Here’s the Fooled by Randomness summary. Learn another aspect of the fallibility of human knowledge. We’re often fooled by randomness and we’re not aware of it.
Fooled by Randomness author Nassim Nicholas Taleb explains how modern humans resort to survivorship bias and hindsight bias instead of thinking of it all as random.
We create reasons that justify the randomness of things. We try to think of patterns that caused the success or failure of a certain thing. Although the reason is that it’s just randomness at work.
About the Author
Nassim Nicholas Taleb worked as a trader and risk analyst for many years. Now he focuses on writing about the role of luck, chance, and probability in markets.
Main takeaways: Fooled by Randomness Summary
Let’s discuss the key takeaways from his book:
- Randomness and luck influence our lives more than we realize.
- Wild success is not just about hard work.
- Hindsight bias and survivorship bias often blind us to randomness.
Randomness and luck influence our lives more than we realize
It’s not just gambling. The decisions we take can all have random consequences. Luck will also play a part on what will happen next. Will we be successful?
We don’t know for sure. But most of the consequences will be out of our control. There are external things that we can’t hold. For example in our career. We get hired and worked for that same company for over 20 years.
But suddenly the company shuts down. We had no clue that it will happen. We were sure that our jobs would be stable. We were wrong. It’s random. It’s just bad luck.
It’s an extreme example. But you get the concept. Luck plays a large part because we can’t know everything beforehand. Yes we might be able to prepare some alternatives. But the random still happens whatever we do.
Wild success is not just about hard work
You know a few multimillionaires and billionaires? You know a few celebrities who suddenly rose to fame?
Whenever you hear interviews of them, it seems it’s all about hard work and faith. They tell the stories of how they came from poverty and now they achieved their goals. They say they worked hard and they paid the price.
But is it really just hard work? Or luck played a large part? It’s the latter. You don’t get wild success just by pure hard work. Some stars should align before it happens.
For wildly successful entrepreneurs, they might be in the right business. They might be at the right place at the right time that’s why their businesses flourished. You can say different factors are at play. But luck played a part admit it or not.
For wildly successful celebrities, maybe they starred in a movie or movie series that unexpectedly became a blockbuster. Maybe they had one video that went viral. Maybe they’re always getting the right projects that become blockbusters later on.
Luck will play a part if you want to achieve wild success. But if you want average success, you don’t need a lot of luck. You just need skills and hard work.
Also keep in mind that luck is a double-edged sword. If you became wildly successful because of luck, that same luck might work against you. It will be taken away from you anytime. You have much more to lose.
The result is you become overconfident. You forgot to save and invest your money. You believed that luck will always smile at you. That’s why you need to protect yourself from “unexpected” or random events by learning new skills and saving your money.
Hindsight bias and survivorship bias often blind us to randomness
Hindsight bias is “I knew it all along.” A thing happened and we’re smart and fast enough to create reasons for that. For example a movie became a blockbuster beyond expectations. Some critics will say it’s just timely or it has a beautiful storyline. Then they try to replicate the formula to the next movie. But the truth is it’s just luck at work.
Survivorship bias works this way. We often concentrate on the few winners or losers. The result is we ignore the majority. For example we see local actors getting featured in talk shows and lifestyle channels.
We see their beautiful houses with a swimming pool. They have a music studio. And out the window you can see a beautiful view of the seas or valleys.
We’ll think that actors are successful. We suddenly picture ourselves in their shoes. We think that we can also do achieve that by becoming an actor. Many of us actually audition and hope for a big project.
What happens next? Most of the hopefuls didn’t make it. Even the few who made it didn’t get any big project. Most of those who aspired actually failed.
But all we see on TV are those actors and their beautiful houses and their adventure travels. We ignored those thousands who failed and got quiet.
It’s often luck. We often forget randomness because of the hindsight bias and survivorship bias. Keep them in mind as you hear stories about losers and winners.
Aside from the influence of luck, hindsight bias, and survivorship bias, you’ll also learn the following from the Fooled by Randomness book:
- Why science is still just about speculation
- What is the social treadmill effect
- If it’s repeatable, it’s not luck
- Why simplification is dangerous
- What is the concept of alternative histories
My personal takeaways
The book is full of stories that illustrate how humans think. It’s fascinating how randomness plays a large part in our thinking and outcomes.
The author often referenced to his background in trading. However, we can see parallel examples in our own lives. Principles always work no matter where we are. Chance and luck affect us in our daily lives.
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