Tuesday, May 30, 2006

A review of "Fooled by Randomness : The Hidden Role of Chance in Life and in the Markets"

by Nassim Nicholas Taleb

It’s true that Taleb’s ego sticks out from this book like a porcupine’s quills, but whether that bothers you may depend on whether they prick you. It’s hard to take his self-satisfaction seriously; in some ways, he seems just a little sad (but funny). Overall I found his style pretty amusing and had quite a few laugh-out-loud moments while reading the book.

I noted a few favorite examples [from the 2004 revised paperback edition]:

Chapter 7, p 124: “Whenever I hear work ethics I interpret inefficient mediocrity.”

Postscript, p 254: On the inverse rule: “The higher up the corporate ladder, the higher the compensation to the individual”, but the lower the evidence of that individual’s contribution to the company.

Who could be annoyed at a guy who holds such opinions?

I have a few quibbles. I do wish he’d had some graphs in some cases (in the preface, he explains why he refused to add these). If he’s going to claim that outstanding performers got where they are by chance, he could show it by attempting a fit of some variable to a normal distribution. But that’s probably easier said than done. Also, he tends to make generalizations – if something applies to him, then it applies to everyone (for example, he claims he never learns from reading, he has to experience something for it to make an impression – and seems to think this is the case for everyone). I think he should keep in mind that not everyone’s brain functions in the same way, and furthermore the human brain is not identical to a pigeon’s brain. Still, it’s easy to ignore these irritations, which are minor in comparison to the entertainment and educational value of the book.

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