Skin in the Game Key Takeaways

Skin in the Game

Skin in the Game: Hidden Asymmetries in Daily Life is the long awaited fourth installment of Nassim Nicholas Taleb’s Incerto series. If you follow Taleb on Twitter or are familiar with his other work, you’ll be familiar with the central premise of this book, namely that there should be a symmetry between share of benefits and share of harm, and that there are asymmetries that exist in a variety of domains, but especially in politics and business. This is post is pretty long because there are just so many Skin in the Game key takeaways – this book is absolutely packed with insight.

It is not necessary to have read the rest of Incerto before reading Skin in the Game. If you are completely new to Taleb’s work, I would recommend starting with this book as it gives you his ideas and style in a narrative, entertaining format, as opposed to the mathematical plus narrative style of his previous books. That is because the SITG concept is more qualitative than other topics Taleb has discussed in the past. As Taleb himself says in the Introduction: “To this author, skin in the game is mostly about justice, honor, and sacrifice, things that are essential for humans.”

For those who would rather listen to Skin in the Game key takeaways, you can listen to a Made You Think podcast episode about this book:

Let’s get into the key takeaways:

Skin in the Game Key Takeaways

Book 1: Introduction

In the introduction, Taleb sets the stage for what he means by “skin in the game” along with a number of other core ideas he has. Some of these ideas may be familiar to readers of his other books. For example, Taleb’s aversion to academia and theoretical models:

In academia there is no difference between academia and the real world; in the real world, there is.

Similarly, Taleb’s “show me, don’t tell me” approach is on full display here:

Don’t tell me what you “think”, just tell me what’s in your portfolio.

But the best overview of the SITG concept comes in the following passage:

Skin in the game, applied as a rule, reduces the effects of the following divergences that grew with civilization: those between action and cheap talk (tawk), consequence and intention, practice and theory, honor and reputation, expertise and charlatanism, concrete and abstract, ethical and legal, genuine and cosmetic, merchant and bureaucrat, entrepreneur and chief executive, strength and display, love and gold-digging, Coventry and Brussels, Omaha and Washington D.C., human beings and economists, authors and editors, scholarship and academia, democracy and governance, science and scientism, politics and politicians, love and money, the spirit and the letter, Cato the Elder and Barack Obama, quality and advertising, commitment and signaling, and centrally, collective and individual.

Prologue Part 1: Antaeus Whacked

The story of Antaeus is worth reading in its entirety – but the gist is that Antaeus was a mythological “invincible” giant, the child of Poseiden (god of the sea) and Gaea (Mother Earth). However, the key to his invincibility was his contact with his mother, the Earth. If he lost contact with the Earth, he lost all his powers and was easy to kill.

Taleb uses this story to demonstrate that:

you cannot separate knowledge from contact with the ground. Actually, you cannot separate anything from contact with the ground. And the contact with the real world is done via skin in the game – having an exposure to the real world, and paying a price for its consequences, good or bad.


The knowledge we get by tinkering, via trial and error, experience, and the workings of time, in other words, contact with the earth, is vastly superior to that obtained through reasoning, something self-serving institutions have been very busy hiding from us.

Taleb also introduces the Bob Rubin trade in this section, a concept he returns to often:

Robert Rubin, a former Secretary of the United States Treasury, one of those who sign their names on the banknote you just used to pay for coffee, collected more than $120 million in compensation from Citibank in the decade preceding the banking crash of 2008. When the bank, literally insolvent, was rescued by the taxpayer, he didn’t write any check – he invoked uncertainty as an excuse. Heads he wins, tails he shouts “Black Swan.” Nor did Rubin acknowledge that he transferred risk to taxpayers: Spanish grammar specialists, assistant schoolteachers, supervisors in tin can factories, vegetarian nutrition advisors, and cerks for assistant district attorneys were “stopping him out,” that is, taking his risks and paying for his losses. But the worst casualty has been free markets, as the public, already prone to hating financiers, started conflating free markets and higher order forms of corruption and cronyism, when in fact it is the exact opposite: it is government, not markets, that makes these things possible by the mechanism of bailouts.

This “Heads I win, Tails You Lose” situation is invoked whenever someone has figured out a way to separate themselves from downside while still retaining the upside of their actions, giving them a free option.

Prologue, Part 2: A Brief Tour of Symmetry

Taleb uses Hammurabi’s code to demonstrate that humans have been aware of the Bob Rubin trade since antiquity. One of Hammurabi’s injunctions that demonstrates this:

If a builder builds a house and the house collapses and causes the death of the owner of the house – the builder shall be put to death.

This rule shows symmetry in upside and downside – skin in the game. Builders are still able to put together a shoddy house with subpar materials – but if that results in an accident, the builder has literal skin in the game and can be put to death. Builders will certainly think twice before cutting corners and passing risk on to their customers – because any risk they pass to their customers is passed back to themselves.

Some other great tidbits form this section:

We know with much more clarity what is bad than what is good.

Conduct yourself toward your parents as you would have your children conduct themselves toward you.

We are much better at doing than understanding.

Because what matters in life isn’t how frequently one is “right” about outcomes, but how much one makes when one is right. Being wrong, when it is not costly, doesn’t count – in a way that’s similar to trial-and-error mechanism of research.

By definition, what works cannot be irrational; about every single person I know who has chronically failed in business shares that mental block, the failure to realize that if something stupid works (and makes money), it cannot be stupid.

Those who talk should do and only those who do should talk.

When you are rewarded for perception, not results, you need to show sophistication.

Artisans have their soul in the game.

Studying courage in textbooks doesn’t make you any more courageous than eating cow meat makes you bovine.

Book 2: A First Look at Agency

Chapter 1: Why Each One Should Eat His Own Turtles: Equality in Uncertainty

Taleb starts this chapter with an ancient story of the god Mercury and some fishermen who catch turtles that they don’t want to eat. This story demonstrates the principle that you need to eat what you feed others – and a related concept: the agency problem. As Taleb says:

Beware of the person who gives advice, telling you that a certain action on your part is “good for you” while it is also good for him, while the harm to you doesn’t directly affect him.

There is also an example in this section from Sharia law that was fascinating to me:

Sharia establishes the interdict of gharar, drastic enough to be totally banned in any form of transaction. It is an extremely sophisticated term in decision theory that does not exist in English; it means both uncertainty and deception – my personal take is that it means something beyond informational asymmetry between agents: inequality of uncertainty. Simply, as the aim is for both parties in a transaction to have the same uncertainty facing random outcomes, an asymmetry becomes equivalent to theft. Or more robustly: No person in a transaction should have certainty about the outcome while the other one has uncertainty.

These information asymmetry issues all tie back to the fairness in voluntary transactions. Violating this is the equivalent of fraud.

Book 3: That Greatest Asymmetry

Chapter 2: The Most Intolerant Wins: The Dominance of the Stubborn Minority

This chapter introduces one of the most impactful concepts from the book – namely the tyranny of the minority. Initially this concept can be very counterintuitive. How can a minority be tyrannical? A great example to understand it is Taleb’s example of kosher/halal eaters vs “regular” eaters:

A kosher (or halal) eater will never eat non-kosher (or non-halal) food, but a non-kosher eater isn’t banned from eating kosher.

This means that if it isn’t overly costly to make something kosher, then it is in the interest of a company to make all their food kosher, for the very simple reason that it makes their product accessible to everyone. That said, if something were very costly to make compliant, then this effect is diminished and companies may just opt to ignore the minority population. The kosher/halal effect is also seen in GMO vs non-GMO products, as GMO eaters will eat non-GMO products but not the other way around.

This has a massive implication to food companies and why Taleb believes all food products will be non-GMO:

“Big Ag” (the large agricultural firms) does not realize that this is the equivalent of entering a game in which one needed to not just win more points than the adversary, but win 97% of the total points just to be safe. It is strange to see an industry that spends hundreds of millions of dollars on research-cum-smear-campaigns, with hundreds of these scientists who think of themselves as more intelligent than the rest of us, miss such an elementary point about asymmetric choices.

There was also a fascinating story about the minority rule as it relates to the US Constitution that I can’t help but share:

Can democracy – by definition the majority – tolerate enemies? The question is as follows: “Would you agree to deny the freedom of speech to every political party that has in its charter the banning of freedom of speech?” Let’s go one step further: “Should a society that has elected to be tolerant be intolerant about intolerance?” This is in fact the incoherence that Kurt Godel (the grandmaster of logical rigor) detected in the United States Constitution while taking the naturalization exam. Legend has it that Godel started arguing with the judge, and Einstein, who was his witness during the process, saved him. The philosopher of science Karl Papper independently discovered the same inconsistency in democratic systems.

Book 4: Wolves Among Dogs

Chapter 3: How to Legally Own Another Person

In this chapter, Taleb talks about employment versus “free agents” or contractors. As a culture, we tend to talk about creativity and independence as something to aspire to but there are pros and cons – both for individuals and for potential employers. Taleb himself says:

Total freedom for your employees is a very, very bad thing if you have a firm to run.

Taleb also expounds on the concept of a “company man”, something which is becoming less common but refers to a Lifer within a large company:

A company man is someone who feels that he has something huge to lose if he doesn’t behave as a company man – that is, he has skin in the game. In return, the firm is bound by a pact to keep the company man on the books as long as feasible, that is, until mandatory retirement, after which he would go play golf with a comfortable pension, with former coworkers as partners. The system worked when large corporations survived a long time and were perceived to be longer lasting than nation-states.

Going one step further, Taleb explains that there is a special class of employees that are effectively slaves to the company:

The best slave is someone you overpay and who knows it, terrified of losing his status.

Ninety-five percent of the employee’s mind will be on company politics…which is exactly what the company wants.

Chapter 4: The Skin of Others in Your Game

This chapter expounds on much of what was discussed in the previous chapter with a couple notable additions:

It is no secret that large corporations prefer people with families; those with downside risk are easier to own, particularly when they are choking under a large mortgage.

Taleb also gives an intriguing, if somewhat impractical (in my opinion) solution to the issue of suicide bombers. Suicide bombers, particularly the religious sort, have an asymmetric payoff opportunity – they believe they will go to Paradise while in the earthly realm, their family is well taken care of. Taleb’s proposed solution is worth thinking about:

The only way way we have left to control suicide-terrorists would be precisely to convince them that blowing themselves up is not the worst case scenario for them, nor the end scenario at all. Making their families and loved ones bear a financial burden – just as Germans still pay for war crimes – would immediately add consequences to their actions. The penalty needs to be properly calibrated to be a true disincentive, without imparting any sense of heroism or martyrdom to the families in question.

Book 5: Being Alive Means Taking Certain Risks

Chapter 5: Life in the Simulation Machine

One of the biggest Skin in the Game key takeaways was Taleb’s exposition on Jesus Christ, specifically his dual nature of simultaneously being god and man. This was not the simple route to take and has led to conflict throughout history:

It would be theologically simpler if God were god and Jesus were man, just like another prophet, the way Islam views him, or the way Judaism views Abraham. But no, he had to be both man and god; the duality is so central it kept coming back through all manner of refinement.

The answer to this puzzle comes back to suffering and Skin in the Game:

So it appears that the church founders really wanted Christ to have skin in the game; he did actually suffer on the cross, sacrifice himself, and experience death. He was a risk taker. More crucially to our story, he sacrificed himself for the sake of others. A god stripped of humanity cannot have skin in the game in such a manner, cannot really suffer (or, if he does, such a redefinition of a god injected with human nature would back up our argument). A god who didn’t really suffer on the cross would be like a magician who performed an illusion, not someone who actually bled after sliding an icepick between his carpal bones.

For the less theologically inclined, Taleb gives a philosophical example about experiences taking place within a simulation machine (that the experiencer is aware of):

You feel exactly as if an event took place, except that it all happened in virtual reality; it was all mental. Alas, such an experience will never be in the same category as the real – only an academic philosopher who never took risk can believe such nonsense. Why?

Because, to repeat, life is sacrifice and risk taking, and nothing that doesn’t entail some moderate amount of the former, under the constraint of satisfying the latter, is close to what we can call life. If you do not undertake a risk of real harm, reparable or even potentially irreparable, from an adventure, it is not an adventure.

Simply put, without risk, there is no life.

Chapter 6: The Intellectual Yet Idiot

This is probably my favorite chapter in the entire book. Taleb’s Intellectual Yet Idiot (IYI) label is so beautiful in its simplicity. It describes someone who is “book smart” (whatever that means), not street smart. You can really feel Taleb’s channeling his anger into humorous yet sticky barbs that take down any respect you might have felt for the IYIs in the world. Taleb’s intro to this chapter sums it up better than I ever could:

These self-described members of the “intelligentsia” can’t find a coconut on Coconut Island, meaning they aren’t intelligent enough to define intelligence, hence fall into circularities – their main skill is a capacity to pass exams written by people like them, or to write papers read by people like them. Some of us – not Fat Tony – have been blind to their serial incompetence. With psychology studies replicating less than 40% of the time, dietary advice reversing after 30 years of dietary fat phobia, macroeconomics and financial economics (while trapped in an intricate Gargantuan patch of words) scientifically worse than astrology (this is what the reader of the Incerto has known since Fooled by Randomness), the reappointment of Bernanke (in 2010) who was less than clueless about financial risk as the Federal Reserve boss, and pharmaceutical trials replicating at best only a third of the time, people are perfectly entitled to rely on their own ancestral instincts and to listen to their grandmothers (or to Montaigne and such filtered classical knowledge), who have a better track record than these policymaking goons.

This also applies to the condescending attitude many “elites” can have when thinking about the voting choices of the less-educated:

What we generally call participation in the political process, he calls by two distinct designations: “democracy” when it fits the IYI, and “populism” when plebeians dare to vote in a way that contradicts IYI preferences.

Taleb had posted much of this chapter on Medium prior to the 2016 US Presidential election and it’s interesting to see how this chapter has played out since Trump and Brexit.

Chapter 7: Inequality and Skin in the Game

A timeless question humans have faced since the advent of money (and perhaps even before) is whether the rich deserve their success or if it’s pure luck. Taleb’s Skin in the Game lens is a fascinating way to look at inequality. The central point is that the poor don’t resent the rich – they resent the rich who made their money without skin (or soul) in the game. For example:

Michele Lamont, the author of The Dignity of Working Men, cited by Williams, did a systematic interview of blue-collar Americans and found a resentment of high-paid professionals but unexpectedly, not of the rich.


It is safe to say that the American public – actually all publics – despises people who make a lot of money on a salary, or, rather, salarymen who make a lot of money.

Taleb then introduces the concept of ergodicity and the absorbing state. Simply put, perfect ergodicity means that given an infinite timespan, we would spend a proportion of time in all economic conditions. In contrast, absorption means that someone who becomes rich stays rich and someone who starts poor stays poor. This seems to occur more in places where the state is large and protects their rich from descent. Eliminating downside risk for a group also means upside will be eliminated for other groups.

Exposure to risk of the marketplace is a way to distinguish those who are rich via absorption vs those with true skin in the game:

Now consider that the likes of Krugman and Piketty have no downside in their existence – lowering inequality brings them up in the ladder of life. Unless the university system or the French state goes bust, they will continue receiving their paychecks. The fellow you just saw in the steak restaurant dripping with gold chains is exposed to the risk of the soup kitchen, not them. Just as those who live by the sword die by the sword, those who earn their living taking risks will lose their livelihood taking risks.

This means a wealth displaying rapper has more dignity and honor than a rent-seeking intellectual who makes money via being a “thought leader”. This goes double for those who become rich while serving in public office (which happens an uncomfortable amount of times in the US Congress):

Money is greed, for them – but those who did not earn the money via commerce were illogically exempt. I had a rough time explaining that having rich people in a public office is very different from having public people become rich – again, it is the dynamics, the sequence, that matters.


It is downright unethical to use public office for enrichment.

Taleb goes even further to show how public officials often behave in certain ways to ensure they are rewarded by industry later on:

A good rule for society is to oblige those who start in public office to pledge never subsequently to earn from the private sector more than a set amount; the rest should go to the taxpayer. This will ensure sincerity in, literally, “service” – you do not become a Jesuit priest because it may help you get hired by Goldman Sachs later.

A civil servant can make rules that are friendly to an industry such as banking – and then go off to J.P. Morgan and recoup a multiple of the difference between his or her current salary and the market rate. Regulators, you may recall, have an incentive to make rules as complex as possible so their expertise can later be hired at a higher price. The IYI-cum-cronyist former Treasury Secretary Tim Geithner – with whom I share the Calabrese barber of the Prologue – was overtly rewarded by the industry he helped bail out. He helped bankers get bailouts, let them pay themselves from the largest bonus pool in history after the crisis, in 2010 (that is, using taxpayer money), and then got a multimillion-dollar job at a financial institution as his reward for good behavior.

This would be a true “drain the swamp” reform if it ever got passed. I don’t have high hopes.

Chapter 8: An Expert Called Lindy

The Lindy Rule is a fascinating concept and one I have written about previously in a beer context. Basically, things that have lasted for a long time will (generally) continue to survive. New things are more likely to disappear. Taleb uses a maxim from Alfonso X (El Sabio) from Spain that sums this up nicely:

Burn old logs. Drink old wine. Read old books. Keep old friends.

Things that survive for a long time do so for a reason, whether or not that reason is visible to human beings.

The key takeaway in this chapter is that any field that is reliant on peer assessment is the domain of the IYI. Note that peer assessment and customer assessment are two very different things. Breweries should be judged by drinkers, not by other breweries. Movie directors should be judged by movie watchers, not other directors. Yet in certain fields, peers are the only judge of success. This is most notable in academia. From the book:

You can define a free person precisely as someone whose fate is not centrally or directly dependent on peer assessment.


As an essayist, I am not judged by other writers, book editors, and book reviewers, but by readers. Readers? Maybe, but wait a minute…not today’s readers. Only those of tomorrow, and the day after tomorrow. So, my only real judge being time, it is the stability and robustness of the readership (that is, future readers) that counts. The fashion-oriented steady reader of the most recently reviewed book in The New York Times is of no interest to me. And as a risk-taker, only time counts – for I could fool my accountant with steady earnings with a lot of hidden risk, but time will eventually reveal them.

Chapter 9: Surgeons Should Not Look Like Surgeons

This is such an excellent chapter for those in fields that depend on picking “winners”, whether that is hiring, investing, or something else. People who are good at talking and telling a story are most likely bullshitting – true innovation is messier than that. Taleb shares a rules from finance to highlight this point:

An expert rule in my business is to never hire a well-dressed trader. But it goes beyond: Hire the successful trader, conditional on a solid track record, whose details you can understand the least.

The fallacy is that what one may need to know in the real world does not necessarily match what one can perceive through intellect: What can be phrased and expressed in a clear narrative that convinces suckers will be a sucker trap.

I noticed a similar phenomenon in my corporate innovation days as well – the people who were actually innovative had a difficult time explaining their findings and ideas to senior management. Meanwhile, the people who could put together sexy presentations were usually not doing anything of substance.

I’ve never been a venture capitalist but I can imagine a similar phenomenon: someone walking in with an extremely polished pitch and business plan is generally less likely to be doing something innovative than someone who is heads down working on building their business and not spending their time on building a deck for a VC. As Taleb says:

I also learned, in my early twenties, that the people you understand most easily were necessarily the bull***tters.


Never pay for complexity of presentation when all you need is results.

The title of this chapter also brings up an excellent heuristic for evaluating competence. A surgeon who looks like he would have been cast as a surgeon in a movie is not likely to be competent:

Say you had the choice between two surgeons of similar rank in the same department in some hospital. The first is highly refined in appearance; he wears silver-rimmed glasses, has a thin build, delicate hands, measured speech, and elegant gestures. His hair is silver and well combed. He is the person you would put in a movie if you needed to impersonate a surgeon. His office prominently boasts Ivy League diplomas, both for his undergraduate and medical schools.

The second one looks like a butcher; he is overweight, with large hands, uncouth speech, and an unkempt appearance. His shirt is dangling from his back. No known tailor on the East Coast of the U.S. is capable of making his shirt button at the neck. He speak unapologetically with a strong New Yawk accent, as if he wasn’t aware of it. He even has a gold tooth showing when he opens his mouth. The absence of diplomas on the wall hints at the lack of pride in his education: he perhaps went to some local college. In a movie, you would expect him to impersonate a retired bodyguard for a junior congressman, or a third-generation cook in a New Jersey cafeteria.

Now if I had to pick, I would overcome my sucker-proneness and take the butcher any minute. Even more: I would seek the butcher as a third option if my choice was between two doctors who looked like doctors. Why? Simply the one who doesn’t look the part, conditional on having made a (sort of) successful career in his profession, had to have much to overcome in terms of perception. And if we are lucky enough to have people who do not look the part, it is thanks to the presence of some skin in the game, the contact with reality that filters out incompetence, as reality is blind to looks.

When reading this paragraph, I thought about how the NFL graveyard is littered with quarterbacks who “look” like they would be quarterbacks; people who would be cast as a QB in a movie. In contrast, a number of legendary QBs are the opposite: they look like…dweebs (think: Peyton Manning). Even those like Tom Brady, who now looks like a movie star QB, looked very different when entering the NFL:

This likely happens in every field. The mental biases described in this chapter are a huge part in my belief that there is huge potential in working with and investing in founders from unconventional backgrounds. The Stanford computer science undergrad/Harvard MBA background, as impressive as it is, just looks too much the part of entrepreneur.

Chapter 10: Only the Rich Are Poisoned: The Preferences of Others

Taleb makes some excellent points in this chapter on how rich people are scammed through unnecessarily complicated, expensive products and experiences. As Taleb says:

It is easy to scam people by getting them into complications – the poor are spared that type of scamming. This is the same complication we saw in Chapter 9 that makes academics sell the most possibly complicated solution when a simple one can do. Further, the rich start using “experts” and “consultants.” An entire industry meant to swindle you will swindle you: financial consultants, diet advisors, exercise experts, lifestyle engineers, sleeping councilors, breathing specialists, etc.

Hamburgers, to many of us, are vastly tastier than filet mignon because of the higher fat content, but people have been convinced that the latter is better because it is more expensive to produce.

The other major point of this chapter is that progress and growth is nonlinear. A $200 meal is not 10x better than a $20 one. In fact, it is often worse – again, because of unnecessary complication.

Chapter 11: Facta non Verba (Deeds Before Words)

Taleb starts the chapter off with a reference to The Godfather (my favorite movie franchise ever):

The best enemy is the one you own by putting skin in his game and letting him know the exact rules that come with it. You keep him alive, with the knowledge that he owes his life to your benevolence.

The idea here is that verbal threats (indeed verbal anything) doesn’t mean much and instead, shows weakness and unreliability. What is much more effective is showing you can do something. This leaves no room for interpretation.

While Taleb walks us through the history of assassinations and threats, his true key takeaway in this chapter is that one can use a camera as a modern way to change and punish the behavior of unethical and abusive people:

One day, in the New York subway underground corridor, I hesitated for a few seconds trying to get my bearings in front of the list of exits. A well-dressed man with a wiry build and neurotic personality started heaping insults at me “for stopping.” Instead of hitting him as a conversation starter, as I would have done in 1921, I pulled my cell out and took his picture while calmly calling him a “mean idiot, abusive to lost persons.” He freaked out and ran away from me, hiding his face in his hands to prevent further photographs.

Taleb clearly states that he never actually uses these pictures for anything. But the simple act of taking the picture is a tangible threat to these abusive individuals and has the power of changing their behavior.

Chapter 12: The Facts Are True, the News Is Fake

In 2009, Taleb had the misfortune to be attacked by the media for being a “climate denier”, even though he had said the exact opposite! While referencing the precautionary principle, he said that the burden of proof is on those who pollute to show that what they are doing is not harmful. Thanks to Taleb’s stature and social media, he was able to get many of the media outlets reporting this fake news to issue corrections. But it clearly showed the agency problem that the media as an institution has:

It is impossible for anyone to write a perfectly rationally argued document without a segment that, out of context, can be transformed by some dishonest copywriter to appear totally absurd and lend itself to sensationalization, so politicians, charlatans, and more disturbingly, journalists hunt for these segments. “Give me a few lines written by any man and I will find enough to get him hung” goes the saying attributed to Richelieu, Voltaire, Talleyrand, and a few others. As Donald Trump said, “The facts are true, the news is fake” – ironically at a press conference in which he subsequently suffered the same selective reporting as my RSA event.

Chapter 13: The Merchandising of Virtue

Taleb starts this chapter off by sharing a story about an encounter with Susan Sontag, who upon learning that Taleb was a financial trader, stated that she was “against the market system” and turned her back on him mid-sentence. Taleb imagined she must live in a commune of some sort. A couple years later, Taleb learned while reading Sontag’s obituary that she did not live in a commune; she had lived in a $28 million mansion in New York City and squeezed her publisher for millions of dollars for a novel. This leaves Taleb to state two rules about virtue and signaling:

It is immoral to be in opposition to the market system and not live (somewhere in Vermont or Northwestern Afghanistan) in a hut or cave isolated from it.

It is much more immoral to claim virtue without fully living with its direct consequences.

Virtue signaling is rampant in our society today. An example we have beat to death on Made You Think is the rich, white student at Middlebury College complaining that colleges discriminate against minorities. Another commonly example is people tweeting (Twitter valuation: $31B) about the failures of capitalism on their Apple (valuation: $944B) iPhones, while ordering products on Amazon (valuation: $820B) that they learned about on Instagram (Facebook valuation: $556B) .

Virtue signaling is not just limiting to citizens. Politicians do it all the time too. My favorite (most irritating) example is when a politician says no one needs guns for personal protection but then chooses to protect themselves and their families with armed bodyguards. This is the opposite of skin in the game. Taleb gives some other great examples:

Kids with rich parents talk about “class privilege” at privileged colleges such as Amherst – but in one instance, one of them could not answer Dinesh D’Souza’s simple and logical suggestion: Why don’t you go to the registrar’s office and give your privileged spot to the minority student next in line?

Clearly the defense given by people under such a situation is that they want others to do so as well – they require a systemic solution to every local perceived problem of injustice. I find that immoral. I know of no ethical system that allows you to let someone drown without helping him because other people are not helping, no system that says, “I will save people from drowning only if others too save other people from drowning.”

The principle: If your private life conflicts with your intellectual opinion, it cancels your intellectual ideas, not your private life.

Putting yourself on the line with an opinion that is the truth but unpopular is the only way to be virtuous:

Sticking up for truth when it is unpopular is far more of a virtue, because it costs you something – your reputation. If you are a journalist and act in a way that risks ostracism, you are virtuous. Some people only express their opinions as part of mob shaming, when it is safe to do so, and, in the bargain, think they are displaying virtue. This is not virtue but vice, a mixture of bullying and cowardice.

Chapter 14: Peace, Neither Ink nor Blood

Being an interventionista (someone who meddles in the affairs of others, particularly in geopolitics) leads to unnecessary complication and can make peace impossible. Taleb uses the Israeli-Palestinian conflict to show that when you leave people alone to trade freely, they tend to settle for practical reasons:

People on the ground, those with skin in the game, are not too interested in geopolitics or grand abstract principles, but rather in having bread on the table, beer (or for some, nonalcoholic fermented beverages such as yoghurt drinks) in the refrigerator, and good weather at outdoor family picnics. Also they don’t want to be humiliated in their human contact with others.

Taleb also clears up the misconception that history is extremely bloody. In fact, he says it is mostly peace punctuated by wars – not the other way around. But because of availability bias, there is much more written about the wars (for obvious reasons). This leads us to believe history is bloody when the empirical evidence shows otherwise.

Book 7: Religion, Belief, and Skin in the Game

Chapter 15: They Don’t Know What They Are Talking About When They Talk About Religion

In this chapter, Taleb briefly discusses that matters of “belief” result in labels that mean very different things to different people. For example, paganism (a catch-all term) is a loosely related set of ideas whereas a religion such as Islam or Christianity is a codified and defined system of belief with rules. These are not equivalent things. The same applies to comparing libertarianism to political parties.

Chapter 16: No Worship Without Skin in the Game

Taleb starts this chapter off with a beautiful passage that exemplifies the skin in the game aspect of religion:

It is when you break a fast that you understand religion. I am writing this as I am ending the grueling Greek-Orthodox period of Lent, which, for the most part, allows no animal products. This diet is particularly hard to keep in the West where people use butter and dairy products. But once you fast, you feel entitled to celebrate Easter; is is like the exhilaration of fresh water when one is thirsty. You’ve paid a price.

This holds true in every major religion, from Hinduism to Buddhism to Islam. In summary: the gods do not like cheap signaling.

Chapter 17: Is the Pope Atheist?

The distinction Taleb makes in this chapter is that there are people in two different categories:

Those are atheists in actions, religious in words (most Orthodox and Catholic Christians

Those who are religious in actions, religious in words (Salafi Islamists and suicide bombers)

Even those who don’t claim to be religious are religious in their own manner (worship of the state, science, economics, etc). The title references the 1981 shooting of Pope John Paul II and how he was immediately rushed to the emergency room instead of being taken to a chapel for prayer.

Book 8: Risk and Rationality

Chapter 18: How to Be Rational About Rationality

This chapter implores us to look at religion and superstition through the lens of what purpose they serve, as opposed to their truth. This is true for everything, not just religion:

Your eyes are not sensors designed to capture the electromagnetic spectrum. Their job description is not to produce the most accurate scientific representation of reality; rather the most useful one for survival.

This takes us to one of Taleb’s core beliefs:

Survival comes first, truth, understanding, and science later.

This is similar to an idea espoused by Jordan Peterson in 12 Rules for Life.

There are many competing definitions of what “rational” really means but Taleb nails it with this definition:

What is rational is that which allows for survival.


When you consider beliefs in evolutionary terms, do not look at how they compete with each other, but consider the survival of the populations that have them.


Rationality does not depend on explicit verbalistic explanatory factors; it is only what aids survival, what avoids ruin.

Chapter 19: The Logic of Risk Taking

A central theme to all of Taleb’s work is the focus on avoiding ruin. For, if you are truly ruined, there is no coming back from that. This is a prudent approach to risk.

Psychology studies of “risk” are single variable events – they don’t really translate to how humans actually live – namely, that we are exposed to risk all the time. Driving, walking, eating, talking, dating, buying, selling…the list goes on. Every activity brings with some risk. And humans are subconsciously computing our risk exposure all the time – this is how we’ve survived.

However, in this chapter, Taleb takes it one level further and discusses the risk of collective ruin:

Unless you are perfectly narcissistic and psychopathic – even then – your worst-case scenario is never limited to the loss of only your life.


I am renewable, not humanity or the ecosystem.

Going further:

It doesn’t cost us much to refuse some new shoddy technologies. It doesn’t cost me much to go with my “refined paranoia,” even if wrong. For all it takes is for my paranoia to be right once, and it saves my life.

And finally:

Rationality is avoidance of systemic ruin.


Despite how long this post is, the only way to truly get all the insight from this book is to read it yourself – have some skin in the game! You can buy Skin in the Game on Amazon or wherever you buy your books. Let me know what you think of these notes in the comments or on Twitter.

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