Skin In The Game is the final part of Nassim Nicholas Taleb’s five-book Incerto series. This book takes a look at hidden asymmetries in life and shows how we can make better decisions based on how much skin in the game someone, or we, have.
The book is not as groundbreaking as The Black Swan, which completely changed the way I looked at the world, but it is a practical book and one that you can use to improve your life.
As always with anything Taleb writes, it is an enjoyable ride. He is not afraid to declare his opinions and disdain for people he does not agree with.
This makes the book entertaining and easier to digest.
The book is split into four topics and focuses on the following: uncertainty and the reliability of knowledge, symmetry in human affairs, that is, fairness, justice, responsibility, and reciprocity, information sharing in transactions and rationality in complex systems and in the real world.
The rationale is that the four cannot be untangled and that is obvious when you have skin in the game.
Skin In The Game is a must-read if you want to get a closer look at the forces which shape our lives and you’re eager to learn how you can make more informed decisions in your daily life.
Table of Contents
Skin In The Game summary
Takeaway 1 – Skin in the game keeps human hubris in check
Imagine you’re on a plane travelling to Dubai from London. For the majority of the flight, everything is fine.
No turbulence and the food is ok, if not spectacular. The movies on the flight have been enjoyable and allowed the flight to pass quickly.
As the plane approaches Dubai, suddenly, things start to go array. The plane feels like it’s dropping too fast. It bobs from side to side. You’re hanging on for dear life.
When the plane does land, it hits the runway with a thud, jerks to one side, but manages to right itself and eventually comes to a halt.
The pilot did his job, but he was reckless. His actions could have resulted in a crash, but he was lucky. Next time might be different.
Now you’re probably thinking this doesn’t sound familiar. I’ve been on a lot of planes and I’m yet to experience a flight as described above. I’ve had a few bumpy landings but nothing out of the ordinary.
The reason? Pilots have skin in the game.
If a pilot acts with hubris and decides to ignore warnings, fly too close to mountain ranges, or take off in bad weather, not only are they endangering their passengers, but themselves.
The fact that their lives are on the line, as well as hundreds of other people, means they don’t take unnecessary risks. The reason plane crashes are big news is that they’re rare.
If someone has skin in the game, they’re more likely to weigh up the risks before they act. When skin in the game isn’t present, those risks don’t seem as scary.
Takeaway 2 – A minority can dominate a majority
An asymmetry refers to a condition that is not equal between two sides. It can be in relation to people, countries and a variety of different areas.
Asymmetries play out in society more than we realise. An example of this in recent years is Brexit. The UK joined the European Economic Community (EEC), as it was then known, in 1973.
Two years later amid discontent from some, a referendum was held to decide whether should remain or leave. 67% voted to stay.
Those that still wanted to leave never let up and when the EEC later became the European Union (EU) following the adoption of the Maastricht Treaty in 1992, they became more agitated.
For years they made the case to leave the EU despite low support for their parties, the most notable of which was the UK Independence Party. At the turn of the decade in 2010, the idea the UK would leave the EU was a fantasy.
Just six years later, the UK voted to leave the EU by 52% to 48% in another referendum. How did the situation change? The minority advocating to leave never ceased shouting and moved the debate towards them.
They were relentless and wouldn’t settle for anything until they got a referendum. This same mentality played out in the negotiations to leave as the UK had a much ‘harder’ Brexit than was envisioned back in 2016.
For years, the majority didn’t care about the minority and viewed them as a bunch of ‘fruitcakes and loons,’ to use the words of one British politician.
When a minority is inflexible and unwilling to yield, it’s often the majority that changes to suit them. If left unchecked politically, this is How Democracies Die and minority rule becomes entrenched.
Takeaway 3 – Freedom is never free
The price of freedom is eternal vigilance. Hannah Arendt makes this clear in The Origins of Totalitarianism. A society that takes freedom for granted is liable to lose it.
A good analogy is one Taleb uses in the book:
“In the famous tale by Ahiqar, later picked up by Aesop (then again by La Fontaine), the dog boasts to the wolf all the contraptions of comfort and luxury he has, almost prompting the wolf to enlist. Until the wolf asks the dog about his collar and is terrified when he understands its use. “Of all your meals, I want nothing.” He ran away and is still running. The question is: what would you like to be, a dog or a wolf?”
The life of a dog seems appealing on the face of it, but when you look deeper you see they lack freedom. They are fed by their owners, who also decide when they go for walks.
The trade-off is that can live in comfort and want for nothing. The wolf has a tougher existence, but he is free to do as he pleases.
He may have to earn his meals himself, but this is a small price to pay to not have to wear a collar and be free to roam the land.
The final question is an important one. Almost all of us would rather be the wolf than the dog. Yet, we often fail to realise that freedom means we have skin in the game.
We are free to choose what to do. If we were under the rule of a totalitarian regime, we’d have no skin in the game, unless we decided to rebel.
As Taleb states later on:
“A dog’s life may appear smooth and secure, but in the absence of an owner, a dog does not survive.”
In the absence of freedom, we have no agency and no say in how we conduct our affairs. I’d think we’d all rather be the wolf than be the dog.
- “Laws come and go; ethics stay.”
- “The curse of modernity is that we are increasingly populated by a class of people who are better at explaining than understanding.”
- “Yes, an intolerant minority can control and destroy democracy. Actually, it will eventually destroy the world.”
- “A dog’s life may appear smooth and secure, but in the absence of an owner, a dog does not survive.”
- “True equality is equality in probability.”
- “The only effective judge of things is time – by things we mean ideas, people, intellectual productions, car models, scientific theories, books, etc.”
Skin In The Game review
As interesting and useful as I hope this Skin In The Game summary has been, it isn’t the best book Taleb has written.
Out of the Incerto series, this is the one you should read last. The others, such as Fooled by Randomness and The Black Swan set the scene for the series, Skin In The Game ties it together and adds a flourishing touch.
That said, there are a lot of lessons you can learn from this book. The key principle is a fascinating one, that asymmetries can have a profound impact on our lives.
I’ve described how minority rule can impact our lives and the book goes into more detail about a variety of similar phenomena.
Arguably the best thing about this book is Taleb’s trademark wit. He discusses complex topics, yet they are a joy to read.
I can say the same about all of his books. The fact that a philosophical and scientific book is not only enjoyable but funny.
I enjoy the way Taleb looks at issues and explains concepts. I also like that he’s not afraid to say it how it is.
When you read Taleb, you do so to learn something new and have your mind stretched. But, you also read his books to be entertained.
Skin In the Game, like all his other books, does both.
Who should read Skin In The Game?
Anyone who enjoyed Taleb’s previous books such as Antifragile will enjoy this one. It has a lot of interesting ideas and it’s written in his usual witty style.
If you’re interested in ethics and how being invested in a decision of a choice can affect your decision-making, this is a good book to read.