The Predictive (Antifragility and Forecasting)
Taleb argues that reserves and redundancy can make a person or system less dependent on precise forecasts. A buffer may absorb several kinds of disruption without predicting which will occur.
THE IDEA
The Predictive
What makes life simple is that the robust and antifragile don’t have to have as accurate a comprehension of the world as the fragile—and they do not need forecasting. To see how redundancy is a nonpredictive, or rather a less predictive, mode of action, let us use the argument of Chapter 2: if you have extra cash in the bank (in addition to stockpiles of tradable goods such as cans of Spam and hummus and gold bars in the basement), you don’t need to know with precision which event will cause potential difficulties.1 It could be a war, a revolution, an earthquake, a recession, an epidemic, a terrorist attack, the secession of the state of New Jersey, anything—you do not need to predict much, unlike those who are in the opposite situation, namely, in debt. Those, because of their fragility, need to predict with more, a lot more, accuracy.
When to use it
Personal finance: Maintaining an emergency fund to handle unexpected expenses without forecasting the specific cause.
Business: diversifying suppliers to reduce dependence on a single source of supply.
Engineering: including safety margins for loads within a structure’s design assumptions.
Investing: Holding cash reserves to take advantage of market downturns without timing the market.
FROM THEORY TO EVERYDAY LIFE
In practice
Emergency Savings and Preparedness
Extra cash, food, or other reserves may help someone cope with several kinds of disruption without predicting their exact cause. Whether the reserves help depends on the crisis and the resources available; redundancy does not ensure preparedness for every scenario.
A MOMENT TO REFLECT
Put it to work.
In what areas of your life have you been trying to predict outcomes? How could you introduce redundancy instead?
Consider a recent decision that required forecasting. What buffers could have made that prediction unnecessary?
How might this concept change the way you think about building flexibility into your projects or savings?
Often confused with
References
- Antifragile: Things That Gain from Disorder — Nassim Nicholas Taleb (2012)
CONTINUE THE CONVERSATION
Source texts
- Antifragile (Nassim Nicholas Taleb)