On the Measurability of (Some) Things
Taleb argues that comparing how structures respond to a specified shock can be more reliable than forecasting rare shocks. His distinction shifts attention from estimating an event’s probability to examining vulnerability to it.
THE IDEA
On the Measurability of (Some) Things
Fragility is quite measurable, risk not so at all, particularly risk associated with rare events.1
I said that we can estimate, even measure, fragility and antifragility, while we cannot calculate risks and probabilities of shocks and rare events, no matter how sophisticated we get. Risk management as practiced is the study of an event taking place in the future, and only some economists and other lunatics can claim—against experience—to “measure” the future incidence of these rare events, with suckers listening to them—against experience and the track record of such claims. But fragility and antifragility are part of the current property of an object, a coffee table, a company, an industry, a country, a political system. We can detect fragility, see it, even in many cases measure it, or at least measure comparative fragility with a small error while comparisons of risk have been (so far) unreliable. You cannot say with any reliability that a certain remote event or shock is more likely than another (unless you enjoy deceiving yourself), but you can state with a lot more confidence that an object or a structure is more fragile than another should a certain event happen. You can easily tell that your grandmother is more fragile to abrupt changes in temperature than you, that some military dictatorship is more fragile than Switzerland should political change happen, that a bank is more fragile than another should a crisis occur, or that a poorly built modern building is more fragile than the Cathedral of Chartres should an earthquake happen. And—centrally—you can even make the prediction of which one will last longer.
Instead of a discussion of risk (which is both predictive and sissy) I advocate the notion of fragility, which is not predictive—and, unlike risk, has an interesting word that can describe its functional opposite, the nonsissy concept of antifragility.
This excerpt argues for comparing fragility but does not supply a measurement rule.
We have been unconsciously exploiting antifragility in practical life and, consciously, rejecting it—particularly in intellectual life.
When to use it
Evaluating the stability of different investments during a market crisis by comparing their susceptibility to losses.
Comparing the robustness of two business models to regulatory changes or economic downturns.
Using infrastructure stress tests to find vulnerabilities and guide improvements without claiming to forecast every possible disaster.
Assessing personal health fragility to lifestyle changes (e.g., diet, exercise) by observing responses to small stressors.
FROM THEORY TO EVERYDAY LIFE
In practice
Comparative Fragility of Systems
You can compare fragility without predicting specific events: your grandmother vs. you in response to temperature changes; a military dictatorship vs. Switzerland in response to political change; one bank vs. another in a crisis; a modern building vs. Chartres Cathedral in an earthquake.
Predicting Longevity
Taleb argues that comparing fragility can inform expectations about longevity. The comparison concerns how each system responds to particular stresses; it does not guarantee which one will survive whatever happens.
A MOMENT TO REFLECT
Put it to work.
How can you assess the fragility of a system without needing to predict specific shocks?
What are some examples from your life or work where you can measure comparative fragility but not calculate exact risk?
Why is it easier to measure fragility than to measure risk, and what implications does this have for decision-making?
Often confused with
CONTINUE THE CONVERSATION
Source texts
- Antifragile (Nassim Nicholas Taleb)