Definition
Antifragile can be
defined as ”a thing improving from volatility, randomness,
uncertainty, disorder, errors, and stressors.”
Fragile, robust, and antifragile
Fragile is pretty
simple. Anything that brakes from volatility, randomness,
uncertainty, disorder, and stressors. When you think about the
inverse of fragile, you think about robustness, or resilient. Robust
and resilient things do not break from the aforementioned things, but they won´t get any better. Antifragile gets better. There are many
antifragile systems, like evolution, capitalism to some extent when
it is left alone, technological innovation, good recipes, and even
your own existence. These things change with time. You can see
antifragile things everywhere, in your body, and in the nature, etc.
There is a simple way of thinking about antifragility of things:
Anything that can have bigger gains from upside than downside from
random events, volatility, etc.
Antifragile
systems become fragile if volatility, stressors, uncertainty, and
disorder are denied from them. They weaken and die. Just watching
what happens is a better solution for problems in antifragile
systems. They will get stronger. These things thrive with right
amount of stressors, and disorder. You have to remember that many stressors and too much disorder will break even antifragile systems. For
example, your bones like small jumps, but jumping from ten meters
will break them. Bureaucrats, central bankers, and academics want to
change antifragile systems, but they cause more harm. This top-down
approach only make these systems worse. Bottom-up approach would be
much better.
How to spot fragile/antifragile
things
Fragile things
have one interesting mathematical property. Their damage accelerates,
when it is measured. For example, you have a highway in which there
are 20,000 cars moving every day on average. The travel time through
this road is 30 minutes. When there are 25,000 cars moving, travel
times increases to 40 minutes. If the amount of cars is 30,000, then
your travel time gets to 60 minutes. This is a sign of fragility of
the highway. These kind of nonlinearities are signs of either
fragility or antifragility. You have to find a way to limit the
downside and maximize the upside. For example, you want to try make
some small changes to get big outcomes. These small errors do not
have less cost than the possible upside. You don´t have to be right
so often. Power laws have positive effects on antifragile things and
negative for the fragile.
Antifragile things
have also stood the test of time. It is actually the most important
sign of antifragility. Things or ideas that have been working for
thousands or hundreds of years are antifragile with a high
probability. It doesn´t mean that they won´t eventually break or
become useless. Considering this phenomenon, there is a Lindy effect.
It says that it is probable that an idea that has survived x amount
of years will probably survive another x amount of years. For
example, tablets have been in use for thousands of years. First they
were made from stone, and now they are made from many other
materials. The idea is still pretty much the same, only different
ways of using a tablet have grown. It is probable that they will be
here much longer.
Life on earth is one of the best
examples of antifragile systems
This planet has
had life even for billions of years. It is not depended on the
bureaucrats or academics, or other humans. It will probably have life
after humans have disappeared on earth. It is not dependent on
people. It has never been and never will. Life on earth aggressively
destroys, replaces, selects, and changes. It is hard to prove that
antifragility is a characteristic of mother nature, but you should
have no suspicions about it. It has survived different catastrophes
like earthquakes, asteroids, etc. It has also evolved to more
intellectual life forms like humans. In the long run, life gets
better on earth, even though it will have its ups and downs.
Mother nature is
not fully efficient. There is some slack or redundancy in its
systems. For example, humans have two kidneys instead of one that is
necessary, etc. When a system´s efficiency is fully tuned up, it
becomes fragile. It will eventually break. Many man-made systems are
fragile. Mother nature is the opposite. Systems become antifragile
also, when some of the components can break. And when the opposite is
true, systems are fragile. For example, a restaurant business is
antifragile, because when some restaurant goes bankrupt, another
better one comes along. Banking systems is fragile, because some of
the banks are too big to fail. And then the whole system goes bust.
Life on earth also gets better, when some genes are not recreated.
How to become less fragile
You cannot really
become antifragile. You will eventually break and die. You can only
become less fragile, however, your genes are another thing. Let´s
forget the genes and focus on think how you become less fragile. I
have to remind that most of the things mentioned below come with
opportunity costs of becoming less efficient. Here are some things you
can do:
- Decrease the amount of your long term stressors and increase the amount of short-term stressors. Do the latter in random moments if possible.
- Believe in ideas that have survived centuries or millennia like the most important mental models I have introduced. Do not believe the new ideas unless you are completely sure they are better.
- Favor the natural over man-made
- Keep things simple. Do not add complexity, unless it is unavoidable.
- Listen to your grandmother´s advice instead of younger people. There is a proof that she has survived many bad events.
- Have many sources of income
- Have some extra cash
- Invest most of your money in fool-proof securities like U.S. Bonds and the small part of your money for a diversified portfolio of asymmetric expected payoffs.
-TT
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