike it.

Book 2: A First Look at Agency

It may not be ethically required, but the most effective, shame-free policy is maximal transparency, even transparency of intentions.

Book 3: That Great Asymmetry

Studying individual ants will almost never give us a clear indication of how the ant colony operates. For that, one needs to understand an ant colony as an ant colony, no less, no more, not a collection of ants.

Book 4: Wolves Among Dogs

By being employees they signal a certain type of domestication. Someone who has been employed for a while is giving you strong evidence of submission.

Revolutions are unarguably driven by an obsessive minority. And the entire growth of society, whether economic or moral, comes from a small number of people.

What matters isn't what a person has or doesn't have; it is what he or shee afraid of losing.

Book 5: Being Alive Means Taking Certain Risks

Always do more than you talk. And precede talk with action. For it will always remain that action without talk supersedes talk without action.

Book 6: Deeper Into Agency

But we have evidence that collectively society doesn't advance with organized education, rather the reverse: the level of (formal) education in a country is the result of wealth.3

Which brings us to the principle: If you private life conflicts with your intellectual opinion, it cancels your intellectual ideas, not your private life.

When young people who “want to help mankind” come to me asking, “What should I do? I want to reduce poverty, save the world,” and similar noble aspirations at the macro-level, my suggestion is:

  • Never engage in virtual signaling;
  • Never engage in rent-seeking;
  • You must start a business. Put yourself on the line, start a business.

Yes, take risk, and if you get rich (which is optional), spend your money generously on others. We need people to take (bounded) risks. The entire idea is to move the descendants of Home sapiens away from the macro, away from abstract universal aims, away from the kind of social engineering that bring tail risks to society. Doing business will always help (because it brings about economic activity without largescale risky changes in the economy); institutions (like the aid industry) may help, but they are equally likely to harm (I am being optimistic; I am certain that except for a few most do end up harming).

Courage (risk taking) is the highest virtue. we need entrepreneurs.

Book 8: Risk and Rationality

Smoking a single cigarette is extremely benign, so a cost-benefit analysis would deem it irrational to give up so much pleasure for so little risk! But it is the act of smoking that kills, at a certain number of packs per year, or tens of thousand of cigarettes - in other words, repeated serial exposure.

in real life, every single bit of risk you take adds up to reduce your life expectancy. If you climb mountains and ride a motorcycle and hang around the mob and fly your own small plane and drink absinthe, and smoke cigarettes, and play parkour on Thursday night, your life expectancy is considerably reduced, although no single action will have a meaningful effect. This idea of repetition makes paranoia about some low-probability events, even that deemed “pathological,” perfectly rational.

In order to succeed, you must first survive.

Warren Buffett: to make money you must first survive.

Every single risk you take adds up to reduce your life expectancy.

Rationality is avoidance of systemic ruin.

Appendix

learning is rooted in repetition and convexity

Let's break down both components:

  1. Repetition:

    • Cementing Knowledge: Just like in memorizing a piece of information or mastering a physical skill, repetition plays a crucial role. Each time you repeat an action or revisit information, you reinforce the neural pathways in your brain associated with that action or information. This makes retrieval easier and faster over time.
    • Practice: Whether it's a musical instrument, a new language, or a mathematical concept, practice helps in internalizing and perfecting the skill or knowledge.
    • Spacing Effect: Research in psychology, particularly in the realm of memory, has shown that spaced repetition (revisiting information at increasing intervals) is more effective for long-term retention than cramming or massed repetition.

  2. Convexity (in the context of learning):

    • Robustness to Variability: A convex learning process implies that it benefits from variability and randomness. For instance, if you are trying to learn a skill, practicing it in varied conditions or with slight modifications can make your learning more robust. It's the idea that facing a range of scenarios, rather than just a single repeated scenario, can enhance understanding and adaptability.
    • Antifragility: Nassim Nicholas Taleb introduced the concept of "antifragility" in his book "Antifragile: Things That Gain from Disorder." Something that is antifragile doesn't just resist stress and chaos but actually benefits from it. In terms of learning, this means that a learner becomes stronger and more resilient with exposure to challenges and variability. This idea aligns with the concept of convexity in learning.
    • Error-correction and Adaptation: A convex approach to learning would involve iterative processes where mistakes are not just permissible but are considered valuable. Learning from errors and making corrections paves the way for deeper understanding and mastery.

In essence, the phrase suggests that effective learning is not just about passive exposure but involves active, repeated engagement with the material or skill, and that this learning becomes more robust and resilient when exposed to variations, challenges, and even mistakes.

Relationship between education and economic advancement

Here's a breakdown:

  1. Society Doesn’t Advance with Organized Education:

    • Some argue that organized or formal education is not the primary driver of societal or economic advancement. Instead, they believe that many other factors, like natural resources, governance, innovation, entrepreneurship, or social and cultural factors, play a significant role in a nation's development.
    • Historically, many civilizations and societies experienced periods of advancement without the presence of organized, formal education systems as we understand them today. For example, many innovations and advancements during the Renaissance were achieved by self-taught individuals or through apprenticeship models, rather than formal schooling.

  2. Level of Education as a Result of Wealth:

    • As countries become wealthier, they often invest more in formal education. This investment can be seen in the establishment of schools, universities, and research institutions, and in the general promotion of education at all levels.
    • There's evidence suggesting that as nations accumulate wealth, they tend to prioritize and value education more, possibly viewing it as a means to sustain and further that wealth. Wealth allows for the luxury of investing in long-term projects like education.
    • Additionally, wealthier nations often have more stable infrastructures and governance that can support expansive educational endeavors.

  3. Causality Challenge:

    • The core of this debate is a chicken-and-egg problem: Does education drive wealth, or does wealth drive education? While there's ample evidence for both sides, many researchers believe it's a bidirectional relationship. Education can lead to advancements that boost economic growth, and economic growth can lead to increased investments in education.
    • Some studies have shown positive correlations between education (particularly female education) and subsequent economic growth, but correlation does not necessarily imply causation.

  4. Other Considerations:

    • The quality and type of education matter. Simply having more years of formal schooling doesn't necessarily equate to meaningful education or applicable skills.
    • Societal values play a role. Some societies may prioritize other forms of advancement or knowledge dissemination over formal education.

While this statement provides a perspective that challenges commonly held views about the importance of organized education in societal advancement, it's essential to approach the topic with nuance and an understanding of the broader complexities involved.

Reading

Footnotes

Footnotes

  1. Skin in the Game: Hidden Asymmetries in Daily Life (Incerto) ↩

  2. The statement "learning is rooted in repetition and convexity" touches on two foundational aspects of learning: the importance of repeated exposure and practice, and the idea of convexity which, in this context, likely refers to the resilience and robustness of learning to variability and uncertainty. ↩

  3. The statement touches upon a debate within the realms of sociology, economics, and education concerning the relationship between education and economic advancement. ↩