Jul-Sep 2013

Antifragile: Things that Gain from Disorder By Nassim Nicholas Taleb

Nassim Nicholas Taleb is back with another book on the role uncertainty plays in economic  life. Readers of his earlier books Fooled by Randomness and Black Swan will  have a fair idea of what to expect from Antifragile: Things that Gain from Disorder in terms  of  subject matter. However, Antifragile is the most engrossing of the three books. “Fooled  by Randomness” seemed, at times, to be stating the obvious. “Black Swan” suffered from  the same problem,  albeit to a lesser extent. The sophistication  of ideas in “Antifragile” is what raises it a notch or two above both books.
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Publishers: Random House, 2012

What  are these ideas? The title of the book offers a clue.  “Antifragile,”  a word  Taleb coined  for lack of an existing  word  apposite enough to express the idea, refers to the opposite of “fragile.”  A fragile object is adversely affected by any uncertainty  in its environment,  whereas an antifragile one benefits  from such  uncertainty.   Being antifragile is much more than being merely robust. While robustness suggests being  unaffected  by shocks, antifragility means actually being improved by shocks.

The  central  message of the  book is  that  in a  world   where  randomness abounds, we should not let uncertainty affect  us in a  negative  way,  but rather learn to harness it to work for us. This can be done by staying  away from  the fragile and by relying on the antifragile.  Taleb proposes many ways to do this. Recalling that the banking system was fragile before the financial crisis of 2008, he offers the example of a friend  who made money betting  against the system The beauty of the book is that Taleb extends this concept of antifragility to domains one would normally not  associate either with fragility or antifragility. One such domain is innovation.  Innovation  occurs through tinkering. The payoff from a successful innovation  is far higher than the cost of an unsuccessful innovation. This  is  why  a venture  capitalist  should  invest  his money in as many  innovative   projects   as possible, thus benefitting  from  the effects of uncertainty on antifragility.

He also applies antifragility  to the treatment of diseases by arguing that often, medical treatments tend to have small gains and large losses. In such cases, it is  wiser  to not undergo treatment.  Undergoing treatment should be reser ved for situations where the possible  losses from  doing  so are small in comparison to the  gains; this  way, one  exposes oneself  to the benefits of uncertainty.

While  the  discussion in the  book  is  designed to be  accessible  to the  layman (leaving aside the rather technical Appendix),  Taleb does not shy away from rigour.  His description  of the  links  between optionality, convexity, non-linear second-order effects and  antifragility   is  elaborate  enough  to satisfy the curiosity of the reader without  ever becoming overly technical.

However, this attention  to detail  presents  a problem as well. An oft-repeated criticism of Taleb is that his books tend to be repetitive. One may have had good reason to feel that “Black  Swan” was in fact  a paragraph expanded into a book. “Antifragile” should probably  have been pruned  to roughly half its length as well. What salvages the book from being a complete drag in spite of this is the fact that the central ideas presented  in the  book  are at  times  complex  and technical enough to be worth repeating.

If having your  intellectual  curiosity  piqued  by a combination   of brilliant   insights  and engrossing anecdotes drawn  from  a deep well makes your day, then “Antifragile” is perfect for you.

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