Skin in the Review: The Hidden Asymmetries of Taleb’s Skin in the Game

Nassim Nicholas Taleb wrote a book—Skin in the Game: Hidden Asymmetries in Daily Life—but I don’t know what kind of book he wanted to write. (I do know Taleb enjoys italicizing, though; in what follows, the emphases in quotations always belong to the author, not this reviewer.)

So what kind of book is Skin in the Game? It’s just not clear. Perhaps it is a self-help book:

Simply: if you can’t put your soul into something, give it up and leave that stuff to someone else (42).

Never engage in virtue signaling (189).

But maybe not, because the book contains aphorisms like these:

Not everything that happens happens for a reason, but everything that survives survives for a reason (221).

It costs a lot of energy to fake that you’re not bored (168).

No kidding. But it’s not all self-help and aphorisms. Skin in the Game offers Taleb an opportunity to criticize, or I should say mischaracterize, his opponents:

Purely monotheistic religions such as Protestant Christianity, Salafi Islam, or fundamentalist atheism accommodate literalist and mediocre minds that cannot handle ambiguity (82).

aggressive journalistic minds as Richard Dawkins and Steven Pinker (91)

the writer and pseudo-rationalist Sam Harris (181)

the creepy interventionist Richard Thaler (227)

Is there an argument behind this abuse? I don’t think so. If Protestant Christianity provides the backdrop for expressions of genius — think Bach, Euler, or Kierkegaard — while accommodating literalist and mediocre minds that cannot handle ambiguity, then that’s a selling point, not a fault. If Dawkins, Pinker, Harris, and Thaler write clearly enough to engage a broad audience, while also pursuing work of interest to the academic guild, that’s to their credit, too. You don’t need to be a Protestant Christian, a Salafi Muslim, or a fundamentalist atheist to accept this observation. You just need to be able to handle some — wait for it — ambiguity. Someone can be both a thinker and a popular writer; you can disagree strongly with an opponent but still recognize his expertise or (in your view) misused talent. Taleb doesn’t demonstrate the charity he advocates elsewhere in the book (182).

A lack of nuance plagues the book. So “[Ronald] Coase was a remarkable modern economist in that he was independent thinking, rigorous, and creative, with ideas that are applicable and explain the world around us—in other words, the real thing” (100). But, apparently, Coase was no genius, if Taleb is consistent: “But economists, psychologists, and decision theorists have no geniuses among them . . . and odds are they never will” (225). Taleb may think he’s being humorous, but he comes across as sloppy.

Perhaps a Talebian defender would say I’m taking things too seriously. I just don’t get his humor! The man himself certainly gets petulant when misunderstood: “I discovered that the typical IYI [intellectual yet idiot] has difficulty, when reading, in differentiating between the satirical and the literal” (127). But there’s something to be said for Adam Smith’s remark in The Theory of Moral Sentiments that “a man is mortified when, after having endeavoured to divert the company, he looks round and sees that nobody laughs at his jests but himself.” If people don’t get your jokes, you may only have yourself to blame.

To be fair, Taleb is occasionally funny, even cleverly so. For example, he offers a “scholar of Portuguese irregular verbs” as an example of the “vicious domain-dependence of expertise” (140). Here he’s surely referring to the hilarious and charming novel by Alexander McCall Smith. There’s also this pottery for peace plan:

I surmise that if we put those “people wanting to help” in the State Department on paid vacation to do ceramics, pottery, or whatever low-testosterone people do when they take a sabbatical, it would be great for peace (191).

Losing a Billion, Winning an Election

Now let’s turn to the argument of Skin in the Game. To have skin in the game means to embrace a certain amount of personal risk for a possible reward. The problem with our society is that people receive rewards without taking on risk; even worse, people receive rewards even when other people take on what should be their risk, and suffer for their mistakes. Taleb laments how “we have experienced a takeover of people without skin in the game” (124).

Taleb extends his analysis to the 2016 election results: Taleb notes, quite convincingly, that “the detractors of Donald Trump . . . failed to realize that, by advertising his episode of bankruptcy and his personal losses of close to a billion dollars . . . removed the resentment . . . people may have had toward him. There is something respectable in losing a billion dollars, provided it is your own money” (130). Trump had skin in the game.

Taleb explains how recalcitrant minority positions influence the majority population. Those of us who don’t keep kosher nevertheless eat many more kosher foods than we realize. Why? People who keep kosher will not eat a food or consume a drink if it’s not kosher. But non-kosher consumers will partake of kosher food and drink unreflectively. Producers recognize this difference in preferences, and they adjust accordingly (70). This analysis, though interesting in its own right, fits unclearly with skin in the game—reflecting the book’s subtitle (Hidden Asymmetries in Daily Life) more than the title, as Taleb himself recognizes (88).

Let the Rich Rotate

Drifting away from the title, and even the subtitle, Taleb considers what he calls dynamic equality. Whatever it is, the United States has it: More than half of all Americans will spend a year in the top 10 percent; in Florence, “the same handful of families have kept the wealth for five centuries” (131). Focusing on dynamic, rather than static, inequality helps us better address what our goals should be. “You do not create dynamic inequality just by raising the level of those at the bottom, but rather by making the rich rotate” (131). To make the connection to the book’s title explicit, perhaps we can say that static inequality isn’t a problem as long as the rich have skin in the game and can be knocked from their heights by those lower down the social ladder.

Taleb envisions a hypothetical situation in which “each one of us, should he live forever, would spend a proportion of time in the economic conditions of the entire cross-section” (132). Two questions: First, is this true? Second, is this desirable? Doubtful on both counts. First, “the economic conditions of the entire cross-section” will change, even as we do. If Charlemagne could live forever, then surely he would rather be middle class in the twenty-first century than Holy Roman Emperor in the ninth. Additionally, free people may decide against certain strategies for wealth creation regardless of how long they live. Would Pope Benedict become a hedge fund manager in the thousandth year of his retirement? Doubtful. Perhaps Taleb thinks people’s interests and talents are more malleable under the aspect of eternity, but that’s something he assumes rather than demonstrates.

Second, perfect social churning may not be morally or economically desirable. I have no desire to be in the one percent, top or bottom. I walk to work; I have enough coffee to drink, and I don’t own a television — and I don’t have to watch one. May I not keep my lifestyle . . . forever? Perhaps Taleb wants something less than perfect dynamism, just some movement between the social classes. But if that’s the case, moral and economic considerations become more important, not less, because Taleb will need to resolve the tension between people wanting to stay at a certain level of socioeconomic satisfaction and this perceived need for churning.

For his own part, Taleb isn’t quite sure. He offers a tribute to the “shoemaker in Westchester County” who “wants to be a shoemaker,” saying, “It may be cruel to cheat people of their profession. People want to have their soul in the game” (39). His response to the shoemaker’s concern is to be open to some amount of protectionism. But Taleb also tells us that, to achieve dynamic inequality, we must “allow the system to destroy the strong, something that works best in the United States” (134). So does the shoemaker deserve protection because he’s weak, or is he strong, and so doesn’t deserve protection? If he deserves protection because he’s weak, then where’s the shoemaker’s skin in the game? If he deserves protection because he’s strong — politically influential, for example, though with declining market influence — then where’s the dynamism?

Misreading Pascal, Kant, and Nozick — but Loving Nietzsche

When talking about skin in the game and the hidden asymmetries of life, Taleb is quite convincing. But he all too often wanders from these central claims, giving offhanded remarks with few clues to their greater significance, if they have any at all Taleb’s analysis of philosophers — sprinkled haphazardly throughout Skin in the Game like intellectual potpourri — is mostly unreliable. Taleb decries “the theological weakness of Pascal’s wager,” which “proposes religion without skin in the game, making it a purely academic and sterile activity” (121). But Pascal proposes just the reverse: The wager merely demonstrates the rationality of belief in God; Pascal’s advice on how to find belief is, ironically enough, to get skin in the game. “Learn of those who have been bound like you,” Pascal writes, “and who now stake all their possessions.” Do what they do: “Follow the way by which they began; by acting as if they believed, taking the holy water, having masses said, etc.”

Taleb misreads Kant, too. Kant’s philosophy “gets too complicated and things that get complicated have a problem” (21). According to Taleb, Kant simply doesn’t offer what we need. “We should focus on our immediate environment; we need simple practical rules” (21). But, of course, Kant offers such rules, and he also offers a framework to help us answer complex moral questions. He may be wrong for all that, but at least he’s trying. When Taleb asks, “Can someone punish a family for the crimes of an individual?” (113), he explores various options but ends with the following half-hearted observation: “But I feel queasy about transferring a crime from one unit, an individual, to another, a collective” (115). Because Taleb’s own moral judgments about life can get “complicated,” he may discover his need for Kant, or someone like him.

Taleb rejects Robert Nozick’s experience machine, a thought experiment against hedonism. Nozick believes we want to do things in the real world and not just have the pleasure of a simulation in the aforementioned experience machine. So when Taleb says that “only an academic philosopher who never took risk can believe such nonsense” (121), he simply misreads Nozick. Indeed, Taleb could have used Nozick’s experience machine to bolster his claim that we all need skin in game: We want to live in the actual world, doing real things and exposing ourselves to genuine risks.

The philosopher Taleb loves is, quite predictably, “our old friend Friedrich Nietzsche,” whom he paraphrases approvingly: “Sympathy for all would be tyranny for thee, my good neighbor” (58). Nietzsche offers “ancient wisdom” because he “was a classicist” (152). Er, okay. Taleb also offers his own Will to Power: “Start by being nice to every person you meet. But if someone tries to exercise power over you, exercise power over him” (22). Or, in the language of middle school machismo, “Whatever you do, just don’t be a dog claiming to be a wolf” (103).

Survivalist Religion

Taleb misunderstands philosophers; he also misunderstands religion. According to him, religion exists for risk management with a view to survival (217). “Religious ‘beliefs,’” he writes, “are simply mental heuristics that solve a collection of problems — without the agent really knowing how” (162). By contrast, he declares, “In science, belief is literal belief; it is right or wrong, never metaphorical. In real life, belief is an instrument to do things, not the end product” (213).

Where to begin? Briefly, notice how much Taleb has in common with the positions of Dawkins, Harris, and Pinker, in spite of his distaste for them; how he disagrees with the actual practice of science, which uses metaphor to articulate its own positions, and, finally, how Taleb’s sentences, when taken together, entail a contradiction: Either his declaration is “scientific,” so (contrary to what he claims) there are literal beliefs that are not the deliverance of science, or his declaration is not “scientific,” and so is an instrument for action rather than for literal belief (though he offers it as such).

Taleb identifies himself as “an Orthodox Christian” (210), but his beliefs (literal or otherwise) are far from Orthodox, or even orthodox. He says, “Jesus had to be man, not quite god” (45), but that’s the Arian, and not the Christian, position. Christians believe Jesus is both God and man, both “Light of Light, very God of very God” and the one who “was made man.” Taleb may be less orthodox (or Orthodox) than he realizes.

When talking about skin in the game or the hidden asymmetries of life, Taleb offers thoughtful observations. But Taleb loves painting with broad brushstrokes, too, and sometimes — let’s be honest — his portraiture is caricature, or worse. Let’s consider two examples. First, Taleb writes, “For Orthodox and Catholic Christians, religion is largely aesthetics, pomp, and rituals. For Protestants, religion is belief without aesthetics, pomp, or law” (200). But surely the Orthodox think they have right beliefs, as their name suggests; Catholics certainly understand catholicity to include the proclamation of things to be believed. As for Protestants: If Luther’s work seeks belief without aesthetics, pomp, or law, why did Luther write so furiously against the iconoclasts, the Anabaptists, and the antinomians? Such caricatures may “accommodate literalist and mediocre minds that cannot handle ambiguity,” but they are still caricatures for all that.

Second, Taleb writes, “Religions such as Christianity, Judaism, and, to some extent Shiite Islam, evolved . . . precisely by moving away from the literal” (202). Insofar as Christianity’s concerned, that’s false: The flourishing of allegorical interpretations in the first millennium gave way to literalism in the second. Aquinas serves as a transitional figure, telling us in the Summa Theologiae that “nothing necessary to faith is contained under the spiritual sense which is not elsewhere put forward by the Scripture in its literal sense.”

Taleb’s own description of “moving away from the literal” is unconvincing by his own lights. He tells us “Christianity ended up removing the idea of sacrifice under the notion that Christ sacrificed himself for others” (206), but that “notion” seems to be a literal one, because at the cross “Christians had their last transaction,” i.e., a real sacrifice (207). Protestants, of course, exult in such language, e.g., the Westminster Shorter Catechism: “Christ executes the office of a Priest, in his once offering up of himself a sacrifice to satisfy divine justice and reconcile us to God, and in making continual intercession for us.” To achieve his “moving away from the literal,” Taleb inserts metaphor where it doesn’t belong, suggesting a Roman Catholic or Eastern Orthodox service has “wine representing blood” (206). Oops! Surely even Pope Francis — in his wildest moments of theological freewheeling — does not propose something so obviously un-Catholic. Catholics and Orthodox don’t believe the wine represents blood. The wine is blood. Taleb may be more Protestant than he realizes.

Never Engage in Vaunting

“Virtue is not something you advertise,” Taleb says (186). But Taleb engages in another kind of signaling, which is equally annoying. Perhaps we should call it vaunting, showcasing one’s knowledge for no apparent reason. Let’s consider two examples of a general trend in Skin in the Game.

Taleb’s language games can be very confusing indeed. For example, he quotes Hebrews 9:22 in Latin, instead of Greek (or even, in English), for no discernable purpose (206). Elsewhere, in a single sentence on Aristotle and the virtues, he uses the Greek (σωφροσύνη) and its transliteration (sophrosyne) without mentioning an English translation (e.g., temperance); he then speaks of prudence in English, without offering a transliteration or the Greek, and he ends with the transliteration phronesis, without Greek or English translation — a choice made even more confusing because prudence, just mentioned, is itself an older translation of phronesis (230). (Practical wisdom is a newer one.) If that sounds confusing, it’s because it is. Such bizarre and unnecessary use of languages looks like window dressing to impress the unlearned, and possibly such maneuvers succeed. Nevertheless, such vaunting should be avoided.

It gets worse. Taleb writes, “Claude Shannon, Ed Thorp, J. L. Kelly, and Harald Cramér are, no doubt, geniuses — I can personally vouch for Thorp, who has an unmistakable clarity of mind combined with a depth of thinking that juts out in conversation” (225). There’s name-dropping to make a point, and then there’s name-dropping to flaunt one’s connections. This name-dropping is altogether different, and worse. It’s not that Taleb is great because he’s connected to Thorp, which is the way name-dropping usually works; instead, Thorp is great because he’s connected to Taleb. What’s the reader to conclude? If you think you can personally vouch for the genius of a genius, you reveal only your own estimation of your own intelligence. Instead of vaunting, Taleb would have been better served by humility, a Christian virtue. Tell us you’re mesmerized by Thorp’s intelligence. Don’t vouch for his genius. Admire it.

The Hidden Asymmetries of Skin in the Game

Skin in the Game begins so well I confess I assumed at the start I’d be giving the book a glowing review. But I can’t. Yes, Taleb’s remarks about skin in the game and the hidden asymmetries in daily life — which occupy perhaps a third of the book — strike me as both interesting and true. Indeed, rarely have I reviewed a book that has made me think so differently about my own life. But the same cannot be said for the rest of the book.

Reader Discussion

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on May 29, 2018 at 10:17:10 am

Thank you for this review, even if Taleb comes off as a half-baked Jordan Peterson. I love Taleb interviews on EconTalk and was considering buying the book and struggling through it, because I have to listen to his interviews 2x to really get what he is saying. Now I will just stick to the interviews, where Russ Roberts keeps him on topic to what Taleb is good at, namely, understanding risks and incentives.

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on May 31, 2018 at 10:22:24 am

That is a highly thoughtful, well-written book review, done the way all reviews should be, with a view to explaining the author's intentions and critically analyzing his facts, arguments and conclusions. This particular book and author, however, seem unworthy of such high effort and special skill., so that the reader feels sympathy for the reviewer having to expend his exceptional talent on a lowly subject.

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Pukka Luftmensch

Law & Liberty welcomes civil and lively discussion of its articles. Abusive comments will not be tolerated. We reserve the right to delete comments - or ban users - without notification or explanation.