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Nassim Nicholas Taleb on the Pandemic

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Nassim Nicholas Taleb on the Pandemic


Intro. [Recording date: July 3rd, 2020.]

Russ Roberts: Today is July 3rd, 2020, and my guest is philosopher and author Nassim Nicholas Taleb. He is the author of the Incerto, his collection of books, Antifragile, The Black Swan, Fooled by Randomness, The Bed of Procrustes, </>Skin in the Game. This is his ninth appearance on EconTalk. He was here last in March of 2018, talking about Rationality, Risk, and Skin in the Game.

Our topic for today is the COVID-19 pandemic. I want to remind listeners, we’re recording this during the pandemic. Audio may be below our usual standards. This episode will be released on YouTube with video, we hope. So, please go to YouTube, and search EconTalk, and subscribe. I want to thank Plantronics for providing today’s guest with a Plantronics Blackwire 5220 headset.


Russ Roberts: Nassim, welcome back to Econtalk.

Nassim Nicholas Taleb: Yeah. Thanks again for inviting me. And, one little detail. I’m not technically a philosopher: I’m just someone interested in probability. So, whatever field is attached to that would be my field, but not quite philosophy. But, anyway.

Russ Roberts: Well, I like to also call you a flaneur, but that’s even more pretentious.

Nassim Nicholas Taleb: Flaneur is my profession. Flaneur–you don’t have a–but, actually, it’s pretentious now, but it used to be a quality in Roman time, [foreign language 00:01:50].

Russ Roberts: Yeah?

Nassim Nicholas Taleb: Doing nothing. Or, not being guided by any constraint. That’s pretty much what it is about. Yes.

Russ Roberts: And, in your usage of it, it often denotes wandering on foot, without a purpose.

Nassim Nicholas Taleb: Yeah, but if you try to make it productive, you’re going to fail–

Russ Roberts: Correct.

Nassim Nicholas Taleb: Anyway, aimlessness is the idea, whether intellectual or physical.

Russ Roberts: I want to begin with a personal reflection. My father, Ted Roberts, used to say that even though there are snakes in the world, it’s good to go barefoot so you can feel the grass between your toes. That was a statement about trade-offs that he embraced and shared, and I embraced eventually. My dad hated the popular wisdom of what he would consider obsessive safety. He never wore a bike helmet because he liked the feeling of the wind in his hair. My dad taught me that value of trade-offs at a very young age.

But, while I am his son, I am Nassim Nicholas Taleb’s student, and I learned from you, Nassim, about the risk of ruin–that trade-offs become relevant when you’re out of the game, either literally, as in wiped out in gambling, or figuratively, as in being dead. So, being 65, I have been exceptionally cautious over the last few months. Would you say I’ve done the right thing in responding to the pandemic?

Nassim Nicholas Taleb: Yeah. Okay. So, what I’m saying is that caution and prudence are perfectly compatible with your father’s statement.

So, the central idea that risks of variation is extremely different from risk of ruin, particularly at a systemic level. Like, risk of car accidents doesn’t impact–whether it goes higher or lower–doesn’t make a difference in a risk of ruin for society. The example I gave in Antifragile at the individual level is: if I jump one meter, I’m probably going to get stronger. Actually, if I don’t jump often, I will get weaker. But, if I jump 20 meters–you know, it won’t happen.

So, there is a difference between medium-size variations at individual level and systemic at the system level. You must survive.

And, this is something we discussed last time, last chapter of Skin in the Game, which is something about the absorbing barrier, that conditional on being here, odds are there’s some properties we didn’t have. We are paranoid for large-scale risks and certain classes of risk. And, what I’ve tried to do with my collaborator is figure out what are the systemic risks we should be avoiding, which is liberating because it allows us to take a lot of risks elsewhere.

Russ Roberts: But, do you think that–just thinking about myself and my personal risk–not the societal risk–should I have been extremely cautious, as I, in fact, have been during this pandemic?

Nassim Nicholas Taleb: Yes. We actually wrote a thing on it, Joe Norman and myself, as a follow-up: that even my archenemies–people who consider themselves my archenemies, liked–like Sam Harris–

Russ Roberts: Well, we don’t have to name them–

Nassim Nicholas Taleb: No, no, no, no. Sam is a nice guy because he went in and said, ‘Listen. I hate–‘. And, this guy hates me. He is my archenemy, but you know what? You got to read that piece.

And, in the piece, we follow the following very simple reasoning. It is very selfish for you to not reduce your risk, because a contagious disease has different properties. So, let me explain. Someone came up with a statistic that being hit by a car represented much larger risks for people. But, at the time it was true–

Russ Roberts: Than the pandemic —

Nassim Nicholas Taleb: Than the pandemic. Than COVID. But, then I said, ‘Okay. But, if you don’t behave conservatively, you will increase that risk dramatically because the collective risk doesn’t scale linearly from individual risk, unlike other risks that do effectively have some scale transformation.’ So, if I don’t pay attention, the risk will be high for everybody else.

It’s just like wearing a mask. I wear a mask not for myself, but because a person I’m going to infect will infect maybe 10 more, or, I mean, maybe up to 10 more–

Russ Roberts: Some number. Yeah —

Nassim Nicholas Taleb: Maybe up to 20 more. Some number more, maybe on average. So–

Russ Roberts: Depends if they sing in a choir or go to a urologist.

Nassim Nicholas Taleb: Yeah, exactly. Exactly. So, you wear a mask not just to protect yourself, but for the systemic effect.

And, very few understand that thing. And, last time we discussed rationality, we spoke about scaling. Like, some things may be perfectly rational for society, but totally irrational for any individual in it.

Russ Roberts: So, in the case of wearing a mask, if we all–and we’ll get to masks in more detail because we’ve come to a moment in American history deeply depressing to me, where wearing a mask has become a partisan, ideological issue rather than a scientific issue.

But, the point is, is that wearing a mask has external effects that are beneficial. It’s like being a nice person. You bear a very small cost. It is uncomfortable and hot. And, by doing so, you reduce the chances that you are asymptomatically spreading a deadly disease to, potentially, as you say, dozens of people.

Nassim Nicholas Taleb: Yeah. Yeah. So, it becomes a duty, sometimes, to act against your own interest–

Russ Roberts: A moral imperative–

Nassim Nicholas Taleb: It’s a moral imperative. And, masks are the cheapest. I mean, think about it. You’re inflicting huge economic cost by not wearing a mask. Because–I’ve computed a few things about convexity of masks and errors made by bureaucrats, initially. Because initially the World Health Organization [WHO], the CDC [Centers for Disease Control], all these people were against mask-wearing.

And, we said there were two things they did not figure out. The first nonlinearity, the first one, is they didn’t think–again, they don’t scale–they did not think that if I wear a mask and you wear a mask, we’re not reducing the risk by P, the protection, by a mask, but by P-squared. See?

So, the idea–so, for example, if I have 50% probability of being infected wearing a mask, and you have 50%, the total would be .25. So–but, there’s another thing people did not pick up. And, we saw it in a lot of papers. And, that is even more central: that, if I reduce the viral load by half, I don’t necessarily decrease the probability of infection by half. I may decrease it by 99%–

Russ Roberts: Right. And, there may be a threshold level.

Nassim Nicholas Taleb: because of convexity–

Russ Roberts: A threshold level.

Nassim Nicholas Taleb: There is an S-curve. So, if you’re in a left side of the S-curve, it must be that you’re convex. Everything is convex initially, and then concave at the end. So, that’s the nature of the S-curve.

So, these are the things that were missed by people who analyzed masks, initially, scientifically. They just looked at viral load reduction.


Russ Roberts: So, back in January of this year, January 26, you wrote a paper with Yaneer Bar-Yam and Joe Norman warning about the pandemic. And, it got some attention. But, if you were in your shoes then, looking back at that moment, which was–in America, nobody really was paying any attention to this–what were you hoping would happen when you wrote that paper? Besides raising an alarm, which you did.

Nassim Nicholas Taleb: Okay. No, no, no. Two things, and it was depressing that we had to do that. Our team was basically monitoring for pandemics because, in my opinion, they are the fattest tails, and fat tails means that these things could really go out of control. And, we haven’t had many pandemics in history, but we’ve had very lethal ones. They represent an existential risk. And, we knew that, so you have to stop some things in the egg, when it’s cheap to do so.

And, when Ebola started, people were not reacting to it properly. They were comparing a process that is multiplicative to risks that were in a Gaussian distribution. So, here we had fat-tailed risk–Ebola or any pandemic–versus people dying in their swimming pool, people falling from ladders, and stupidities like that. They do not compare–

Russ Roberts: Rare events–

Nassim Nicholas Taleb: Yeah, but you cannot compare these two, because one is multiplicative, and then the other one follows what I call ‘Chernoff bound.’ So–

Russ Roberts: Yeah: when I drown in my bathtub, you don’t drown in your bathtub as a result.

Nassim Nicholas Taleb: Exactly. Exactly. So, they’re not multiplicative.

And, then the way to look at it is they have extreme value properties that are very different. If I tell you a billion people died, you know they did not die drowning in their bathtub in any given year. Whereas if I tell you, ‘A billion people died. Try to guess,’ odds are it’s going to be either a nuclear war or a pandemic. More likely to be a pandemic. It’s actually fattest tail.

So, just to alert people to the nature of pandemics, that’s the thing we have to worry about the most. And, we failed during Ebola because people kept using–especially psychologists–rationality arguments.

And, our argument was twofold. One, the multiplicative notion; and the second one is that rationality point that I just made–that rationality doesn’t scale.

And, this is completely absent: the fat-tailedness and the scaling are absent from the Decision Science literature, which effectively makes people doing the right thing look like they’re irrational.

Russ Roberts: Right. And, no one wants to look irrational.

Nassim Nicholas Taleb: Exactly. So, the literature coming out of that tradition of rationality and all of that is completely bogus. So, we knew that from the Ebola days, four or five years ago. And, we were waiting for the next pandemic. And, sure enough, we saw the sign. In January. And, then we–

Russ Roberts: In China.

Nassim Nicholas Taleb: In China. And, at the same time, I started studying a little bit history, in preparation for a paper that came out in Nature: Physics with Cerillo, showing, effectively, that pandemics are the fattest-tailed thing, and that you got to kill them in the egg.

So, in preparation, I read some history, and I discovered that, effectively, Eurasia–I mean, let’s call it the Old World; let’s call it Eurasia–dealt with pandemics in a very effective way. It was part of the economics of the time.

Russ Roberts: Explain.

Nassim Nicholas Taleb: Because–people, when they talk about plague, think that it’s an instant phenomenon that killed a lot of people and disappeared. We had two plagues. The first one, Justinian’s Plague, and then the second one is what is commonly known as the Major Plague in Europe, in the 13th century. 1300s, 14th century, 13th or 14th century. And, people have the illusion that, ‘Hey, it came.’ In fact, no. The previous plague stayed. And, it was accelerated by commerce along the Silk Road. And, as can be expected, commerce brings germs. And, people adapted to it, because the plague stayed there for 300 years.

And, to give you an example of what happened, in 1720 a ship left Smyrna with merchandise coming from the East. Smyrna, now in Turkey, at the time in Ottoman Empire, Eastern. It was considered the Levant at the time. Went through what is now Lebanon, Cyprus. Went to Genoa. The Genovese didn’t let it in because they had something called lazaretto, which was a quarantine for all ships. When they suspected the Plague, it was enforced. Talking around 1720. The ship was owned by the Mayor of Marseilles. Okay? And, he bypassed the quarantine rules. Half the population of Marseilles perished.

Russ Roberts: You mean of Genoa.

Nassim Nicholas Taleb: No. Marseilles. Genoa refused it.

Russ Roberts: Oh.

Nassim Nicholas Taleb: Okay. Because they were smart, so you think about it–

Russ Roberts: Oh. It went to Marseilles. Okay.

Nassim Nicholas Taleb: Yeah, it went to Marseilles.

So, you think about it, that was the mechanism. Mechanism: The ship comes in. You have suspicions. You don’t take chances. You refuse the ship.

Russ Roberts: Wow.

Nassim Nicholas Taleb: And, the cities–you look at it. You’re in the Black Death, or that period, when they–some cities shut down. They did not accept any foreigner or any outsider, and even the residents coming back had to go to lazarettos, or the equivalent of quarantine.

So, quarantine was built in.

Russ Roberts: Was a standard operating procedure.

Nassim Nicholas Taleb: Procedure. Standard operating procedure, activated whenever people suspected something. And, the Ottoman Empire–you see, the Ottoman Empire–had a border with the Habsburg at the time. And, whenever you crossed from one to the other, you quarantined.

Russ Roberts: And, it’s worth pointing out that ‘quarantine’–its root is Italian, or Latin, which is ‘forty’.

Nassim Nicholas Taleb: 40. It’s 40 days. It was 40 days.

Russ Roberts: So, I think these people were–

Nassim Nicholas Taleb: Yeah.

Russ Roberts: Which was a pretty serious–we do two weeks here in modern times.

Nassim Nicholas Taleb: But still, two weeks works. I mean, two weeks is good enough. I mean, whatever reduction of connectivity is very good.

So, what happened is you have to realize–and this is something I saw when writing The Black Swan–that we have more connectivity today than we did before, so therefore things that are multiplicated will be vastly more multiplicated today. And, you have more of a winner-take-all, just like we have economic winner-take-all with Google thanks to technology.

I notice Pavarotti, for example, the singer–the opera singer. Because you had the television, okay, he really–

Russ Roberts: And, the radio.

Nassim Nicholas Taleb: And, the radio–

Russ Roberts: I mean, album. CDs [compact disks]. Yeah.

Nassim Nicholas Taleb: Yeah. So, you had–particularly for opera, where you need the visual–you had a winner-take-all effect, where a few opera singers were making hundreds of millions of dollars, and the rest were starving, or working for Starbucks, or singing at birthday parties.

So, you have the same concentration, the same thing will happen, with diseases, that you would have a winner-take-all disease taking over the planet. And, we have super-spreader events that cause even more fat tails.

To give you an example, urology conference in Las Vegas. And, in this case, what happens in Las Vegas doesn’t stay in Las Vegas, gets redistributed to 200 countries. So, people come in, they get something, and then they distribute it. So, that, you did not have on the Silk Road. It was much slower, 30 kilometers a day maximum, you see.

And, because you had that barrier of religion between the Ottoman Empire and what’s considered now as Western Europe, because you had that barrier, it was porous but not as porous as the world is today. So, you don’t have natural limits to things.


Russ Roberts: So, back in January, when you were warning about this risk–of course, it hasn’t taken over the planet exactly, and we’ll talk about that in a little bit. It’s been, obviously, devastating in different degrees in different places. But, what do you think we should have done in January? And, the right way to phrase that is, when the next pandemic hits, and we get COVID-23 instead of COVID-19, what’s the right response at the national level? and then at the state level? the local level? and the personal level?

Nassim Nicholas Taleb: We wanted systematic quarantines, because the fact of having quarantine for people coming from China is foolish, not knowing that they can come from somewhere else, okay–

Russ Roberts: Yeah. Europe.

Nassim Nicholas Taleb: and the fact that it came from somewhere else.

Russ Roberts: Yeah.

Nassim Nicholas Taleb: And, the Chinese, actually. And, then, also you want to have the World Health Organization removed. It’s a bureaucratic organization that has been devastating for mankind because of its incompetence. They prevented people from wearing masks. So–

Russ Roberts: Now, since then, the CDC did the same thing.

Nassim Nicholas Taleb: Yeah.

Russ Roberts: They have since confessed that they did that. At least that’s what they’re saying now, that they did that because they were worried about a shortage. So, they lied to people, if that’s true; degraded the quality and credibility of their organization, and resulted in–

Nassim Nicholas Taleb: No, no. It’s not just that they lied. They’re incompetent. They didn’t understand the compounding.

Russ Roberts: Well, maybe, yeah.

Nassim Nicholas Taleb: See. Now they’re saying, also, they did not realize that–you know, they’re bureaucrats. In their opinion, only the government can make masks. They did not realize that there is a market, that the minute you tell people, ‘Hey, wear masks,’ that people would find stuff in their closets that would work perfectly as a barrier, and we wouldn’t be here.

What I think today–we thought of the mask situation late in the game. Initially we bought the argument that it was not transmitted by that mode. We thought it wasn’t contagious. But, very quickly we figured out the mask situation, when Taiwan–when we got a statistical hint there–why is it that Taiwan, that has a lot of traffic from Wubai–

Russ Roberts: Or Wuhan.

Nassim Nicholas Taleb: Wuhan–was completely spared?

Russ Roberts: And it’s claimed that Hong Kong has been completely spared as well despite its [inaudible 00:20:30].

Nassim Nicholas Taleb: And, look at the mask situation. So, you start getting statistical hints.

And, then, of course, we [?] convexity argument and realized immediately that they missed it. So, was very embarrassing. But, that’s not the point. The idea–

Russ Roberts: You said ‘missed it.’ I thought you meant, ‘misted.’ Like, because of the virus. But you meant: ‘missed it.’ Sorry.

Nassim Nicholas Taleb: Missed it. And, then also there’s something. They said, ‘Well, there’s no evidence masks work. Don’t use them.’ They cannot–.

Russ Roberts: I’m still hearing it. People are still saying it.

Nassim Nicholas Taleb: Yeah, ‘There’s no evidence mask works.’ Hence, wear it, if you don’t know. The whole idea of the Incerto, the central idea of the Incerto, is that when you have uncertainty in a system, it makes your decision-making much, much easier.

Russ Roberts: Rather than harder. It seems harder.

Nassim Nicholas Taleb: Yeah. It seems. And, let me give you [inaudible 00:21:18] example. This water: If I tell you, ‘Well, I’m not certain about the quality of this water,’ what would you do? Would you drink it?

Russ Roberts: No.

Nassim Nicholas Taleb: Okay. Very good. Okay. Very simple. I tell you–we have uncertainty about the pilot’s skills. He could be excellent, he or she [?]–

Russ Roberts: Or incompetent.

Nassim Nicholas Taleb: Okay. We’re not sure. We have uncertainty. What do you do? Right? You get off the plane.

Russ Roberts: No, you get on the plane for a while. The reason I like this example is that, if there’s a 1% risk that the water has the bubonic plague in it, you don’t drink 1% of it, thinking, ‘Well, it’s probably okay.’ Or, ‘Less that 1%, it’s probably good.’

Nassim Nicholas Taleb: There we go. There we go.

Russ Roberts: You just don’t drink it. You go to zero. You go to the corner, we call it in economics.

Nassim Nicholas Taleb: There we go. And, people behave that way. We’re going to see how people’s built-in instinct is vastly superior to what the CDC had, what a lot of scientists, what these decision-making professors, the Nudge group in the United Kingdom. All these people are completely incompetent when it comes to basic things that your grandmother gets.

Russ Roberts: Yeah. Your grandmother is right, often.

Nassim Nicholas Taleb: This instinct helped us get here.

Russ Roberts: Yeah. If she weren’t right, we wouldn’t be here.

Nassim Nicholas Taleb: Exactly.

Russ Roberts: Yeah.

Nassim Nicholas Taleb: There we go.


Russ Roberts: So, this–I’m going to talk about masks for a minute because what I found fascinating about it, in thinking about these kind of issues of risk generally: If you tell people that if you wear a seatbelt you might drive less carefully, they laugh at you. They say, ‘Nobody pays attention. That’s ridiculous.’ But, those same people, for some reason, when we started to suggest that wearing masks was a good idea, ‘Oh, no, no, no. There’s all these other facts. You might touch your face more. You might think you’re safer than you really are,’ which is like the seat belt argument. They said, ‘It’s not scientific. There’s no evidence. There are no studies. There’s no clinical data on mask-wearing.’ And, I’m thinking, ‘Why is clinical data the only kind of evidence that is acceptable?’

Nassim Nicholas Taleb: Okay. Yeah. So–

Russ Roberts: It’s absurd.

Nassim Nicholas Taleb: After 20 years of working with uncertainty–and, more than 20 years, of course, but, 20 years of publishing to it, I finally wrote a piece that has a sentence that summarizes everything I’ve struggled to explain. In my debate with John Ioannidis, I came up with a sentence: ‘Science is not about evidence. Science is about properties.’ It’s not about [crosstalk 00:23:59] forecast.

Russ Roberts: Explain. Explain.

Nassim Nicholas Taleb: So, science is about understanding something. So, it’s not about details.

For example, if you have absence of evidence, all right, it’s still scientific to describe a process–

Russ Roberts: That this virus goes in your nose, and it comes out of your nose. So, if you cover your nose, and the guy across from you covers his nose, maybe it’ll reduce–I mean, that just seems–

Nassim Nicholas Taleb: Exactly. It is scientific. It’s scientific to say, ‘Let’s wear masks.’ Because, if your decision–if you map your decision-making abilities or the decision-making–sorry–the rationale–in a scientific way, then you would get results that are very formal. But, this naive, evidence-based science is not there in sophistication yet, to grasp that. And, we’re all interested in details about forecasting. But, science is not–

Russ Roberts: Hey, but wait a minute–

Nassim Nicholas Taleb: about forecasting single events. Science is about understanding the properties of stuff–

Russ Roberts: Let’s talk about that. Yeah.

Nassim Nicholas Taleb: which may or may not include forecasting.

Russ Roberts: But, one second. I just want to add this famous, sort of onion-like example, which is: There’s no clinical data on whether it’s unsafe to jump from an airplane without a parachute at 35,000 feet. Right? So, when someone says, ‘Should you put on a parachute or not?’ you could say, ‘Well, there’s no evidence that it helps.’ But, we understand gravity. We understand logic, and we would understand that you don’t need a clinical study, and–

Nassim Nicholas Taleb: And, you understand asymmetry. You understand asymmetry.

And, this is what I’m saying, is that integrating in your decision-making rigorous science includes taking into account the asymmetry, the payoff assymetry: that, the harm you’re going to get from wearing a parachute is vastly inferior, potentially, than the benefits you may get for it. That’s it. Simple.

Russ Roberts: Right. It’s the same with the mask, right? The mask is a little bit uncomfortable. It’s a little bit hot. It costs $8. It’s a bargain.

Nassim Nicholas Taleb: What do you mean it costs $8? You can make masks for 45 cents, using–

Russ Roberts: Yeah. 50 cents.

Nassim Nicholas Taleb: Listen–coffee filters work.

Russ Roberts: Yeah. You can also–I probably mentioned this before–get on YouTube and Google, or search, for ‘sock, mask, scissors,’ and you’ll find a way to make a mask just with a pair of scissors and a single sock. It’s phenomenal.

Nassim Nicholas Taleb: Yes.


Russ Roberts: So, let’s talk about forecasting, because a lot of people have lost some unfortunate credibility because they picked numbers. They said–famous example in England, Neil Ferguson–not my colleague at Hoover [Niall Ferguson–Econlib Ed.]; the other Neil Ferguson–said that up to 2 million people could die from the pandemic. And, you could argue, ‘That was okay because he said “up to.”‘ Which is meaningless, of course. It doesn’t mean anything. It just means it could be really bad–which it could have been.

And, you could argue it was important for him to scare people into being more cautious, and that was the payoff for this. It was that people became more careful when they heard that number. So, what’s wrong with making a forecast like that?

Nassim Nicholas Taleb: Okay. I’m sharing a screen with you here. And, a paper that started with a debate with Ioannidis. And–

Russ Roberts: This is John Ioannidis, who is a past EconTalk guest, who I’m very fond of. And, we may get from him–

Nassim Nicholas Taleb: Yeah, I used to be fond of him.

Russ Roberts: Well, we may hear from him down the road. Go ahead. Let’s see the image.

Nassim Nicholas Taleb: Talebetal_25062020_Fig1.jpg So, the title is “On Single-Point Forecasts for Fat-Tailed Variables.” And, let me explain it very simply, and explain why science is not about forecasting, as people think. Sometimes it’s about forecasting, but not necessarily so.

You see this graph here. I have a probability distribution that is very skewed. Actually, it’s not an unusual probability distribution. It’s common, log-normal, which is not the worst. I mean, there is worse–

Russ Roberts: And, for those listening to audio only, we’re going to describe this in a minute, without the graph. But, carry on. Carry on, Nassim.

Nassim Nicholas Taleb: The average is slightly above 7. Okay?

Russ Roberts: Mm-hmm.

Nassim Nicholas Taleb: All right. And, the–

Russ Roberts: The variable.

Nassim Nicholas Taleb: The variable. And you only observe the average 15% of the time. Something above the average. Okay? 85% of the observation fall below the average. Okay? And, what’s worse, that 50% of the observation fall below 1, which is like [13? 30?] percent of the average.

Russ Roberts: So the average is–for those not listening at home: the reason I love this image, and your discussion of it, is that it highlights something important that I’ve learned from you, which is: Most of our casual, non-real, academic explorations of risk are based around classroom exercises like flipping a coin. And, flipping a coin, or the distribution of height in the United States–these are what are approximated by normal distributions, where most of the events occur around the middle, around the mean. So, if you flip a coin a thousand times, you’re going to get between 400 and 600 heads most of the time. You could get 700, but it’ll be rare. You could get 300. That’ll be rare.

The point of this kind of distribution–it doesn’t look anything like a normal distribution. And, if you bring your intuition from the normal distribution into this picture, you’re going to make some horrible mistakes. So, just to repeat: In this case, the average outcome is 7. But, as you said–

Nassim Nicholas Taleb: A little more than 7–

Russ Roberts: A little more than 7. But, 50% of the time, it’s going to be less than 1. And that’s because, and just to make it clear, that’s because it has a long tail to the right, and you’re going to get outliers relatively often. Unlike the case of flipping a coin, where you can’t get more than a thousand heads in a thousand tosses. Or height–you can’t get anybody over, say, 7.5 feet tall. And, wealth, or other things that are distributed–risk of a pandemic, death rate–

Nassim Nicholas Taleb: Okay. So–

Russ Roberts: You can have big numbers.

Nassim Nicholas Taleb: Talebetal_25062020_Fig2.jpg Yes. But, now I have a second graph to show you, which is going to depress you. Or, maybe–you know, I think that understanding uncertainty makes me happy because I know there’s not that many risks out there. I just worry about those. And, that makes it–

Russ Roberts: It also makes you feel smart, Nassim.

Nassim Nicholas Taleb: Exactly so. But, that makes it vastly more fat-tailed.

Russ Roberts: Yeah.

Nassim Nicholas Taleb: Okay? So, in this case, the average for this distribution–if it exists, assuming it exists–will come from one observation. So, you can have a million observation. One will determine the average.

Russ Roberts: Meaning? Explain that. I don’t understand.

Nassim Nicholas Taleb: Meaning–okay. So, fat-tailed means, like, if you take the wealth in America, you realize that 1% of Americans own 50% of the wealth.

Russ Roberts: Okay.

Nassim Nicholas Taleb: Okay. And, it gives you contribution by outliers that can be monstrous, like Jeff Bezos is wealthier than–I don’t know–the bottom hundred billion American, 200 millions, whatever it is.

Russ Roberts: Whatever it is. Yeah.

Nassim Nicholas Taleb: Okay. So, the concentration. It is concentrated. These pandemics have effected, are very, very concentrated, in the sense that: One observation will determine–unlike the normal that we saw earlier, which gave us the intuition, 85% of the observation are above the average–in this case, only one single observation is above the average.

Russ Roberts: One.

Nassim Nicholas Taleb: One.

Russ Roberts: And, why is that important?

Nassim Nicholas Taleb: It’s important to realize that you can’t work with averages, and you cannot work with forecasting. There are techniques from extreme value theory, where you can understand perfectly what’s going on, have a representation of reality–

Russ Roberts: So, let me try to–

Nassim Nicholas Taleb: That mean you have representation of reality, but it’s not describable by an average, nor can it be captured by testing people’s forecasting.

Russ Roberts: All right. So, let’s take out the screen sharing. Let’s go back to you and me [Zoom/YouTube screensharing removed] you and me.

Nassim Nicholas Taleb: Okay.

Russ Roberts: I want to try to [inaudible 00:32:21] this.

Nassim Nicholas Taleb: Okay.


Russ Roberts: So, let’s talk about why this is important. If I’m an expert, and you’re doing a coin-flipping exhibition, and you’re going to toss a coin a thousand times, and I’m called in to ask, ‘What’s my forecast?’ So, I say, ‘Well, I think he’s going to get about 500.’ And, I’m going to be in the ballpark.

Nassim Nicholas Taleb: Exactly. Because–

Russ Roberts: I’m going to be in the ballpark.

Nassim Nicholas Taleb: Exactly. What you just described, parentheses, is the law of large numbers.

Russ Roberts: Yeah. Right.

Nassim Nicholas Taleb: It does work for thin-tailed distributions. So, if you have large enough a sample, or large enough a repetition, you can figure out what’s going on.

Russ Roberts: So, the–another way to say it–and, again, to put it into folksy terms that I also got from you–is that you care about–you don’t care about the average depth of the river if you’re going to walk across it and you can’t swim. You care about where it is deepest. And, if the average is three feet high, but there’s a large stretch where it’s 60 feet deep and you’re going to die, that’s what you care about, not the average.

And, here you’re saying that if the average death rate from this pandemic forecast, which is based on a zillion assumptions also, is a million people, that that prediction is essentially meaningless. Because there’s no sense in which–there’s so many factors are going to determine where we are on the distribution that aren’t going to be subject to the Law of Large Numbers.

Nassim Nicholas Taleb: Exactly. So, in another words, if the real average that can come from pandemics is something like 2 billion, more; or 3 billion–right? 99% of the time you will observe something under a million.

Russ Roberts: Right.

Nassim Nicholas Taleb: Okay? So, which is–

Russ Roberts: But, that doesn’t mean–

Nassim Nicholas Taleb: Which is why we should not forecast numbers.

That’s the first reason why a single-point forecast is highly unscientific, naive. What I call naive, [thinkatory ?] statistical approaches. Okay.

Russ Roberts: Say that again. Let’s go back to that example, because I think it really helps people.

So, the mean, the expected value, the average–you run a simulation, the equivalent of a simulation. And you run a hundred plagues, and you find out that the mean number of deaths is a billion.

Nassim Nicholas Taleb: Yes.

Russ Roberts: And, that’s because there’s a few times when it’s 5 billion and 7 billion, and there’s a lot of times when it’s quite low.

Nassim Nicholas Taleb: Exactly.

Russ Roberts: And, then it becomes–the actual event occurs. And, because people are cautious or for whatever reason, we get a good draw from the urn, and the death rate is maybe only a million.

Nassim Nicholas Taleb: Yeah, and it’s not necessarily because people are cautious. It’s mostly, largely, because diseases, even COVID, which we think know something about it, we know nothing. Because it can mutate. Sometimes it can start mildly. We classify as pandemic that have fat-tailed events that have killed more than a thousand people.

Russ Roberts: But, the point is that–

Nassim Nicholas Taleb: And, let me tell you why this is important.

Russ Roberts: Go ahead.

Nassim Nicholas Taleb: It means that you don’t have to worry about anything that hasn’t killed yet a thousand people. See, we separate the classes. Something that has not killed–every time you have a virus in town, it doesn’t[?] matter.

Russ Roberts: It does not matter.

Nassim Nicholas Taleb: It doesn’t matter. You don’t have to worry. The minute it kills–if it’s in the category that it has killed more than a thousand people, then you have to worry about that.

Russ Roberts: Because it could be a fat-tailed monster from–

Nassim Nicholas Taleb: It is a fat-tailed monster.

Russ Roberts: But, it could be a monster that could kill a billion.

Nassim Nicholas Taleb: Exactly. You have to kill it in the egg–

Russ Roberts: But, I want to–

Nassim Nicholas Taleb: as we’re approaching a thousand. Yes.


Russ Roberts: I want to get at this point about the naivete and unscientific nature of these forecasts. Somebody who says, ‘I have simulated this. The mean number of deaths is a billion.’ Then the actual thing happens, and only a hundred thousand people die. You don’t want to say–he might be an idiot–but you don’t want to say he’s an idiot because it was an inaccurate forecast. He’s a–

Nassim Nicholas Taleb: That’s exactly the point. So–

Russ Roberts: You’re saying he’s an idiot because you cannot–I would say it differently: ‘Expected’ doesn’t mean an ‘average’; don’t mean ‘typical,’ here.

Nassim Nicholas Taleb: Exactly–

Russ Roberts: We run those words together.

Nassim Nicholas Taleb: Exactly. We said, ‘You’re an idiot to forecast,’ and ‘He’s an idiot to critique your forecast.’

Russ Roberts: Right.

Nassim Nicholas Taleb: Okay. So, this is what we said in the paper. And, we said one thing. We said, ‘Science is not about accounting. It’s not bean counting. Science is about understanding a phenomenon.’

Russ Roberts: A process.

Nassim Nicholas Taleb: Now, the second thing I would say is that, effectively, some people have abandoned completely that naive forecasting, and study properties in risk management very effectively. The Dutch. Because you know it’s a country, it’s a low country: so they are worried about the level of the water. They are not interested in the average. They’re interested in the maximum.

Russ Roberts: Yeah.

Nassim Nicholas Taleb: Okay. And, then there’s a whole science of extrema coming from statistics, applied in insurance, applied in risk management, applied in finance, applied in many fields extremely successfully, that look at what robust claims you can make about maxima.

And, that’s the one I used in my paper with Cerillo. We used exactly the same techniques used for the expected maximum or the average maximum–which is different from the average and different from the maximum–water level. And, of course, we modified it. We had to find robust tricks. It was complicated. But, over the years, we developed a technique to deal with extreme value theory applied to some classes of phenomena–namely, wars and the fattest of fat tails of all, pandemics.

So, when we started warning about pandemics in January, it was not the cry-wolf variety. We told, ‘Don’t worry about anything else. Just worry about these things, things that are multiplicated, particularly pandemics, and here is the evidence.’ It’s not like, ‘Oh,’ people were supplying us with arguments[?], ‘Oh, if we listened to you, you’d never make money. You’d stay home all the time.’

Russ Roberts: Stay home all day.

Nassim Nicholas Taleb: No. No, no, no. The entire point of the precautionary principle is to replicate what that old trader told me.

Russ Roberts: Which is what?

Nassim Nicholas Taleb: ‘Take all the risks you want, but make sure you’re in tomorrow.’

Russ Roberts: Yeah.

Nassim Nicholas Taleb: Which is how Goldman Sachs, taking a lot of risks, have survived, so far, 161 years.

Russ Roberts: Don’t eat the nest egg. Don’t [inaudible 00:38:53]–

Nassim Nicholas Taleb: Make sure you survive. Hopefully you’ll invite Ole Peters, people who worked on ergodicity. Standard economics has flaws in it because they don’t taken into account this absorbing barrier.

Russ Roberts: Yeah. The other thing I think you’ve emphasized over the years, which I find very helpful, is that a lot of modeling takes place because it’s convenient, not because it’s right. And, dealing with expected value, which is the average, is easy. And, so we do a lot of it.

Nassim Nicholas Taleb: Yeah. We’re not against modeling. They are parameters for fat-tailed distribution that are very robust. We’re not against modeling. We’re against naive modeling. It doesn’t mean that because you have a model, that it’s right.

But, on the other hand, it doesn’t meant that mathematics cannot be used effectively and rigorously to capture empirical phenomena. You just have to be very careful. And, the interesting thing–I just wrote this book, and actually it’s out today. Okay. The Statistical Consequences of Fat Tails. And–

Russ Roberts: Fantastic bedside reading, I suspect, for people who have trouble falling asleep. It’s a technical book, right?

Nassim Nicholas Taleb: Yeah. Yes. Very technical. And, it’s sort of the technical Incerto. I have the Incerto for what I call the philosophical literary books, and this is sort of like a backup that I’ve been writing over the years. And, the first volume is out. Today.

And, the entire message of the Incerto is that a lot of things that people claim come out of statistical models, don’t come out of statistical models. For example, linear regression. You cannot do it with fat tails. So, it’s not science. When you violate fundamental mathematical rules, it’s not science anymore.

Russ Roberts: Well, to me that’s like the insight of Ed Leamer, in his essay we’ve talked about here before, “Let’s Take the Con Out of Econometrics”–

Nassim Nicholas Taleb: [crosstalk 00:41:02]. Exactly. Exactly.

Russ Roberts: where he’s basically saying that if you’re constantly trying different variations of the models, of what variables you include, you can’t use the standard statistical significance tests because you’ve violated the underlying assumptions under which they were generated.

Nassim Nicholas Taleb: There you go. That’s one of them. So, I went through, like, 18 violations by saying that, for example, you cannot do linear regression if you don’t satisfy the Gauss-Markov theorem. I didn’t come up with that theorem. They are using that theorem as justification.

Psychologists use correlation. They cannot use correlation when you have non-linear effects, for example, because it’s going to be a linear coefficient of linear association. And, stuff like that.

And, then you go deeper with the principle-components analysis, sector analysis. So, the idea is that they are violating the rules of statistical inference.


Russ Roberts: I want to talk a little bit about fat tails and pandemics to make it a little clearer. Let me see if I understand you correctly. I hear you’re saying the following–because you corrected me at one point. You said, ‘Well, it’s not necessarily how people behave.’ A pandemic of pandemics is one that is more infectious, more fatal, etc. So, we often don’t know those characteristics of the virus when it’s spreading. So, to get that tragic catastrophe–

Nassim Nicholas Taleb: You can tell pretty quickly. You can tell very quickly.

Russ Roberts: But the catastrophic, far-tail outcome of one billion dead–when do we need to worry about that? Is that because it’ll be a particular [?]–

Nassim Nicholas Taleb: The minute you cross a thousand. Okay. We’ve tested. There’s this magic number, whatever it is. It could be 200, 300 people. But, we said,: Okay, as a heuristic, let’s study the class of those that have killed more than a thousand people in today’s population equivalent in history.

Russ Roberts: Right. But, COVID-19 doesn’t kill young people much, hardly at all.

Nassim Nicholas Taleb: It killed more than a thousand people.

Russ Roberts: I understand.

Nassim Nicholas Taleb: It’s not that true[?]. First of all, we know nothing about COVID-19. We’re, what, five months into the thing?

Russ Roberts: Yeah. Maybe.

Nassim Nicholas Taleb: And, most infected people were infected recently because it’s still growing. And, you have about, what, 500,000 people died, today?

Russ Roberts: So, far.

Nassim Nicholas Taleb: So, far. There’s one thing we can make. We know nothing about morbidity. Nothing about–

Russ Roberts: Explain. Explain.

Nassim Nicholas Taleb: Okay. When you get sick, okay, you come out of a disease, sometimes you come out of it stronger, but in some cases you have side–

Russ Roberts: Oh, I see what you’re saying.

Nassim Nicholas Taleb: some effects, either of the treatment or the disease itself.

Russ Roberts: You would survive, but your lungs are damaged, and you’re going to live much shorter–

Nassim Nicholas Taleb: A lot of young people have damaged lungs. We don’t know.

Russ Roberts: We don’t know.

Nassim Nicholas Taleb: [crosstalk 00:43:56]–

Russ Roberts: We don’t know.

Nassim Nicholas Taleb: But that’s the whole idea, is we know nothing. We know very little about COVID today. Until now–

Russ Roberts: So, the lesson, then–

Nassim Nicholas Taleb: Till now that they started treating it differently from respiratory thing. Now they understand that there could be some autoimmune effects and reactions. So, you cannot rule out the effect on young people.

Russ Roberts: And, what I’m thinking is that we’ve had some scary diseases–Ebola, SARS [Severe Acute Respiratory Syndrome], etc.–and not that many people died. And, I think it lulled people like myself into a false sense of security. ‘Oh, these things are overblown. It’s not so bad.’ You understood, and your coauthors understood, that’s the wrong way to think about it. What was I missing? Did this one kill a lot more people because we didn’t react correctly? Because it’s a different kind of virus?

Nassim Nicholas Taleb: Okay. No. Okay. The idea that you should treat, as we warned in January, absolutely all pandemics the same way.

Russ Roberts: Okay.

Nassim Nicholas Taleb: The minute they kill–and, the reason we use the number killed, because you have a lot of pandemics that are not that consequential, like the common cold. They’re not consequential. So, you should treat them all as something that can potentially mutate, once you enter that class.

One thing that people don’t realize is that–in hindsight, of course, you know what happened. You know that Ebola was not a big deal.

Russ Roberts: Right.

Nassim Nicholas Taleb: You know that SARS was not a big deal, in hindsight.

In foresight, when you’re standing facing uncertainty, you should behave according to a protocol. What is my protocol here? The protocol is we have something to take seriously. And, let’s find ways to pull out of it.

One thing I question is that people believe that fighting the pandemic is costing us money. It’s not fighting the pandemic that’s costing money. It’s the pandemic. And, let me explain. If you’re rational, would you go to a restaurant in New York City?

Russ Roberts: No.

Nassim Nicholas Taleb: Would you go to a bar?

Russ Roberts: No.

Nassim Nicholas Taleb: You would not go to a bar.

Russ Roberts: No.

Nassim Nicholas Taleb: Okay. All right. So–

Russ Roberts: Well, I would if I wore a mask, the other person wore a mask, and I didn’t stand talking to him for 20 minutes.

Nassim Nicholas Taleb: [crosstalk 00:46:18]. Okay. All right. So, as a bar, then, [inaudible 00:46:18]–

Russ Roberts: It’s a weird bar.

Nassim Nicholas Taleb: you have to wear a mask inside. Okay. So, what killed–

Russ Roberts: I say that because I was at a brewery yesterday, outside, in the countryside. Yeah.

Nassim Nicholas Taleb: Outside, that’s fine.

Russ Roberts: Wearing a mask. But, yeah.

Nassim Nicholas Taleb: Yeah. Okay. When we don’t know what’s going on, in the beginning–we don’t know what’s going on. So people have risk aversion. They don’t want to get on a plane that has 1% probability of crashing or an unknown probability of a crash.

Russ Roberts: Right.

Nassim Nicholas Taleb: People have that aversion. And, all it takes in New York City for some restaurants is a drop of 20% of revenues. That’s all it takes for them to go bust.

Russ Roberts: Sure. They’re already on a thin margin, anyway.

Nassim Nicholas Taleb: Exactly.

Russ Roberts: Almost all of them.

Nassim Nicholas Taleb: They’re already working on such a thin margin.

And, I read a statement by the chairperson of Delta, saying, ‘Hey, take care of the clients. They only make money–the plane is full, we only make money on the last four passengers.’ So, there you go. Would I get on a plane? No. Now, I would, but of course–so, you realize that a lot of the economic contraction that we have is a result of uncertainty.

Russ Roberts: It’s fear. No, it’s mostly fear.

Nassim Nicholas Taleb: It’s fear and uncertainty, and we didn’t know much about it. And, that’s a major cause of economic contraction. The positive trade-off between government shutdown and the business–

Russ Roberts: Not so important. We shut it down. Most people shut down. We shut ourselves down.

Nassim Nicholas Taleb: Of course. Of course. [crosstalk 00:48:01].

Russ Roberts: Because we’re afraid. And, rationally so, is your point.

But, I want to come back to this understanding about risk because: why is any–this might’ve been different. It might not have had much of an effect. What was different about this one, relative to Ebola and–

Nassim Nicholas Taleb: It was not. It was not different.

Russ Roberts: Why has it spread so much more? Why is it so much more deadly? Is it the virus itself?

Nassim Nicholas Taleb: Ebola had some different characteristics, but you couldn’t tell about this one at the time, and we still can’t tell about this one, because this and Ebola can change. Ebola kills people faster and more effectively. It kills a high number of carriers. Okay? This one doesn’t. But, things have changed.

Russ Roberts: Right. But, your point is that–

Nassim Nicholas Taleb: And, it could change here. And, it was Ebola–you can’t really say, ‘Okay, let’s not worry about Ebola, because it’s going to kill enough people before they–‘

Russ Roberts: Spread.

Nassim Nicholas Taleb: ‘–before they spread it to others, so therefore it’s a good disease.’ You don’t know. You should treat them all the same way. That was my idea, that all of them–and, we don’t have to worry too much about pandemics.

Russ Roberts: Because?

Nassim Nicholas Taleb: Just to have a good mechanism.


Russ Roberts: So, we’re going to come to that. But, I want to just put a period at the end of this piece of the conversation because I think I understand it better, which is, to come back to your point about statistical characteristics, you would be an idiot or a fool to look at past pandemics and say, ‘Well, they really didn’t kill so many people, so I’m not worried.’ Your point is that, that past experience is not predictive. The average of the past 12 pandemics is a poor predictor of what to do, to expect of the next one.

Nassim Nicholas Taleb: Exactly. That’s what we told the epidemiologists. And, we had an impactful paper, Cerillo and I, because it was presenting things that physicists understood, mathematicians could grasp, but epidemiologists not so much, you see.

And, then it’s a mathematician who helped spread our message, not the epidemiologists, about the fat-tailedness of the process and why you should take it seriously. You should take all fat-tailed processes seriously. [inaudible 00:50:13]. We spend a trillion dollars in America, okay–give or take a hundred billion or so, no?–on defense, directly and indirectly.

Russ Roberts: Okay.

Nassim Nicholas Taleb: Okay? So, it means that we are not willing to gamble with certain things without security. You agree?

Russ Roberts: Right. Yup.

Nassim Nicholas Taleb: Okay. So, you may argue, as I do often, that this causes more instability in the world and stuff like that, and–

Russ Roberts: It has consequences–

Nassim Nicholas Taleb: Okay. This has consequences; and that it’s not probably in our best interest to have–you know. Anyway. But, the point is, we spend that money. We don’t have to spend as much for pandemics. And, pandemics are vastly more dangerous than wars.

Russ Roberts: So, what’s the protocol? You said we should just follow the same protocol with every one of them.

Nassim Nicholas Taleb: Sure: mechanism for quarantine, reduction of–and identify super-spreaders. You don’t have to lock down things. In this case, it’s very easy. Super spreaders are subways, elevators, and big gatherings like the Trump convention.

Russ Roberts: Weddings. Yeah.

Nassim Nicholas Taleb: The Trump convention, for example.

Russ Roberts: Yeah. Trump rally–political rallies.

Nassim Nicholas Taleb: Political rallies. Okay. And, then if you have masks, then you can mitigate. Okay. So, okay, you can attend a game, but everybody should wear masks. Because now we understand that open air–but, when you don’t know, you have quarantines and elimination of super spreaders, till we figure out what’s going on.

Russ Roberts: My complaint–I have a few, but one of my complaints is that we don’t know much about what’s going on, even right now. And, one of the key roles for the government, to me, should be gathering information so that we could make good decisions about what’s risky and what isn’t risky. We don’t have good testing mechanisms. The government did an atrocious job in the United States.

Nassim Nicholas Taleb: There we go. So, we spend a trillion dollars on weaponry, nuclear warheads. You can destroy Russia, or you can destroy any country you want a hundred times. But, we are still not able to have proper testing and/or proper quarantine.

Russ Roberts: But, quarantining is tricky, right? So, when China–in China, as far as I understand it, they used basically the military and said, ‘You get the disease–‘. They stopped people at checkpoints. They took temperature. They did testing.

Nassim Nicholas Taleb: You don’t have to go that far. The–

Russ Roberts: What quarantining would you support?

Nassim Nicholas Taleb: No. Quarantine [inaudible 00:52:53]. Listen, the Federal government’s job is not domestic quarantine. It’s international travel. At least check people coming in. Right?

Russ Roberts: Yeah.

Nassim Nicholas Taleb: They were not checking people–

Russ Roberts: Still not doing it, I assume.

Nassim Nicholas Taleb: Still not doing it. Okay. Check people coming in. That’s what they do. And, then you quarantine people who are suspicious cases.

And, states should probably do the same. You’re allowed to block New York City and say, ‘Okay. We can check you,’ like some Italian towns have done.

This is the victory of localism because it showed that, just like the Plague. The Plague was a victory of localism. Some towns fared a lot better than others. And, here some states will fare better than others.

But, the idea that it’s cost you money is bogus because you can do it at very cheap costs.

Russ Roberts: Well, it does cost you money, but there’s different ways–there’s different amounts, depending on what you choose.

Nassim Nicholas Taleb: Yeah, exactly. No. It does cost you money, but I don’t think it should. And, now we’re going to adapt to an economic life that is adapted to these things. I think. And, the way–

Russ Roberts: How will it change? What do you think will change? 53:58

Nassim Nicholas Taleb: We’re antifragile. I mean, we learned from this. It’s like when a plane crashes, the probability another plane crashes drops.

I think the odds of us suffering from the big one–because this is not the big one, by the way. The big one can be some antibiotic-resistant bacteria coming out of hospitals, something crazy. So, now we know how to handle it. And, we know how to–

Russ Roberts: Are you confident about–how confident are you about that? So–

Nassim Nicholas Taleb: I am very confident. And, the fact that you and I are doing Zoom now, something you never wanted before–

Russ Roberts: No.

Nassim Nicholas Taleb: is a testimony to the change of times, and how we’re adapting, and some people are better off. Like, we have this conference, the Real World Risk Institute conference, and we’re going to be able to accommodate many people who could not afford to come spend a week in New York.

Russ Roberts: Sure.

Nassim Nicholas Taleb: And, we never thought of it before, of doing something online. The university system is going to adapt to it, and it’ll be lot cheaper to get an education, because you can stay in India and get a class from any person in the world.

So, there are things that the adaptation is leading. As you know, the economy likes stressors, leading to a beautiful–somewhere is adaptation. Somewhere. And, then, of course, some industries are suffering, but not too many industries are suffering. The industries that are suffering are–

Russ Roberts: Travel.

Nassim Nicholas Taleb: Travel and–

Russ Roberts: Recreation.

Nassim Nicholas Taleb: tourism, and–

Russ Roberts: Yeah.

Nassim Nicholas Taleb: And, even that can adapt. I’ve been traveling. I will travel. Two masks. And, I feel safe traveling under these conditions. But–

Russ Roberts: Let me ask–I’m going to push you on that. Because, I want to go visit my 87-year-old mom, who lives by herself in Alabama. And, I feel very uneasy about getting on an airplane, and potentially picking up the virus in that airplane, and killing her. Although she’s healthy. She’s a healthy 87, thank God. But, you know, I don’t feel comfortable enough wearing two masks and goggles. And, we have a selfie of you–you’ve posted it in a fantastic essay on mask.

Nassim Nicholas Taleb: Yes. Yes.

Russ Roberts: But, I don’t know whether that’s going to make it safe for her, for me to come visit. Will it?

Nassim Nicholas Taleb: I think–I mean, I’ve been looking at data. And, again, I don’t want to make a statement now–

Russ Roberts: That would go against what you just spent an hour talking about, yeah.

Nassim Nicholas Taleb: No, no. No. Data could give you a hint–

Russ Roberts: Yeah.

Nassim Nicholas Taleb: that data. Particularly, we have a few cases of people infected who, in a high-volume business–say, like stylists in a salon–two infected people and then, an exposure of 15 minutes or however it takes, that led to zero contagion. So, we have enough. And, now we’re going to accumulate studies for meta-things, that tells us that if you have two masks–and I’m not sure it’s necessary to wash your hands, but I would do that anyway, and use these things–you should be okay traveling. And, soon we will have more data, when we examine those employees who spend a lot of time on airplanes. And–

Russ Roberts: Well, I find it incredible.

Nassim Nicholas Taleb: Yeah, yeah. Yes.

Russ Roberts: I find it incredible that we don’t have those data regularly collected–

Nassim Nicholas Taleb: No, no.

Russ Roberts: and discussed. It’s so important. It’s so valuable.

Nassim Nicholas Taleb: The Chinese are good at collecting stuff.

Russ Roberts: Yeah.

Nassim Nicholas Taleb: Hong Kong. A lot of people have data. It’s just it’s not yet put together in a way that I’m comfortable discussing. But, I’m giving you ahead enough statistical signals that, if I had to go–and, I have to go see my slightly younger mother in Lebanon, which entails a much longer exposure–I’m going to hop on a plane. I’m just waiting for my travel agent to call back. See? So, I’m going to get on a plane and take that risk. Two masks plus other measures. Actually, I [crosstalk 00:58:01]–95.

Russ Roberts: Do you drink water?

Nassim Nicholas Taleb: I don’t have to worry about water, but I–

Russ Roberts: No, but do you take the mask off, while you’re on the plane, to drink the water?

Nassim Nicholas Taleb: If you’re seated far from other passengers, the exposure is not linear. You see? For a minute or two, it’s not going to hurt you.

Russ Roberts: Okay, so don’t–listeners out there: Do not accept this as medical advice.

Nassim Nicholas Taleb: Exactly.

Russ Roberts: Nassim is not a doctor. He only plays one on EconTalk. Let me–

Nassim Nicholas Taleb: No, no. The whole thing, the other thing–let’s talk about doctors, where people think that understanding medicine, which is understanding a human, single human, allows you to understand the collective. That’s another skill[?] transformation.

Russ Roberts: Yeah. It’s a good point. I learned that from you also, Nassim: If you want to figure out how to gamble, don’t talk to the carpenter who built the roulette wheel.

Nassim Nicholas Taleb: Exactly. Exactly. Exactly.

Russ Roberts: Even though he should be an expert. ‘He built the wheel. Who could know more than him?’

Nassim Nicholas Taleb: Exactly.


Russ Roberts: Let’s finish by summarizing. Let me try to summarize what I hear you are saying for the next pandemic, as well as the rest of this one. Take inexpensive ways to mitigate risk, such as wearing masks. At the national level, close your borders until you figure out what you’re dealing with. At the local level–are there things at the local level ought to be done? Or are those all going to be at the individual–

Nassim Nicholas Taleb: New York is quarantining people coming from hot spots like Florida and–

Russ Roberts: Texas.

Nassim Nicholas Taleb: And, Texas. And, New York is quarantining them. And, also as sort of reaction, because Florida was quarantining New Yorkers.

Small, little measures like these–you don’t need to bring cases to zero. You just want to make sure they don’t overwhelm your system and that they don’t collapse your infrastructure. You see?

Russ Roberts: Yeah. Well, it’s more than that, though–

Nassim Nicholas Taleb: And also–that’s the first thing. And, then the other one is, if–pandemic will be imploding just like the Plague or the Spanish Flu, naturally, when it–I don’t believe in herd immunity as much as in reduced connectivity. So, but, I have two more points I’d like to make here.

Russ Roberts: Sure. Could I stop you? No, I can’t. Go ahead. Make them.

Nassim Nicholas Taleb: Yeah. One thing we did not discuss is geronticide.

Russ Roberts: Yeah. Talk about that. Although I think I disagree with you on this. So, go ahead.

Nassim Nicholas Taleb: Okay, so–

Russ Roberts: Geronticide is the murder of the elderly.

Nassim Nicholas Taleb: Murder of the elderly. Okay. The ancient world not only did not favor geronticide, but, to the contrary, they worshipped the elders.

Russ Roberts: They honored them. Yeah.

Nassim Nicholas Taleb: They honored them. I mean, the Senate is a council of elders. Senatus is an old person. Same with the Greek name, and then the same in Arabic. The title ‘sheikh,’ it means ‘old.’ And, here we have it worse than there[?], I think. Okay? So, now, you realize that some societies understand the Golden Rule: ‘Treat me the way you want to be treated when you’re older, and respect that.’ And, we have had, and Mediterranean societies–most of us are issued a visa in Mediterranean societies–

Russ Roberts: Well, most of the people on this podcast are, anyway.

Nassim Nicholas Taleb: Okay. Coming from–

Russ Roberts: This episode.

Nassim Nicholas Taleb: the ancient world–people coming from the ancient world–Babylonian, Egyptian, Mediterranean, Greco-Roman–they had values that, basically, for them, geronticide is never an option. Never.

So, would you, would you, would you–if I give you a thousand dollars, would you kill your grandfather? Of course not. Now how about if I give you a billion? Okay. So, now let’s negotiate. So, this is Northwestern European society.

Russ Roberts: Which?

Nassim Nicholas Taleb: Making claims, utilitarian claims–something, someone, infected Northern Europe with these, this calculus of, ‘Yeah, no, if we let old people die, it’ll save us x in economic terms.’ That’s not a question that you’re allowed to ask in a classical society. It’s offensive.

Russ Roberts: There’s no trade-off.

Nassim Nicholas Taleb: I find it offensive.

Russ Roberts: There’s no trade-off.

Nassim Nicholas Taleb: There are trade-offs you don’t make.

And, this is also central, and our paper explained that, for the tail risk, you have no trade-off, because, you know, eventually you’re going to die.

The ramification, this one, even if you look at it from a utilitarian standpoint, it’s not a trade-off, because you don’t know where it’s going to stop. So the idea–and, America is the only Northwestern European–sorry; it’s not quite Northwestern European, but in population, and habits, and language–that has full age equality, no age discrimination. So–

Russ Roberts: And, more than that–and more than that–we devote an enormous amount of resources and money to the health of the elderly, and they’re less–

Nassim Nicholas Taleb: Exactly. And, the rationale is that–it’s not the elderly, not a different class. The young people–you got to think ergodically–will be the elderly.

Russ Roberts: Yeah. That’s hard for people to notice.

Nassim Nicholas Taleb: Okay. So, the other thing is, in other words: We’re going to take care of you. So, we’re telling the young, by taking care of the elderly, ‘We’re going to take care of you.’

Russ Roberts: We hope. Yeah.

Nassim Nicholas Taleb: Plus, there are other things involved in this discipline of taking care of the elderly, because you cannot have both–I mean, capitalism is not about ingratitude.

Russ Roberts: It shouldn’t be.

Nassim Nicholas Taleb: You see. Yeah. I mean, the Greeks let the mules that were used in building the Parthenon–they gave them privileged grounds instead of letting them die because you don’t need them anymore. To the contrary, they gave them privileged ground.

Russ Roberts: They honored them.

Nassim Nicholas Taleb: They honored them. They honored them by giving them great ground. Great food and stuff like that.

So, it was, it was–there’s something, there’s a transmission of intergenerational gratitude that people don’t get.


Russ Roberts: Well, I’m going to take this in a direction maybe you’re headed, which is, to me, this is related to your insight of soul in the game, which is that: you could argue it’s irrational to take care of a donkey or a mule. It’s just an animal. Especially in ancient times. You could say, ‘Well, yes, they helped build the Parthenon. But, they’re animals. We could let them die.’

But, the idea that you honor everything that is worth honoring, even when it’s not, quote, “rational,” has a sweet, sweet aspect to it. And right now, we’re looking at you, Nassim, you’re wearing a lovely sport coat and shirt, and I am confident you are as well-dressed below the waist as you are above it, because I know that’s your motto.

Nassim Nicholas Taleb: Yeah. You can check.

Russ Roberts: Yeah. See? Oh, it’s jeans. Jeans. Well, it’s a nice look.

Nassim Nicholas Taleb: No, no: I always wear jeans. And, jeans–

Russ Roberts: But, you don’t wear pajamas when you’re on Zoom.

Nassim Nicholas Taleb: No. No, I don’t. Even when you don’t see me. Even when you don’t see me. I described it in The Black Swan. There’s an idea that Visconti, the filmmaker–when he handed the box that contained jewels, made sure there were jewels inside of it.

Russ Roberts: Yeah. In the movie. Even though it was just a prop.

Nassim Nicholas Taleb: Exactly. You’re not supposed to see them, but he made sure it was authentic. There was this idea of being authentic.

When you write about something, you don’t want to be an imposter. You want to talk–I mean, people may never know that I can’t write in Chinese, may never know that I don’t know Chinese.

Russ Roberts: Right.

Nassim Nicholas Taleb: But, you can’t do it. You should never be an imposter. Likewise, I don’t like people who write about probability not knowing it, and then use fortune cookies formulas and verbalistic formula.

Particularly this is present among psychologists. They are fake. It shows. There’s something about a fake person. You notice because they will be fake elsewhere, you see.

Russ Roberts: Well, I like the idea that practicing authenticity, even in places where it’s not observable, builds a habit that will protect you in cases when you might forget and go out in your pajamas to the grocery. I think it’s a beautiful idea.

Nassim Nicholas Taleb: Yes. Yes. And, also in fields. For example, if you only write about subjects that you didn’t discover on Wikipedia, but things that are natural, it looks clumsy a little bit, compared to the researcher who knows how to fake and write reports. But people detect it. People detect authenticity.

Russ Roberts: My guest today has been Nassim Nicholas Taleb. Nassim, thank you for being on EconTalk.

Nassim Nicholas Taleb: Thank you very much. Thanks a lot. Thanks again.

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