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Now that we’ve explained the Lindy effect and the inadequacy of human judges, we’re going to begin investigating the various areas in which a lack of skin in the game causes systemic damage to society. To begin, we'll take a look at Taleb’s criticism of science and academia.
The ideology of Intellectualism is particularly widespread in universities and other research institutions that are isolated from the real world in which their ideas are implemented. Academia nurtures Skinless Intellectuals. Taleb argues that areas of science and academia that lack skin in the game yield faulty, harmful ideas and theories that would cause major damage if implemented at a large scale.
First, we’re going to describe what good science with skin in the game should look like. Then, we’ll show how and why modern science strays from this ideal, highlighting specific flaws in modern academic practice caused by a lack of skin in the game. Finally, we’ll look at Taleb’s proposed solution to these problems and explain how he would reshape modern research.
The Lindy effect is at the core of good science. This is because science is about disproving ideas until those that can’t be disproved are all that remain. For example, Ptolemy disproved the astronomical model of the Ancient Greeks, then Copernicus disproved Ptolemy’s model by showing that the earth moves around the sun. Progress is made in the areas in which theories fail.
The point of scientific experimentation is to speed up time’s elimination process. Scientists intentionally create observable stakes that determine whether or not a hypothesis is effective at achieving specific results. If it isn’t, it’s discarded.
(Shortform note: This is an example of another one of the major ideas that appears throughout Taleb’s Incerto: “via negativa,” the principle stating that it’s easier to prove that something doesn’t work than that it does, and consequently, taking things away is a more reliable course of action than adding something. Taleb argues that via negativa is a reliable guiding principle in a wide range of situations: politics, markets, medicine. He devotes several chapters in Antifragile to this topic.)
Ideally, scientific fields would be dominated by skeptical experimenters who are rewarded for disproving theories and devising a more accurate understanding of how the world works. Unfortunately, modern science has strayed from this ideal because researchers lack skin in the game.
This lack of academics’ skin in the game results in the growth of systemic flaws, as researchers are not punished for inefficiencies or mistakes.
Taleb argues that these flaws yield inaccurate conclusions and misguided theories that can cause major harm if applied at a large scale in the real world. For example, Taleb particularly scorns economist Richard Thaler’s argument that policymakers and private companies should actively “nudge” people away from making “irrational” choices—“irrational” choices are sometimes safer, for reasons distant third parties didn’t consider. According to Taleb, many of these errors are then taught in universities, cheapening the value of higher education.
Taleb notes that flaws in science are especially severe in social sciences such as economics, psychology, and history (as opposed to hard sciences like chemistry and physics), where definitive evidence is relatively difficult to gather and theories are difficult to disprove.
Why Do Researchers Lack Skin in the Game?
Taleb argues under the assumption that academia lacks skin in the game, but he doesn’t explain how or why this came to be.
Only a small fraction of scientific research ends up providing practical benefits to society, and it’s difficult to predict how valuable any given line of research will be until after these discoveries are made. If valuable discoveries were predictable, they would have already been discovered.
For example, Alexander Fleming, the scientist who discovered penicillin, initially failed to recognize the practical value of his discovery. It was more than ten years before it was used as a revolutionary antiseptic. Since it’s difficult to predict the value of scientific exploration, the majority of researchers get paid salaries for research that in the end generates little value.
Researchers don’t bear the financial risks of their research, and this imbalance between risk and reward is a lack of skin in the game. Thus, fallible human judges are the ones evaluating research instead of the Lindy effect, which, as we’ve discussed, causes problems.